Digital mergers & acquisitions are a powerhouse for driving "new quality productive forces"

Background and Motivation

As global economies strive for sustainable and advanced development, the concept of "New Quality Productive Forces" (NQPF) has emerged as a critical benchmark, representing an economic shift towards innovation-driven, high-quality growth. Concurrently, digital M&As have become a dominant strategy for corporate digital transformation. However, a clear understanding of whether and how these digital acquisitions directly contribute to the development of NQPF was missing. This study was motivated to bridge this gap, providing empirical evidence on the strategic value of digital M&As in powering the modern economy.

Methodology and Scope

This research employed a robust quasi-experimental approach to establish causality. Using a multi-period difference-in-differences (DID) methodology, the study analysed an extensive sample of Chinese listed companies from 2011 to 2021. This design allowed the researchers to compare firms engaged in digital M&As with a control group, isolating the effect of the acquisitions. The study also introduced a novel, comprehensive index to measure the multifaceted concept of NQPF, a significant methodological contribution.

Key Findings and Contributions

• Direct Positive Impact: Digital M&As have a statistically significant positive effect on enhancing corporate NQPF, confirming their role as a powerful lever for economic advancement.
• The "How": Key Mechanisms: The study uncovered the core internal channels driving this effect:

Firm Innovation: Digital M&As act as a catalyst, significantly boosting the acquiring firm's innovation capabilities.

Data Assets: They facilitate the critical accumulation and integration of data assets, a key resource in the digital economy.

• The "Where": Amplifying External Factors: The positive impact of digital M&As is not uniform; it is significantly strengthened in environments characterised by:

An advanced industrial structure.

High levels of urban human capital.

Lower economic policy uncertainty.

Why It Matters

This research provides a clear and actionable roadmap for transitioning to a more sophisticated, innovation-led economy. It moves beyond theory, offering firm-level evidence that digital M&As are not just financial transactions but strategic investments in a company's core productive capabilities. For policymakers, it highlights that corporate strategy and national economic policy can be aligned to accelerate the development of "New Quality Productive Forces."

Practical Applications

• For Corporate Leaders: Firms should prioritise digital mergers and acquisitions (M&As) as a strategic initiative for long-term competitiveness, not just market expansion. Post-acquisition integration should explicitly focus on harnessing innovation synergies and leveraging newly acquired data assets.
• For Policymakers: Governments can actively foster conditions that amplify the benefits of digital M&As. This includes:

Investing in urban education and talent development to build human capital.

Promoting policies that support industrial upgrading.

Providing a stable, predictable economic policy environment to reduce uncertainty and encourage long-term investments.

• For Investors: The presence of a strategic digital M&A program can be seen as a key indicator of a firm's commitment to building future-facing "New Quality Productive Forces," informing more forward-looking investment decisions.

Discover high-quality academic insights in finance from this article published in China Finance Review International. Click the DOI below to read the full-text!