Digital Wall:Digital Service Trade Barriers and Cross-Border M&As
As digitalization and globalization progress,the demand for cross-border flows of data and technology has grown,but this brings risks related to data leakage.In response to data security concerns,many countries have introduced various digital services trade restrictions,creating a new type of digital services trade barrier.Existing literature suggests that these new barriers suppress firms'product exports.However,another way for firms to expand into international markets is through cross-border mergers and acquisitions(M&As).Besides,previous papers have found that higher tariff barriers encourage firms to use M&As to circumvent conventional trade barriers.This raises an important question:can cross-border M&As overcome these new trade barriers?Currently,there is limited literature examining how digital services trade barriers impact cross-border M&As.This paper develops an oligopolistic competition game model to explore the theoretical mechanisms by which digital services trade barriers affect corporate cross-border M&As.Furthermore,this paper empirically examines the impact of digital services trade barriers on cross-border M&As using merged data from the OECD database and the Zephyr global M&A transactions database from 2014 to 2021.The main conclusions are as follows.Firstly,the digital services trade barriers imposed by host countries significantly suppress cross-border M&As,whereas those imposed by acquiring countries have an insignificant impact.Secondly,the digital services trade barriers in host countries affect cross-border M&As through three channels:the data isolation effect,increased risks of algorithm leakage,and heightened dual technical thresholds.In contrast,conventional trade barriers do not affect cross-border M&As through data and algorithm channels and can only exert a negative effect through a single technical threshold.Thirdly,enhancing cross-border institutional coordination by narrowing differences in digital regulatory rules or signing regional trade agreements can mitigate the adverse effects of digital services trade barriers to some extent.Additionally,improving alternative channels for information transmission,such as interpersonal communication,text-based communication,and voice-based communication,can weaken the negative effect of digital services trade barriers.The possible contributions of this paper are as follows.Firstly,while existing literature has focused on the impact of digital services trade barriers on exports(product flows),it has largely overlooked their effects on capital flows.This paper addresses this gap by investigating how digital services trade barriers affect cross-border M&As.Secondly,this paper clarifies the distinctions between the mechanisms of digital services trade barriers and conventional trade barriers and provides a new explanation for the ongoing debate regarding the relationship between conventional trade barriers and cross-border M&As.Thirdly,this paper argues that the opening of digital trade systems should focus on coordination over simply relaxing restrictions,thereby achieving a balance between openness and protection.The findings enhance our understanding of institutional coordination from a cross-border perspective.Finally,this paper offers policy recommendations in three key areas:aligning with international high-standard trade rules,developing a"Chinese model"for digital trade rules,and participating in regional trade agreements.The findings not only deepen the understanding of the relationship between digital services trade barriers and cross-border M&As but also clarify the distinctions between digital services trade barriers and conventional trade barriers.Additionally,this paper offers valuable insights for China as it transitions from mobility-based openness to institutional openness.
digital services trade barrierscross-border M&Across-border institutional harmonization
万方数据
维普
