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Chinese foreign acquisitions aimed for strategic asset-creation and innovation upgrading: The case of Geely and Volvo Cars

Journal article
Authors Ramsin Yakob
Richard Nakamura
Patrik Ström
Published in Technovation
Volume 70-71 (2018)
Pages 59-72
ISSN 0166-4972
Publication year 2018
Published at Centre for International Business Studies
Pages 59-72
Language en
Links https://doi.org/10.1016/j.technovat...
Keywords Chinese cross-border M&A; Automotive industry; Innovation capability; Innovation clusters; Asset-augmentation; Asset-creation
Subject categories Economic Geography, Business Administration

Abstract

The acquisition and integration of Western companies into Chinese business groups, the impact of host country region innovation dynamics, and the consequences for Chinese firms' innovation capabilities represent a void in the existing literature. This study applies an in-depth longitudinal case study of a cross-border M&A and links the strategic asset-augmentation literature and location theories to address the influence of target firm characteristics on the acquiring firm's innovation capabilities. Results show how the acquisition decision is influenced by post-acquisition accessibility to, and leverage of, firm-level capabilities, macro-level conditions, and the ability to draw advantages from host country regional innovation dynamics to leverage global innovation capabilities. The study extends the asset-augmentation literature to include the notion of strategic asset-creation as a motive for M&A and demonstrates the dynamics of strategic asset-creation in the automotive industry. This study makes three contributions. First, it provides a definition of strategic asset-creation in the automotive industry; Second, it provides a more comprehensive explanation of the importance of spatial dynamics in regional attractiveness in strategic asset-creation processes of emerging market MNCs (EMNCs); Third, it demonstrates how EMNCs harness, absorb, and create new strategic assets.

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