Post-M&A technological capability-building of emerging market firms in China: the case of Lenovo

ABSTRACT

Technological acquisitions have become a strong motivation for cross-border merger and acquisition (M&A) activities by firms in emerging countries. However, whether these companies achieve their objectives remains an open question. This article presents a case study of Lenovo’s acquisition of IBM’s PC division with a focus on inventor productivity after acquisition. Our case study suggests that while a ‘light-touch’ integration approach helped avoid the all-too-common post-M&A productivity drop, intra-firm knowledge transfers to veteran inventors of the acquirers remained difficult due to the knowledge gap. However, M&A events create other opportunities to improve the technological capability of the acquiring company by sourcing new talent globally, offering unignorable merit that justifies outbound M&A activities by emerging market firms.

KEYWORDS:

• China
• inventor
• Lenovo
• outbound merger and acquisition
• PRC
• technological capability

Acknowledgments

This research was funded in part by Project 71704025 supported by National Natural Science Foundation of China.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Notes on contributors

Haiyan Yu

Haiyan Yu, PhD, an associate professor of Faculty of Economics and Management in East China Normal University. Her research focus is on the knowledge and technology transfer in international mergers and acquisitions.

Jianwei Dang

Jianwei Dang, PhD, an assistant professor at Business School, University of International Business and Economics in China. He had been a research fellow at the University of Tokyo. His research interest covers intellectual property management and entrepreneurial finance.

Kazuyuki Motohashi

Kazuyuki Motohashi, PhD, a professor at the Department of Technology Management for Innovation, Graduate School of Engineering in University of Tokyo. He had taken various positions at the Ministry of Economy, Trade and Industry of the Japanese Government, economist at OECD, associate professor at Hitotsubashi University, and Sasakawa Peace Fellow of Shorenstein Asia-Pacific Research Center at Stanford University. His research interest covers economic and statistical analysis of innovation, including economic impacts of information technology, international comparison of productivity, national innovation systems focusing on science and industry linkages, and SME innovation and entrepreneurship policy.