M&A and resources allocation in high-tech industries: Technology diffusion or market power effect

Mergers and acquisitions (M&A) help firms to obtain external technology and other resources quickly, which is an important path for high-tech industries to achieve high-quality development through technology diffusion. However, the excessive concentration of resources caused by M&A also has anti-competitive risks. Based on the M&A data of A-share listed companies in the high-tech industries (manufacturing) from 2015 to 2023, this paper examines its impact on the allocation of industry resources from the dual perspectives of technology diffusion and market power. The results show that the mergers and acquisitions of high-tech firms in China are helpful to promote the optimal allocation of industry resources. This effect stems from the trade-off between the effect of technology diffusion and the effect of market power, and the former is dominant at this stage. In addition, the differential impact of technology diffusion effect and market power effect on high-tech firms leads to the widening of the total factor productivity gap between firms and increases the risk of anti-competition. Further heterogeneity analysis shows that in industries with mature development, low R&D Intensity, low government support and low degree of intellectual property protection, M&A are more likely to promote the efficient allocation of industry resources.