In this paper, we provide evidence on merger from the standpoint of relative labor productivity and relative total factor productivity. Our empirical work examines the Taiwanese manufacturing firms' motivation to merge and how the merger firms perform after merger. On the basis of a sample of 6, 140 manufacturing firms, we have found that (1) the firms with larger relative productivity and firm size have higher probability to merger other firms. (2) R&D has positive and significant impact on merger, but market power doesn’t have a significant effect on merger. (3) Firm productivity growth is positively related to merger. That is, merger firms experience higher improvement in productivity growth. Moreover, horizontal mergers are most effective in productivity growth, followed by vertical mergers and conglomerate mergers.