Psychic Distance’s Impact on China’s Reverse M&A Innovation

In this study, we examined Chinese firms’ cross-border reverse mergers and acquisitions (M&As). From the perspective of internal and external uncertainties, as well as the essence of psychic distance (PD), we established five dimensions of the PD of cross-border reverse M&A: cultural distance, national image, degree of internationalization, top management team (TMT)‘s overseas background, and perceived distance. Using fuzzy-set qualitative comparative analysis (fsQCA), we found that the impact of PD on innovation performance was a combination of multiple factors, showing three types of configurations: external uncertainty dominant, internal uncertainty dominant, and perceived distance dominant. We further explored the interactions between knowledge conditions, such as firm size, industry relevance, and relative knowledge scale, and PD. This study supplements and expands current theories on the internationalization of emerging market enterprises from the perspective of latecomer countries.