Chinese and Indian MNEs’ shopping sprees in advanced countries. How good is it for their innovation output?

Do emerging-market multinational enterprises (EMNEs) innovate after they have acquired advanced countries’ innovative firms and have invested in regions with high innovative capacity? Do EMNEs’ absorptive capacity and status positively moderate the relationship between their post-deal innovative output and the innovative capacity of the target firm and/or region? We explore these questions by analyzing the universe of cross-border acquisitions accomplished by Chinese and Indian medium to high-tech firms in Europe (EU28) and the USA during 2003–2011. We find that EMNEs benefit from investing in regions with higher innovative capacities, with the exception of the most innovative hubs where post-acquisition impacts on EMNEs’ innovative outputs turn out to be less straightforward than we expected. We also observe that EMNEs are often unable to benefit from innovative target firms, which is also in contrast with our predictions. Hence, we do not find conclusive evidence about the positive impact of EMNEs’ investments in developed countries. Rather, we reverse this perspective and argue that it is not just a matter of how innovative the target actors are in the host country, but of whether the investing EMNEs are able to mobilize these actors’ knowledge resources and interests to their own advantage. Only EMNEs with strong knowledge bases and high status standing can make it, the rest remain stranded, no matter how innovative their target firm or location is.