Pulling Knowledge from Rich Sources : Emerging Market Soes’ Hard-to-Reach M&A Strategy

This study examines innovation activities of state-owned enterprises (SOEs) and reveals that emerging market (EM) SOEs invest in innovative development by means of enhancing the AC of target companies after the deal, which in turn contributes to the capability upgrade of SOE. We get the evidence that EM SOEs internationalize to obtain valuable resources, enhance AC and innovativeness of target companies and consequently use evolving synergies. We show that SOEs intend to acquire firms that are young and less experienced which demonstrates their intention to contribute to these companies’ development and technological upgrade. We also reveal that EM SOEs tend to invest in AC of target companies after the deal if acquirer and target belong to the same industry