Learning the digital ropes: explicit and tacit knowledge transfer in firm M&As

Purpose This study aims to examine whether horizontal digital mergers and acquisitions (M&A) enhance acquiring firms' post-acquisition digitalization. Drawing on organizational learning theory, it further investigates how degree centrality and geographic distance shape this effect by influencing explicit and tacit knowledge transfer. Design/methodology/approach Using Chinese A-share listed manufacturing firms from 2012 to 2019, this study constructs a text-based measure of acquiring firms' digitalization from annual reports and employs a propensity score matching difference-in-differences (PSM-DID) design to examine the effect of horizontal digital M&A. It further tests the moderating roles of degree centrality and geographic distance. Findings Horizontal digital M&A enhances acquiring firms' digitalization; the effect is strengthened by degree centrality and weakened by geographic distance, consistent with organizational learning through facilitated explicit knowledge transfer and constrained tacit knowledge transfer. Originality/value This study extends digital M&A research beyond deal performance by examining acquiring firms' post-acquisition digitalization as a transformation outcome. By benchmarking horizontal digital M&A against non-horizontal digital M&A, it isolates the incremental value of horizontality in digital acquisitions. It further develops a learning-based account that distinguishes explicit and tacit knowledge transfer and identifies degree centrality and geographic distance as key boundary conditions.