What determines performance of cross-border M&As by Chinese companies? An absorptive capacity perspective
Version of Record online: 21 OCT 2010
© 2010 Wiley Periodicals, Inc.
Thunderbird International Business Review
Volume 52, Issue 6, pages 509–524, November/December 2010
How to Cite
Deng, P. (2010), What determines performance of cross-border M&As by Chinese companies? An absorptive capacity perspective. Thunderbird Int'l Bus Rev, 52: 509–524. doi: 10.1002/tie.20376
- Issue online: 21 OCT 2010
- Version of Record online: 21 OCT 2010
Chinese companies are increasingly using cross-border merger and acquisitions (M&As) as a vehicle to source knowledge or strategic assets, so as to enhance their competitive advantage. However, a critical question is: Can strategic assets be effectively acquired by Chinese firms, thereby leading to superior firm performance? This article addresses this fundamental question from an absorptive capacity perspective. This approach concentrates on how an acquiring firm's absorptive capacity influences its ability to identify, assimilate, integrate, and apply external new knowledge into commercial use. By comparatively examining two high-profile international M&A deals completed by leading Chinese firms Lenovo and TCL, we argue that the performance of Chinese companies' overseas acquisitions is substantially affected by the acquiring firm's absorptive capacity at multiple dimensions, thus drawing strategic implications for multinationals in other emerging markets. © 2010 Wiley Periodicals, Inc.