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Chinese and Indian MNEs’ shopping spree in advanced countries. How good is it for their innovative output?

Author

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  • Vito Amendolagine
  • Elisa Giuliani
  • Arianna Martinelli
  • Roberta Rabellotti

Abstract

Do emerging-market multinational enterprises (EMNEs) innovate after they have acquired advanced countries’ innovative firms and have invested in regions with high innovative capacity? Do EMNEs’ absorptive capacity and status positively moderate the relationship between their post-deal innovative output and the innovative capacity of the target firm and/or region? We explore these questions by analyzing the universe of cross-border acquisitions accomplished by Chinese and Indian medium to high-tech firms in Europe (EU28) and the USA during 2003–2011. We find that EMNEs benefit from investing in regions with higher innovative capacities, with the exception of the most innovative hubs where post-acquisition impacts on EMNEs’ innovative outputs turn out to be less straightforward than we expected. We also observe that EMNEs are often unable to benefit from innovative target firms, which is also in contrast with our predictions. Hence, we do not find conclusive evidence about the positive impact of EMNEs’ investments in developed countries. Rather, we reverse this perspective and argue that it is not just a matter of how innovative the target actors are in the host country, but of whether the investing EMNEs are able to mobilize these actors’ knowledge resources and interests to their own advantage. Only EMNEs with strong knowledge bases and high status standing can make it, the rest remain stranded, no matter how innovative their target firm or location is.

Suggested Citation

  • Vito Amendolagine & Elisa Giuliani & Arianna Martinelli & Roberta Rabellotti, 2018. "Chinese and Indian MNEs’ shopping spree in advanced countries. How good is it for their innovative output?," Journal of Economic Geography, Oxford University Press, vol. 18(5), pages 1149-1176.
    • Handle: RePEc:oup:jecgeo:v:18:y:2018:i:5:p:1149-1176.
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    Cited by:

    1. Andrea Coveri & Antonello Zanfei, 2023. "Who wins the race for knowledge-based competitiveness? Comparing European and North American FDI patterns," The Journal of Technology Transfer, Springer, vol. 48(1), pages 292-330, February.
    2. Amendolagine, Vito & De Pascale, Gianluigi & Faccilongo, Nicola, 2021. "International capital mobility and corporate tax revenues: How do controlled foreign company rules and innovation shape this relationship?," Economic Modelling, Elsevier, vol. 101(C).
    3. Sasa Ding & Frank McDonald & Yingqi Wei, 2021. "Is Internationalization Beneficial to Innovation? Evidence from a Meta-analysis," Management International Review, Springer, vol. 61(4), pages 469-519, August.
    4. Elia, Stefano & Kafouros, Mario & Buckley, Peter J., 2020. "The role of internationalization in enhancing the innovation performance of Chinese EMNEs: A geographic relational approach," Journal of International Management, Elsevier, vol. 26(4).
    5. Amendolagine, Vito & Chaminade, Cristina & Guimón, José & Rabellotti, Roberta, 2019. "Cross-border knowledge flows through R&D FDI: Implications for low- and middle-income countries," Papers in Innovation Studies 2019/9, Lund University, CIRCLE - Centre for Innovation Research.
    6. Jeffrey Henderson & Mike Hooper, 2021. "China and European Innovation: Corporate Takeovers and their Consequences," Development and Change, International Institute of Social Studies, vol. 52(5), pages 1090-1121, September.
    7. Zhao, Shasha & Liu, Xiaohui & Andersson, Ulf & Shenkar, Oded, 2022. "Knowledge management of emerging economy multinationals," Journal of World Business, Elsevier, vol. 57(1).
    8. Harald Bathelt & John A Cantwell & Ram Mudambi, 2018. "Overcoming frictions in transnational knowledge flows: challenges of connecting, sense-making and integrating," Journal of Economic Geography, Oxford University Press, vol. 18(5), pages 1001-1022.
    9. Amendolagine, Vito & Crescenzi, Riccardo & Rabellotti, Roberta, 2022. "The geography of acquisitions and greenfield investments: firm heterogeneity and regional institutional conditions," LSE Research Online Documents on Economics 115597, London School of Economics and Political Science, LSE Library.
    10. Liang, Yanze & Giroud, Axèle & Rygh, Asmund, 2022. "Strategic asset-seeking acquisitions, technological gaps, and innovation performance of Chinese multinationals," Journal of World Business, Elsevier, vol. 57(4).
    11. Cui, Lin & Gao, Qiuling & Guo, Jinyu & Ma, Pengcheng, 2022. "OFDI performance of EMNEs: A review and recommendations for future research," Journal of International Management, Elsevier, vol. 28(3).
    12. Sutherland, Dylan & Anderson, John & Hu, Zheyuan, 2020. "A comparative analysis of location and non-location-bounded strategic asset seeking in emerging and developed market MNEs: An application of new internalization theory," International Business Review, Elsevier, vol. 29(2).

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    More about this item

    Keywords

    Emerging-market multinationals (EMNEs); cross-border acquisitions (CBAs); patents; absorptive capacity; status;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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