Are proactive outbound cross-border mergers and acquisitions effective for firms' R&D? New evidence from emerging market enterprises

As emerging market enterprises (EMEs) shift from passive foreign capital acquisition to proactive "going global" strategies, do their outbound cross-border mergers and acquisitions (M&As) stimulate innovation? By analyzing China's M&A data from 2007 to 2020, we explore firms' total R&D, exploitative R&D, and exploratory R&D. Employing difference-in-differences (DID) and propensity score matching (PSM) methodologies, our findings indicate that, compared to inbound cross-border M&As, proactive outbound cross-border M&As promote firms' exploitative R&D but inhibit total and exploratory R&D. EMEs engaged in outbound and inbound cross-border M&As exhibit distinct R&D orientations. The effects of outbound cross-border M&As on firms' R&D are moderated differently by government subsidies and the intensity of regional intellectual property protection. Further analysis underscores the advantages of participating in cross-border M&As (firms as acquirers and targets) over domestic M&As. Moreover, outbound cross-border M&As increase firms' substantial innovation outputs. Our study further proves that what drives the results is not solely the international dimension of M&As; proactive engagement in outbound cross-border M&As holds greater significance.