Strategic asset-seeking acquisitions by emerging market multinational enterprises and the liability of emergingness

Emerging market multinational enterprises (EMNEs) often engage in strategic asset-seeking acquisitions to promote innovation catch-up. However, it is unclear why only some EMNEs improve their innovation performance when they face the liability of emergingness (LoE) in overseas markets. To resolve this puzzle, we investigated how EMNEs leverage internal and external LoE to achieve high innovation performance through strategic asset-seeking acquisitions. Application of configurational analysis to data from 162 acquisitions initiated by Chinese multinationals between 2013 and 2017 reveals four scenarios associated with different levels of innovation performance. The results highlight that Chinese multinationals' post-acquisition innovation performance is greater (lower) when both internal and external LoE are low (high), and that entrenched diplomatic relationships are needed to benefit from strategic asset-seeking acquisitions when external LoE is high. Our methodological contribution generates findings that explain variations in EMNEs' innovation performance when pursuing strategic asset-seeking acquisitions, and these findings corroborate the theoretical stance that the effects of strategic asset-seeking acquisitions on innovation performance should be viewed through the lens of the complexities and nuances of LoE.