Learning from inbound foreign acquisitions for outbound expansion by emerging market MNEs

Abstract

Although cross-border acquisitions (CBAs) are prevalent, many such acquisitions fail to complete. This challenge is even more profound for emerging market MNEs (EMNEs). Drawing upon the vicarious learning theory, we argue that EMNEs can learn from inbound foreign acquirers through the latter's demonstration, professional services firms, and employees. This learning mechanism enables EMNEs to better deal with the complexity and uncertainty in various stages of acquiring foreign firms, thus increasing the completion rate of their outbound CBAs. We also suggest that the effectiveness of vicarious learning is further enhanced by the relatedness between inbound and outbound CBAs. Our analysis of 3599 outbound CBAs from 27 emerging economies during 2000-2018 shows that prior inbound CBAs completed in an emerging economy have a positive effect on the completion likelihood of outbound CBAs conducted by EMNEs from this economy. This positive effect becomes even stronger when the percentage of (1) inbound CBAs served by the EMNE's financial advisors, (2) inbound foreign acquirers that are in the same industry as the EMNE, and (3) inbound foreign acquirers that are from the same country as a focal outbound CBA's target country, is larger. These findings offer new insights into the inbound-outbound acquisition links and the internationalization process of EMNEs.

Do It Right the First Time? Exploring the First Cross-border Acquisition and Expansion Frequency of Emerging Market Multinationals

“…This is also evident from the World Investment Report (WIR), which shows that CBAs initiated by EMNEs decreased from US$48.208 billion in 2018to $22.132 billion in 2019(UNCTAD, 2020. Prior studies often interpret expansion barriers based on the various types of home-host country distance (e.g., geographical, cultural, and institutional distance) (Bu et al, 2023;Wang et al, 2014). The most recent studies look at the ideological tension between countries, suggesting that national sentiments, especially the sense of nationalism, affect the completion and progress of CBAs (Lubinski & Wadhwani, 2020;.…”

“…The advent of deglobalization amplifies the complexity of firms' international expansion, especially for EMNEs that are more vulnerable to environmental varieties due to their limited prior experience and lack of understanding of the rules of the game in different countries (Luo & Witt, 2021). Although previous IB research examines the various forms of cross-country differences in hindering or facilitating EMNEs' internationalization (Bu et al, 2023;Wang et al, 2014), less is known about whether the intensified environmental variations due to the rise of nationalism affect their expansion. Nationalism has increasingly become a global strain in the last two decades 1 , characterized by 'an intolerance of criticism and an unquestioning positive evaluation of, and staunch allegiance to, one's own nation' (Hanson & O'Dwyer, 2019: 780).…”

“…The springboard perspective has been increasingly adopted as a theoretical foundation to examine the determinants of EMNEs' aggressive behavior and modes of control in entering different locations (Bu, Tang, Luo, & Li, 2023;Kumar et al, 2020;Wang, Luo, Lu, Sun, & Maksimov, 2014). Recent research has begun to emphasize the important role of EMNEs' first attempt, especially their first cross-border acquisition (CBA), which 'requires a significant effort to develop systems and processes that can manage and integrate foreign operations' (Kumar et al, 2020: 175).…”

Adaptive Fault‐Tolerate Lateral Control for Autonomous Electric Vehicles with Unknown Parameters and Actuator Faults

“…It should be noted that if the controller in this paper is used in a higher order system it may lead to differential explosion. Te articles [33][34][35] provide solutions to this problem and interested authors can refer to them.…”

“…From equation (34), it can be concluded that z 1 , z 2 , 􏽥 θ, and 􏽥 ρ are bounded. From reference [11], the boundedness of x 1 , x 2 , x 3 , and x 4 can be guaranteed.…”