Cultural distance and post-acquisition performance: the role of absorptive capacity

Moura, Stephanie Tonn Goulart; Falaster, Christian; Silva-Rêgo, Bernardo

doi:10.1108/ijoem-08-2021-1251

Cited by 4 publications

(5 citation statements)

References 95 publications

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“…This highlights the diverse knowledge brought by cultural distance (e.g. Aybar and Ficici, 2009; Aybar and Thanakijsombat, 2015; Moura et al. , 2023).…”

Section: Resultsmentioning

confidence: 98%

Home country influence in cross-border mergers and acquisitions by emerging market firms: a systematic review

He,

Padrón-Hernández

2024

MBR

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Purpose Emerging market firms (EMFs) are increasingly expanding their global presence through cross-border mergers and acquisitions (CBMAs). While such deals are distinct from those by advanced market firms, there is a need for a comprehensive understanding of how emerging home markets form this distinctiveness. This study aims to remedy this gap. Design/methodology/approach The authors conduct a systematic literature review of 84 empirical papers. Through a broad search string and seven exclusion criteria, the authors carefully select studies on country-level home factors of CBMAs by EMFs. Findings After summarizing paper volumes, journals and context factors of home/host countries and industries, the authors highlight different strands of institutional theory as the prevailing perspective and pre-M&A issues as the foremost theme. CBMAs by EMFs are influenced by distinct home-exclusive factors, and the mechanisms linking home-country factors to CBMAs by EMFs show significant inconsistencies across studies. Originality/value This review focuses on home country influence and thus goes beyond general characteristics of CBMAs by EMFs. The authors highlight more diverse types of home country factors and CBMA outcomes and, more importantly, take a closer look at involved mechanisms. Doing so, the authors identify gaps and disparities that have limited the understanding of home country influence in CBMAs by EMFs. To correct this, the authors offer a comprehensive roadmap for future research, contributing to EMF studies in particular and CBMA and international business research in general.

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“…This highlights the diverse knowledge brought by cultural distance (e.g. Aybar and Ficici, 2009; Aybar and Thanakijsombat, 2015; Moura et al. , 2023).…”

Section: Resultsmentioning

confidence: 98%

Home country influence in cross-border mergers and acquisitions by emerging market firms: a systematic review

He,

Padrón-Hernández

2024

MBR

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“…Some studies suggest that cultural differences can generate value in M&A by improving the performance of the acquirer (Chakrabarti et al, 2009) and target firm (Campagnolo and Vincenti, 2022). Moreover, better absorptive capacity can increase the positive effects of cultural differences on post-M&A performance (Moura et al, 2022). One possible reason for this is that cultural differences have great potential of transferring knowledge (Sarala and Vaara, 2010) and improving the learning performance (Chen et al, 2022).…”

Section: Stock Market Performancementioning

confidence: 99%

“…, 2009) and target firm (Campagnolo and Vincenti, 2022). Moreover, better absorptive capacity can increase the positive effects of cultural differences on post-M&A performance (Moura et al. , 2022).…”

Section: Theoretical Framework and Research Hypothesesmentioning

confidence: 99%

How do cultural differences affect stock market performance after mergers and acquisitions? Empirical evidence from China

Liu,

Xie,

Guan

2024

ARJ

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Purpose As cross-cultural mergers and acquisitions (M&A) have learning effects on organisations, assessing their impacts on corporate performance is crucial. This study aims to explore the impact of inter-firm cultural differences on long-term post-M&A stock market performance. Design/methodology/approach The authors select domestic M&A transactions of Chinese listed companies during 2010–2021 as the sample. Then, the authors use the partial least squares structural equation model (PLS-SEM) to construct the latent variable of cultural differences in four dimensions to explore long-term stock market performance. Findings Cultural differences first positively and then negatively impact post-M&A performance. Three transmissions mechanisms are identified: investor sentiment, takeover premiums and information disclosure quality. Further analysis reveals that acquirer stock performance improves with higher analyst coverage and non-local shareholders but worsens if there are business affiliations between the acquirer and target firms. Practical implications This study can help optimise information disclosure systems in M&A transactions for regulatory authorities and aid investors’ understanding of post-M&A performance changes. Furthermore, it can improve acquirers’ understanding of the risks and opportunities in cross-cultural M&A, thereby facilitating the adaptation of management practices to the im-pacts of cultural differences. Originality/value By integrating the theories of resource dependence and transaction costs, this study examines the reversal effect of cultural differences between merging companies on post-M&A performance. The authors use a PLS-SEM to empirically analyse the main effects and reveal three transmission mechanisms.

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“…In this globalization era, dealing with cultural differences is inevitable for MNEs (Moura et al, 2022). As such, we are going to explore how managerial cultural orientations may influence the relationships between business ties and capabilities.…”

Section: Power Distance and Assertivenessmentioning

confidence: 99%

“…In this globalization era, dealing with cultural differences is inevitable for MNEs (Moura et al. , 2022).…”

Section: Power Distance and Assertivenessmentioning

confidence: 99%

Unraveling formal and informal business ties in shaping foreign subsidiary capabilities

Thoumrungroje,

Siri

2024

RIBS

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Purpose Drawing upon the resource-based view this study aims to examine the connections between formal and informal business relationships and resource-bridging and adaptive capabilities within the context of foreign subsidiaries of multinational enterprises (MNEs) operating in Thailand. Based on prior literature emphasizing business network ties as sources of competitive advantage in emerging markets, this study extends the discourse by investigating the moderating effects of technological turbulence, power distance and assertiveness. Design/methodology/approach This study uses a quantitative research approach, using data obtained from a self-administered survey conducted among 168 foreign subsidiaries spanning diverse industries in Thailand. The data were analyzed by using multiple-group structural equation modeling to test the hypothesized relationships. Findings Cultivating different types of business ties enables foreign subsidiaries to improve different types of capabilities. While interpersonal relationships (i.e. informal businessties) enable them to develop their abilities to combine various resources (i.e. resource-bridging capability), rigid contractual-based relationships (i.e. formal businessties) help them to be more adaptive (i.e. adaptive capability). These relationships are also contingent upon the levels of technological turbulence, host-country power distance and host-country assertiveness. Originality/value This research builds upon prior research on network ties and capability building by delineating the specific nature of capabilities. Contradicting to the previous findings, demonstrating a negative relationship between formal business ties and capabilities, this study found that each type of business tie enables foreign subsidiaries to enhance different types of capabilities under different circumstances. Moreover, this study adopts a lens of host-country national culture rather than home-country culture in investigating the moderating effects of power distance and assertiveness.

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Cultural distance and post-acquisition performance: the role of absorptive capacity

Cited by 4 publications

References 95 publications

Home country influence in cross-border mergers and acquisitions by emerging market firms: a systematic review

Home country influence in cross-border mergers and acquisitions by emerging market firms: a systematic review

How do cultural differences affect stock market performance after mergers and acquisitions? Empirical evidence from China

Unraveling formal and informal business ties in shaping foreign subsidiary capabilities

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