The Impact Of International Factor Flows On The Productivity Of China's Cross-border Acquiring Firms

A firm's total factor productivity measures its capacity for achieving output under the given inputs of production factors and reflects its input-output efficiency and development quality.The continuous improvement of productivity is a key factor for the healthy and sustainable development of firms in the long run.It is also critical for China's high-quality economic development,and it is the core embodiment of national comprehensive competitiveness.Therefore,the paper examines the influence on the productivity of China's cross-border mergers and acquisitions(M&A)firms from the perspective of the international factor flows.Due to the revolutions in transportation,information,and communication technology,labor and capital more frequently flow across countries in an open global economic system.In this context,firms' productivity is no longer determined only by the static distribution of factors but also by the international factor flows.To establish the "dual circulation" development pattern,and to protect and stimulate the vitality of market entities,it becomes essential to take advantage of the international factor flows to improve the productivity of cross-border M&A firms.To explore the impact of the international factor flows on the productivity of China's cross-border M&A firms,the paper follows the clue of "stylized facts—theoretical discussion—empirical analysis".It sums up the stylized facts of the international factor flows and the productivity of China's cross-border M&A firms and distinguishes between international flows of human capital and global capital flows.The paper demonstrates and tests the principle mechanism of "international factor flows—resource reallocation—productivity improvement".Using both theoretical discussion and empirical analysis,it examines the impact and mechanism of international factor flows on the productivity of China's cross-border M&A firms.Compared with the existing literature,the marginal contribution of the paper is mainly reflected in the research perspective and research content.The paper focuses on the perspective of the international factor flows from the viewpoint of network connections in international economics.It summarizes the characteristics of China's human capital migration network and global financial network and explores the impact of the international factor flows on the productivity of China's cross-border M&A firms with the method of integrating macro and micro variables.The flow of factors is manifested at specific nodes and forms connections.This is why the paper uses the method of complex network analysis to construct an indicator system that is based on the human capital migration network and global financial network.This paper describes the international factor flows with the logic of point,line,and plane to by analyzing the positions and power of the host countries,the cross-border linkages between China and the host countries,and the overall characteristics of China's human capital migration network and the global financial network.The paper also contributes to examining the impact,mechanisms,and moderating effects of the international factor flows on the productivity of China's cross-border M&A firms.It also explores the potential effects of the dynamic and interactive human capital migration network and global financial network.First,for the international flows of human capital,the paper identifies the endogenous problem caused by the non-random flows of human capital using generalized propensity score matching.The mechanism of firms' decisions on entry and exit and resource reallocation within industries and firms are also discussed.Additionally,the paper tests the moderating effects of institutional differences between China and the host countries,as well as Internet development in those countries.Second,for the global capital flows,the paper uses the indicators calculated in the global financial network to reflect the host countries' position in the network and the cross-border financial linkage between China and the host countries.Also,the mechanism is tested from the perspectives of financing effect and competition effect.Given the crucial role governments and financial markets play in global capital flows,the paper constructs two indicators of governance and market intervention and studies how they interact with global capital flows and affect firms' productivity separately.Third,based on the benchmark test,the paper expands the static tests to examine the dynamic impact of international factor flows on firms' productivity across time and space.Besides that,it combines international flows of human capital and global capital flows in an attempt to measure their interaction effect and matching effect from both a structure and a scale perspective.On the basis of the above theoretical discussion and empirical analysis,the paper concludes that:First,there is a significant positive correlation between the international flows of human capital in China and cross-border M&A firms' productivity,and the promotion effect shows an inverted U-shaped.The reason for this is that Chinese human capital can initially enrich the local skills,experience,and creativity of the host countries.However,when the distribution of human capital is too intensive,it will also cause internal friction with local employees due to differences in language and culture,thus increasing firms' coordination cost and risk of information leakage.The negative effects of migration could negate the positive effects of human capital migration on productivity.In terms of the influencing mechanisms,the paper finds that the inflow of human capital from China to the host countries promotes resource reallocation within industries and firms.On the one hand,it causes the least efficient firms to withdraw from the market to give way to more efficient ones.On the other hand,it makes it possible for firms operating in competitive industries and for firms with high initial productivity to gain access to more resources and markets.It facilitates the transfer of resources to more competitive firms,thus enhancing firms' productivity.Moreover,the paper shows that Internet can positively moderate the relationship between international human capital flows and firms' productivity.And it is the informal institutional distance that does not have a significant impact on firms' productivity.However,when the informal institutional distance is greatly pronounced,the positive effect of the foreign human capital migration may be better able to compensate for the institutional difference and increase productivity.Second,global capital flows can significantly boost China's cross-border M&A firms' productivity.The conclusion remains robust in a number of robustness tests and in the face of potential endogenous problems.In terms of the influencing mechanism,global capital flows may increase competition among firms,which impedes the improvement of productivity.While,international capital flows also exerts financing effects.In general,the financing effect can promote firms' productivity by reducing financing costs and by increasing financing scale and efficiency.The net effect of global capital flows on firms' productivity depends on the relative magnitude of the competition effect and financing effect.In terms of the moderating effects,the paper finds that the host countries' better governance and government intervention in credit allocation can strengthen the role played by global capital flows in promoting firms' productivity using the mediating model with a moderating effect.Third,from the perspective of the time horizon,the inflow of human capital can enhance the productivity of cross-border M&A firms in the current period and can play a sustained promoting role future for at least five years in the future.In contrast,global capital flows can only promote firms' productivity in the current period.From the spatial dimension,when human capital and capital flow to a host country with a higher level of economic development,a more open attitude towards foreign capital,and a more obvious institutional difference from China,firms can gain more promotion in productivity.From the perspective of the interaction effect of international flows of human capital and global capital flows,there is a significantly complementary effect between international flows of human capital and global capital flows in promoting the productivity of cross-border M&A firms in terms of scale.The increase of firms' productivity depends on the matching effect between the international flows of human capital and global capital flows in terms of structure.The higher the matching degree between international factors flows,the more conducive to the improvement of the firms' productivity.The paper reinforces the importance of international human capital flows and global capital flows.For governments and financial institutions,it consists of a theoretical discussion and practical guidelines for supporting foreign ventures and establishing the new opening pattern in China.In summary,the paper presents evidence for the positive impact of international factor flows on the productivity of China's cross-border M&A firms and offers corresponding policy recommendations based on these findings.