In Search of Complementarity in China’s Innovation Strategy through Outward Strategic Mergers and Acquisitions Policy: A Behavioural Additionality Approach

Abstract

Chinese policymakers have witnessed great efforts in building indigenous innovation-led economy as well as a deep interest in promoting outward strategic mergers and acquisitions (M&As) as a major approach to acquire advanced technological know-how. Although debates take place regarding whether the governmental promotion of strategic M&As has an impact on the particular responsiveness of Chinese enterprises in terms of innovation activities, most studies use input or output additionality approaches that directly measure either the additional investment in innovation or the innovation output in the form of commercial benefits. The adoption of these approaches has led to inconclusive results. In this article, we assess the relationship between the governmental promotion and enterprises’ responses using a behavioural additionality approach. The findings show that China’s outward strategic M&A policy is likely to increase enterprises’ willingness to venture abroad, extend their international innovation networks, change their focus on innovation and, last but not least, enhance the learning capacity of Chinese government. We conclude that outward strategic M&As is an avenue to achieve the innovation-led economy in China.