ABSTRACT
Based on the perspective of signalling theory, this paper examines the impact of cross-border mergers and acquisitions (M&As) on competitors’ innovation. Using the unbalanced panel data of Chinese listed pharmaceutical companies from 2014 to 2018, this paper examines how cross-border M&As affect competitors’ innovation inputs and analyses the moderating effect of tax incentives. The results find that after cross-border M&As, the competitors of the merging firms significantly increase their R&D investment. Cross-border M&As transform competitors’ innovation types, and competitors turn to high-risk exploratory R&D. Tax incentives weaken the role of cross-border M&As on competitors’ innovation. The paper provides implications for firms to re-examine and adjust cross-border M&As and R&D strategies, and provides references for the government’s innovation encouragement policy.
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Huimin Xiao
Dr Huimin Xiao is working as Assistant Professor at the Faculty of Business Administration, Nanjing University of Finance and Economics, Nanjing, China. Earlier, she received her doctorate at Hunan University, China, and she was a joint Ph.D. Student at Leeds University, UK. Her research interests include international strategy and organisational renewal. She can be contacted at: [email protected].