Use cross-border M&As to build innovation ecosystems: ESG practices, governmental control, and EMNEs' green technological innovation

Multinational enterprises in emerging economies (EMNEs) increasingly leverage cross-border mergers and acquisitions (M&As) to acquire strategic complementary assets to construct their innovation ecosystems. However, how will the EMNEs utilise the interactions between essential actors in their innovation ecosystems (i.e., EMNEs themselves, government, and national innovation systems) to conduct post-acquisition green innovation stays unclear. Based on the data of cross-border M&As completed by Chinese listed manufacturing firms during 2009-2015, this study finds that EMNEs' environmental, social, and governance (ESG) practices positively affect their post-acquisition green innovation. However, the knowledge distance between China and the host countries weakens the relationship. Meanwhile, Chinese governmental control over the economy promotes EMNEs' green innovation, and environmental subsidies strengthen the impacts. This study contributes to the innovation ecosystem and international business literature by shedding light on the construction of the innovation ecosystem of technology laggards and synergistically considering the influence of different actors involved and their interactions on EMNEs' post-acquisition green innovation.