Reverse Knowledge Transfer in Cross-Border Mergers and Acquisitions in the Chinese High-Tech Industry under Government Intervention

Yi Su,Zaoli Yang,Wen Guo,Hocine Cherifi

doi:10.1155/2021/8881989

Yi Su, Zaoli Yang + Show 2 more

Open Access

https://doi.org/10.1155/2021/8881989

Copy DOI

Abstract

The high-tech industry is the main force promoting the development of China’s national economy. As its industrial economic strength grows, China’s high-tech industry is increasingly using cross-border mergers and acquisitions (CBM&A) as an important way to “go out.” To explore the rules governing the process and operation mechanism of reverse knowledge transfer (RKT) through the CBM&A of China’s high-tech industry under government intervention, a tripartite evolutionary game model of the government, the parent company, and the subsidiary as the main subjects is constructed in this paper. The strategies adopted by the three subjects in the RKT game process are analysed, and the factors influencing RKT through CBM&A under government intervention are simulated and analysed using Python 3.7 software. The results show that, under government intervention, the parent company and subsidiary have different degrees of influence on each other. Subsidiaries are highly sensitive to the compensation rate of RKT. Positive intervention by the government tends to foster stable cooperation between the parent company and the subsidiary. However, over time, the government gradually relaxes its intervention in the RKT and innovation of multinational companies.

Highlights

Characterized by knowledge-intensive and technology-intensive enterprises, the high-tech industry has adapted to the needs of the fourth industrial revolution and exemplifies the future trend of industrial development
From the perspective of government intervention, a tripartite evolutionary game model of reverse knowledge transfer (RKT) by MNCs under government intervention is established, and the evolution of the decision-making processes of the government, parent company, and subsidiary related to RKT is systematically analysed
1 During the process of RKT by MNCs in the high-tech industry, the cost of MNCs’ efforts will be reduced by an economic subsidy from the government. e greater the economic subsidy for the effort cost of RKT is, the greater the willingness of the MNCs to actively engage in RKT is. 2 e enthusiasm of subsidiaries for RKT will be stimulated if the government provides financial support. 3 e enthusiasm of MNCs for RKT is improved by appropriately increasing the tax from the government. 4 e negative attitude of MNCs regarding RKT is reduced through the supervision and assessment of the government, which will stimulate the enthusiasm of MNCs engaged in continuous RKT

Summary

Introduction

Characterized by knowledge-intensive and technology-intensive enterprises, the high-tech industry has adapted to the needs of the fourth industrial revolution and exemplifies the future trend of industrial development. China’s high-tech enterprises have continued to increase FDI with the goal of technology seeking and can obtain advanced knowledge resources ahead of their competitors from the host country through M&A integration [7, 8], such as Sinopec’s acquisition of Addax petroleum and Lenovo’s acquisition of IBM. Such acquisition of knowledge from subsidiaries through CBM&A is called “reverse knowledge transfer” [9]. As the successful solution to these problems is related to improvements in the innovation ability and core competitiveness of China’s high-tech industry, it is of great practical significance to explore RKT in China’s high-tech industry from the perspective of government intervention

Literature Review

Model Assumptions

Decision Mechanism of RKT

Numerical Simulation

Conclusions and Countermeasures