RESEARCH ON INTERACTIVE MECHANISM
OF TECHNOLOGY PROGRESS AND M&A
Yongmei Cui, Shengnan Tan and Lian Hong
Beijing Jiaotong University, Merger and Reorganization of Enterprises in China Research Center, Beijing, China
Keywords: M&A, Technical progress, Interactive mechanism industrial impact hypothesis.
Abstract: This paper is based on new growth theory, evolutionary economics and industrial impact hypothesis
theoretical basis, Using the mathematical statistics analysis, case analysis, system analysis and inductive
method, first respectively expatiates the internal mechanism of technical progress drives M&A and M&A
promote technological progress, reveals the interactive of technological progress and the M&A through the
establishment of interaction model, then through the comparative analysis of the developed countries ’M&A
and technical wave, verifies the positive correlation between the technological progress and M&A, it comes
to the conclusion that technical progress is a two-phase dynamic process which contains both technological
innovation and technology transfer, in this process, M&A and technical progress exist mutual drive internal
mechanism, mainly for technological innovation and transfer make the reallocation of industry resources,
which finally drive the M&A waves, then M&A promote the technology innovation and transfer through
break the monopoly and concentrate element. The paper is valuable not only in theory but also in practice,
which favourable to the establishment of technological progress system and the maturity of the M&A
market. Dynamic definition of the technical progress and the establishment of the technical progress and
M&A interaction model is the innovation of the article.
1 LITERATURE REVIEW
The most contribution to new growth theory which
studies the inner mechanism and motivation of
economic in a brand new aspect is regarded
technical progress as endogenous variable for
promoting economic progress. Grossman &
Helpman (1991)’ horizontal innovation model
assumes a certain amount of R&D input can produce
certain new products. Evolutionary economics
explores neoclassical growth theory. One viewpoint
is that the evolution of technology happens along
with industry. Industrial impact hypothesis believes
every industry is impacted by technology,
controlling or economy successively. Tradition
M&A motives has been universally acknowledged
in the literature (such as potentiation,
diversification).Recently many scholar believe that
technology progress is one of the driving factor,
which has been growing interested in. (Chakrabarti
et al., 1994); (Grandstrand et al., 1992); (Hitt et al.,
1991); (Gerpot, 1995); (Hagedoorn and Duysters,
2002).
2 INTERACTIVE MECHANISM
OF TECHNOLOGY PROGRESS
AND M&A
2.1 The Internal Mechanism of
Technology Progress Driving M&A
Luc Soete & Roy Turner (1984), Metcalfe (1988,
1992), (Metcalfe & Michael Gihbotxs, 1989) put
forward the evolution model about technology
transfer. In the model, the enterprise use a series of
technology, which are brought in random and
improve by the time. According to the technology
life cycle theory, technology goes through a circle
process for being developed to replaced, which
promote technology progress. In this circle, it can be
divided into two phase.
First, rational resource allocation drives M&A.
Innovation profit drives the enterprise to innovate, as
a result, it sharpens the competition between the
enterprises and broke the original economic
equilibrium. Second, the motive of acquiring new
technology drives M&A. The company won’t
373
Cui Y., Tan S. and Hong L..
RESEARCH ON INTERACTIVE MECHANISM OF TECHNOLOGY PROGRESS AND M&A.
DOI: 10.5220/0003547403730375
In Proceedings of the 13th International Conference on Enterprise Information Systems (ICEIS-2011), pages 373-375
ISBN: 978-989-8425-53-9
Copyright
c
 2011 SCITEPRESS (Science and Technology Publications, Lda.)

survive without adjusting the industrial and produce
structure according to its own characteristic and
demand, often that adjustment is through M&A.
Third, innovation profit provides adequate liquidity.
2.2 The Internal Mechanism of M&A
Driving Technology Progress
Technology progress driving the M&A, on the
country, M&A is also in favor of technology
innovation and transfer. Many companies get core
technology and knowledge, share advanced
experience, and strengthen innovation ability.
First, the enterprise as an organic system, M&A
help to technology accumulation which is the core
inner factor to success. Second, M&A contributes to
intersect and communicate in the internal
department of the company. Thirdly, M&A makes
the scale of enterprise expand which is the essential
condition of scale effect brought by technology
progress. Lastly, the industry structure affected by
M&A often a perfect macro-environment including
talents, capital, labor and policy to technology
progress.
2.3 The Model of Interactive
Mechanism between Technology
and M&A
This paper above discusses the Interactive
Mechanism of Technology Progress and M&A. As
for the whole society, both is a interactive system,
just as the chart4 say, technology innovation drive
the M&A among the competitive and the inferior to
grab resource and technology, it comes to the result
that resources flow into progress field, the condition
for more R&D is available. And Importing and
spreading makes the beneficiary stay on the higher
ground to achieve profit. The gather of resource
formed by the emergence of the leading industry is
good to R&D and reallocate resource, at the same
time, the big scale M&A promotes the break of
monopoly, interaction of different apartment. That’s
all facilitation for technology innovation.
In one word, the depth and scope of M&A
depends on the degree of technology progress, while
all form of also promote technology innovation and
spread.
3 SOME EMPIRICAL
RESEARCH ABOUT
TECHNOLOGY PROGRESS
AND M&A FROM DEVELOPED
COUNTRIES
American’s data about labor productivity and M&A
growth rate in 1980-2005 indicate that technology
positive relation. This paper use correlation
coefficient and statistical analysis to prove the
relationship (see table 1 below).
Table 1: Correlation coefficient text.
M&A Amount
Growth rate of
Business sector
Correlation 0.412**
t (0.041)
Growth rate of none-
Business sector
Correlation 0.389*
t (0.055)
M&A value Growth rate of
M&A Amount
Growth rate of
M&A vaule
0.370* 0.401** 0.098
(0.069) (0.047) (0.642)
0.353* 0.346* 0.073
(0.083) (0.090) (0.727)
From the table, M&A amount, M&A value,
growth rate of M&A amount and value are all
positive, besides the growth rate of M&A amount;
other three factors all pass the text.
4 RESEARCH CONCLUSIONS
The relationship between technology and M&A is a
worthy question. It came to the conclusion below
through researching the relationship:
First, technology progress contains both
innovation and transfer which represent two phrases
of technology cycle mechanism.
Second, technology progress and M&A is
positive correlation which express as interactivity.
Technology progress promotes M&A, one the
country, M&A also promote technology. That exits
in the technology cycle mechanism. The depth and
scope of M&A depends on the degree of the
technology, while all forms of M&A promote the
innovation and spread of technology.
ACKOWLEDGEMENTS
This paper is funded by the ministry of humanities
and social science research (10YJAZH014) and
ICEIS 2011 - 13th International Conference on Enterprise Information Systems
374

special fund in basic research projects of Beijing
Jiaotong University.
Figure 1.
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