Domestic technological acquisitions and the innovation performance of acquiring firms

This study explores how the external technology base affects innovation performance of domestic technological acquisition based on multiple cases of 108 Chinese firms undertaking technological acquisition from 2001 to 2008. This study reveals interesting results. First, technological acquisitions improve innovation performance of the acquiring firm. Second, based on a Poisson regression with 108 observations, the result shows that the absolute size positively affects post-acquisition innovation performance while the relative size of the acquired external technology negatively affects post-acquisition innovation performance. In addition, the absorptive capacity does not have the positive impact on the relationship between acquired technology and innovation performance. This result, however, is not similar to the conclusion that is drawn in developed countries. This paper is a helpful answer to the question as to how firms obtain resources and competitive advantages in developing countries.