Abstract In the era of global value chains, extending to both ends of the “smile curve” is a core strategy for firms to enhance competitiveness. And value chain extension mergers and acquisition (M&A) is an important measure to realize this strategy. Based on the data of Chinese manufacturing enterprises and M & A transaction data from 2008 to 2017, this paper examines the impact of value chain extension M & A on the independent innovation of Chinese enterprises by using OLS, PSM-DID and other empirical schemes based on upstream M & A, which clearly focuses on the characteristics of vertical integration of M & A. The results show that although the large amount of resources required by implementing M&A will squeeze out R&D inputs, especially of micro-firms', the integration of upstream and downstream formed by value chain extension M&A can reduce the original market transaction costs, encourage specific R&D investment, and drive independent innovation. Value chain extension M&A generally promotes firms' independent innovation. As far as upstream M&As are concerned, the above effects are significantly higher than those of other types of M&A on the independent innovation of firms. And it can keep increasing for a period of time afterwards. Therefore, creating a business environment conducive to the extension of enterprise value chain M & A can promote the construction of an innovative country in China.
2022, Vol. 39 
