Can international acquisition be an effective way to boost innovation in developing countries? Evidences from China's TFT‐LCD industry

Abstract

Purpose

The purpose of this paper is to examine the effects of international acquisition activities on performance and its role in innovation build‐up in developing countries.

Design/methodology/approach

A case study was used to understand the deep integration process of acquisition process. The theory behind the study is the relationship of innovation management and merger and acquisition activities.

Findings

Acquiring a company with higher technologies has more risks and it requires the acquiring company to master a fast learning capability. The key to a successful international technology acquisition for a developing country is to leverage technology dynamics and build up a high‐level learning capability to absorb tacit knowledge.

Research limitations/implications

An in‐depth case study was adopted. Further quantitative research may be needed to test our research outcome here.

Practical implications

The case study may provide valuable reference for the companies aiming to catch up via international acquisition in the developing countries.

Originality/value

First, this paper is to enrich literature on acquisition research from a technological perspective. Second, fast learning capability, especially the capability to absorb tacit knowledge, is the key to a successful acquisition when a lagging‐behind company in the developing country wants to catch up a leading one.

Citation

Liu, X. (2010), "Can international acquisition be an effective way to boost innovation in developing countries? Evidences from China's TFT‐LCD industry", Journal of Science and Technology Policy in China, Vol. 1 No. 2, pp. 116-134. https://doi.org/10.1108/17585521011059866