Determinants of acquisitions in Chinese technology firms: an empirical investigation

Abstract

Purpose – Globalization, increasing intensity of competition and access to capital markets have enabled emerging market firms to explore inorganic growth through merger and acquisitions (M & A) over the past two decades. The purpose of this paper is to analyze the role of firm-specific factors on M & A propensity in Chinese technology firms. Design/methodology/approach – The authors analyze data on 152 firms from Mainland China, Hong Kong and Taiwan over a period of 2001-2011 using logistic and count data regression. Findings – The authors find that the factors that influence M & As in these firms differ from the established factors found in M & A in developed economies. Large, low-debt firms have higher acquisition propensity irrespective of their technological strength and they tend to be serial acquirer too. Originality/value – The findings provide new insights into inorganic growth behavior of emerging market technology firms and indicate presence of both exploitative and exploratory motives.