Digital M&A and Firm Innovation: Evidence From China

This study empirically examines how digital M&A affects firm innovation using data from Chinese listed companies from 2006 to 2019. The results show that digital M&A promotes firm innovation, and our findings also suggest that digital M&A enables firms to break away from technology pathdependence to achieve radical innovation and digital innovation. The analysis of different types of digital M&A shows that the innovation effect of vertical digital M&A is smaller than that of horizontal digital M&A. Vertical digital M&A significantly increases industry concentration and may change the competitive structure of the market; the innovation effect of cross-border digital M&A is smaller than that of domestic digital M&A, which may be related to the negative moderating effect of cultural and institutional distance between China and the host country, as well as the restriction of cross-border data flow.