Cross-border mergers and acquisitions: links between acquiring firm capabilities and resources and target country location

Parente, Ronaldo; Kelley, Keith J.; Thams, Yannick; Alvarado-Vargas, Marcelo J.

doi:10.1108/mbr-02-2019-0010

Cited by 7 publications

(3 citation statements)

References 90 publications

(141 reference statements)

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“…CBAs are the most common form of Chinese OFDI (Xie and Wang, 2022): 92% of Chinese OFDI into the USA has taken the form of acquisition, whereas CBAs accounted for only 62% of the global FDI value in 2018 (UNCTAD, 2019). In comparison to greenfield FDI, CBAs provide faster access to foreign markets and strategic assets, despite their postacquisition integration costs (DePamphilis, 2019; Parente et al , 2020; Zhang et al , 2019).…”

Section: Literature Methods and Hypothesesmentioning

confidence: 99%

Fleeing from systemic risk at home through cross-border acquisitions

Shao¹,

Wang²,

Xie³

et al. 2023

MBR

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Purpose Viewing the domestic downside risk as a “pushing” factor for outward foreign direct investment (OFDI), this study aims to examine the surge in Chinese cross-border acquisitions (CBAs) between 2008 and 2017, a unique window when private firms in China were allowed to conduct CBAs. Design/methodology/approach This study examines the effect of down-side risk on cross-border acquisition performance by using the sample of Chinese A-share listed companies from 2008 to 2017. Specifically, this study considers three kinds of systemic risk, systematic risk and idiosyncratic risk, and respectively examines their impact on CBAs activities; this study also investigates their subsequent results after CBAs activities. The contingency effect of state ownership on the above relationship is also discussed. Findings The findings reveal that pre-CBA systemic risk explains the volume of CBA activities; CBAs are followed by a reduction in systemic risk; the interactions between systemic risk and CBAs decrease with the level of state ownership; and the above results do not hold for traditional risk measures (i.e. systematic risk and idiosyncratic risk). Originality/value This study contributes to the literature by revealing the role of systemic risk as a “pushing” factor in the context of OFDI and suggesting an alternative explanation for CBAs from China: Chinese firms (especially private firms) took advantage of the rare opportunity between 2008 and 2017 given by the government to transfer assets overseas through CBA.

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Section: Literature Methods and Hypothesesmentioning

confidence: 99%

Fleeing from systemic risk at home through cross-border acquisitions

Shao¹,

Wang²,

Xie³

et al. 2023

MBR

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“…For example, research has often looked at institutional distance mainly in terms of the differences between the subsidiary host and the home country on (informal) aspects, such as culture (Duan et al, 2020), administration, geography and economy (Antunes et al, 2019;Ghemawat, 2007), ignoring other aspects that are more relevant to the situation and the host-home country circumstances (Verbeke et al, 2017). Certain ignored (formal) aspects, such as GE and regulatory quality (RQ) (Parente et al, 2020), are more relevant, particularly in research on MNEs from developed countries with their subsidiaries in emerging markets. These aspects carry a regulatory risk (World Bank Group, 2020), which is one of the top three factors considered by MNEs in relation to their investment decisions in emerging markets.…”

Section: Institutional Distance and Subsidiary Innovationmentioning

confidence: 99%

The roles of external embeddedness and institutional distance in the subsidiary product/process innovation and R&D capacity

Rodrigues

Borini

Raziq

et al. 2020

JKM

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Purpose This study aims to look at the relationship of external embeddedness and institutional distance (governance aspects) with the foreign subsidiary research and development (R&D) capacity. Furthermore, it examines whether these relationships are mediated by subsidiary product and process innovation, and whether institutional distance plays a moderating role in the relationship between subsidiary innovation and R&D capacity. Design/methodology/approach The authors draw on survey data from 130 foreign subsidiaries operating in Brazil and test their model using variance-based structural equation modeling. Findings Results suggest that subsidiary (product and process) innovation fully mediates the relationships between: subsidiary external embeddedness and R&D capacity; and institutional distance and subsidiary R&D capacity, such that the relationship is positive in case of the former and negative in case of the latter. The relationship between subsidiary product and process innovation and R&D capacity is positive and stronger at lower levels of institutional distance. Originality/value The research ignores the underlying mechanisms of the external embeddedness and institutional distance relationship with subsidiary R&D capacity. Furthermore, institutional distance based on formal governance aspects and their impacts on subsidiary innovation and R&D capacity are rarely investigated. This paper contributes with regard to these aspects.

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“…Institutional factors not only play a significant role in shaping the experience and cultivating learning but also determine how applicable the previous lessons are in various situations (Barkema and Schijven, 2008; Johanson and Vahlne, 2009). While past acquisition research focused mainly on the role of the general institutional environment (Parente et al , 2020; Wang and Larimo, 2020; Zhou et al , 2016), a more comprehensive assessment of the impact of both general and practice-specific institutional settings can deepen our understanding (Kostova and Roth, 2002; Linder et al , 2016). This is especially true in the first truly global acquisition wave, when more emerging countries participated in cross-border acquisitions than in any previous acquisition wave (Alexandridis et al , 2012; McCarthy et al , 2016).…”

Section: Introductionmentioning

confidence: 99%

Overcoming institutional challenges in cross-border acquisitions: how home- and host-country acquisition experiences shorten the deal completion phase

Soleimani

Yang

2022

MBR

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Purpose Drawing on the institutional theory and organizational learning literature, the purpose of this study is to investigate the relationship between prior acquisition experience and the duration of the deal completion stage in cross-border acquisitions and the impacts of the quality of business institutions in the host country and the institutional distance between home and host countries on this relationship. Design/methodology/approach This study uses the sixth wave of mergers and acquisitions, the first truly global wave that covered a wide range of institutional settings, to test the hypotheses. Using a panel data regression method, it analyzes 8,175 cross-border acquisitions from 2003 to 2009, conducted by acquirers from 47 advanced and emerging economies in 56 advanced and emerging economies. Findings This study finds that host-country acquisition experience has more impact on shortening deal completion duration. Home-country acquisition experience is more effective in host countries with less developed business institutions than in those with more developed ones. The results of this study show that the quality of business institutions in the host country and the institutional distance between the home and host countries amplify or attenuate the effect of past acquisition experiences, depending on their origin and the quality of business institutions and institutional distance of where they are used. Originality/value The growing popularity of cross-border acquisitions among emerging country acquirers calls for a systemic study of the cross-border acquisition process. One of the critical and less understood stages in this process is the deal completion stage. This study examines how the institutional environments in the home and host countries impact the effectiveness of past acquisition experiences on shortening this stage.

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Cross-border mergers and acquisitions: links between acquiring firm capabilities and resources and target country location

Cited by 7 publications

References 90 publications

Fleeing from systemic risk at home through cross-border acquisitions

Fleeing from systemic risk at home through cross-border acquisitions

The roles of external embeddedness and institutional distance in the subsidiary product/process innovation and R&D capacity

Overcoming institutional challenges in cross-border acquisitions: how home- and host-country acquisition experiences shorten the deal completion phase

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