Exploring the impact of establishment mode on intangible strategic asset creation in Chinese MNEs: springboard cross-border strategic asset-seeking M&As versus greenfield R&D-related FDI projects

Sutherland, Dylan, Anderson, John, Wu, Ludan and Severe, Sean (2024) Exploring the impact of establishment mode on intangible strategic asset creation in Chinese MNEs: springboard cross-border strategic asset-seeking M&As versus greenfield R&D-related FDI projects. Asian Business and Management, 23 (4). pp. 519-543. ISSN 1472-4782

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Abstract

How does greenfield versus M&A FDI establishment mode influence intangible asset creation in the parent companies of Chinese MNEs undertaking overseas knowledge sourcing/strategic asset-seeking types of FDI? We hypothesise that while springboard type cross-border acquisitions provide opportunities for the rapid addition of locally embedded competence-creating foreign subsidiaries, challenges in developing intra-MNE knowledge diffusion channels may frustrate integration and thus retard subsequent growth of parent firms’ intangible assets. Greenfield R&D FDI, by contrast, may initially lack local embeddedness but holds out the potential for superior intra-MNE linkages and thus reverse knowledge diffusion to the MNE parent. Our results, based upon propensity score matching and difference in difference models comparing CMNE parent outcomes for FDI projects over the 2003–2018 period, support this argument. We discuss implications for mainstream international business theorising, including springboard theory, which largely overlooks greenfield establishment mode as a means of rapid firm-level catch-up for emerging market MNEs.