Spatial proximity, localized assets, and the changing geography of domestic mergers and acquisitions in transitional China

Abstract

AbstractMergers and acquisitions (M&As) are the main force of spatial restructuring in the location of economic decision making. This paper analyzes the changing geography of M&As and its influencing factors in China during the period of 2002–2016. It shows a significant “core‐periphery” spatial pattern or network structure, in which a core group of major metropolises and developed provinces, led by Beijing, Shanghai, Guangdong, Zhejiang and Jiangsu, dominates China's M&As market and inter‐regional networks, marginalizing the other regions. The descriptive and modelling results indicate that spatial proximity and corporate preferences for localized assets can shape this geography of China's domestic M&As. The findings confirm that the “home bias” does exist in China's M&As partnering. Meanwhile, the key drivers of China's domestic acquirers are their desire to access and internalize localized assets, especially in the emerging market, new technology, and policy advantages. This study enriches the existing knowledge about the determinants of inter‐regional M&As in emerging economies (e.g., China), where the influences of regional disparities in the institutional setting, industrial structure, as well as economic marketization and financialization are more significant.