China's technological catch-up through foreign IP acquisitions: Disaggregating the effects of cross-national distance

Abstract

While the effects of proximity on the technological catch-up of emerging economy firms are well documented, little is known about how the sub-dimensions of cross-national distance impact such firms' acquisition of foreign IP. Cross-national distance is a complex, multi-dimensional construct that has the potential to influence catch-up in different ways, especially for Chinese firms. We use the established Wharton indicators of cross-national distance (Berry et al., 2010) to understand foreign IP acquisition by Chinese firms over a 10-year period. Results show: (1) different sub-dimensions of distance have different direct effects on foreign IP acquisition, (2) a positive effect of knowledge distance on IP acquisition interacts with three other forms of distance, (3) the most aggressive foreign IP acquisition strategies are linked to only three forms of distance, and (4) the impact of disaggregated distance depends on IP asset type and whether the acquirer is in manufacturing or services. Results provide new insight into China's technological catch-up and the complex, multi-dimensional nature of international proximity influencing technological catch-up through acquisitions.