Out of Africa: The role of institutional distance and host-home colonial tie in South African Firms’ post-acquisition performance in developed economies

Liou, Ru‐Shiun; Rao‐Nicholson, Rekha

doi:10.1016/j.ibusrev.2017.04.010

Cited by 47 publications

(51 citation statements)

References 111 publications

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“…In contrast to AMNEs’ acquisitions, EMNEs’ acquisitions in developed markets face a larger threat to establish their legitimacy due to large institutional distance, the difference between their national institutional environments (Liou et al, ). Such a legitimacy threat has been shown to negatively impact post‐acquisition performance (Liou and Nicholson, ).…”

Section: Hypothesis Developmentmentioning

confidence: 99%

Navigating the New Normal: Political Affinity and Multinationals’ Post‐Acquisition Performance

Hasija

Liou

Ellstrand

2019

J Management Studies

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The New Normal in the international business landscape reflects a world challenged by economic volatility and political hostilities. This suggests increased political risk, even for MNEs operating in developed markets. We use the legitimacy‐based view of political risk to examine how political affinity between host and home markets may contribute to an MNE’s post‐acquisition performance in a developed market. A high degree of political affinity signifies aligned national interests thus reducing legitimacy concerns faced by MNEs during post‐acquisition integration. Based on cross‐border M&A deals focused on U.S. targets completed by MNEs representing 45 countries between 2004 and 2012, we find that MNEs from countries with greater political affinity to the U.S. experience better post‐acquisition performance. We also investigate two country‐level factors that intensify the threat to legitimacy; the MNEs’ home market economic status and the presence of a financial crisis in the host market. Our findings indicate that political affinity mitigates risk for MNEs originated from emerging economies much more than for MNEs originated from developed economies, whereas a financial crisis reduces the benefit of political affinity.

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Section: Hypothesis Developmentmentioning

confidence: 99%

Navigating the New Normal: Political Affinity and Multinationals’ Post‐Acquisition Performance

Hasija

Liou

Ellstrand

2019

J Management Studies

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“…Competiveness is defined as the degree to which, under free and fair market conditions, a country (through its SMEs for the purposes of this research) produces goods and services which meet the test of foreign competition (OECD, 1992, as cited in Bierut and Kuziemska-Pawlak, 2017). Extending the scope of research to cover an African country is timely as Africa is gradually increasing its importance in the global marketplace, and researchers have called for more business research on the continent (Damoah, 2018;Gomes et al, 2018;Liou and Rao-Nicholson, 2017;You, et al, 2018;Amankwah-Amoah, 2016). Increasing globalisation has made competitiveness essential for the survival of firms to encourage SMEs in their efforts to participate in the global marketplace (Coeurderoy, et al, 2012;Richard and Sumner, 2008).…”

Section: Introductionmentioning

confidence: 99%

The role of government and the international competitiveness of SMEs

Appiah

Osei

Selassie

et al. 2019

CPOIB

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Purpose The nature of international markets and the challenges with respect to the competitiveness of small- and medium-sized enterprises (SMEs) makes it imperative to examine government support. This study aims to assess the role and effectiveness of government and the export promotion agencies in supporting exports by non-traditional horticultural SMEs in Ghana. Design/methodology/approach The study used a qualitative research design, which involved semi-structured interviews with senior managers of six export facilitating institutions to gain an understanding of the services offered to SMEs with respect to exports of non-traditional horticultural products. Findings The findings reveal inadequate cost-efficient sources of non-traditional horticultural export financing for SMEs. This is a hindrance to the international competitiveness of exporting SMEs in developing countries such as Ghana. In addition, effective and coordinated support from export promotion agencies was found to be critical. Originality/value The study highlights the importance of government’s role in policymaking and implementation of export-led programmes for horticultural exporting firms in Ghana. Despite their strategic importance, this area of research has not attracted the attention of researchers, with little or no information on the horticultural international competitiveness of non-traditional horticultural products.

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“…To control for market seeking motives, we use a dummy variable, Market‐seeking , which takes the value of one if the GDP of target's country is greater than the GDP of acquirer's country and zero otherwise. The Colonial tie extenuates the interorganizational understanding between the bidder and acquired firms and is measured by a dummy variable that takes the value of one if the targets are based in the United Kingdom or the Netherlands and zeroes in all other cases (Liou & Rao‐Nicholson, ). Forex i indicates the impact of currency fluctuations (Berry et al, ; Ghemawat, ).…”

Section: Methodsmentioning

confidence: 99%

“…We control for public information and likely bias in the acquisition of public targets by including a dummy variable, Public Target, which takes the value one if the target is publicly listed and zero otherwise . Puranam and Srikanth (2007) and Makri, Hitt, and Lane (2010) (Liou & Rao-Nicholson, 2017). Forex i indicates the impact of currency fluctuations (Berry et al, 2010;Ghemawat, 2001).…”

Section: Independent and Moderating Variablesmentioning

confidence: 99%

“…Second, researchers suggest strategic asset seeking in a more developed economy remains one prevalent strategic goal in EMNCs' cross‐border mergers and acquisitions (Liou et al, ; Marchand, ). However, less is known with regard to an effective international strategy for EMNCs to overcome the large institutional distance driven by the economic status difference between the host and home market, particularly for the newly emergent acquirers from the African continent (Ellis et al, ; Liou & Rao‐Nicholson, ). In the current study, we propose and find the support that the corporate name change at the acquired subsidiary enhances the likelihood for EMNCs to enjoy better postacquisition performance upon acquiring a target in a host market with a large economic distance.…”

Section: Introductionmentioning

confidence: 99%

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Corporate name change: Investigating South African multinational corporations' postacquisition performance

Liou

Rao‐Nicholson

2019

Thunderbird Intl Bus Rev

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It has long been argued a multinational corporation (MNC) needs to be able to leverage the firm‐specific advantages to overcome the liability of foreignness in the host markets so the MNC can enjoy the benefit of internationalization while competing with the indigenous firms in the host market. However, emerging‐market MNCs, which have the nontraditional ownership advantages, such as flexibility and cost‐advantage, may require different international strategies to realize the anticipated profit in their cross‐border acquisitions. This article takes an organizational identity approach to study how the foreign identity of South African MNCs constitutes the source of liability and negatively impacts their postacquisition performance. We find South African MNCs that adopted a corporate name change for their acquired subsidiaries experienced worse postacquisition return on asset than the South African MNCs who did not do so. On the other hand, facing a large economic distance, South African MNCs that facilitate the acquired subsidiary corporate name change enjoy better postacquisition performance.

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Out of Africa: The role of institutional distance and host-home colonial tie in South African Firms’ post-acquisition performance in developed economies

Cited by 47 publications

References 111 publications

Navigating the New Normal: Political Affinity and Multinationals’ Post‐Acquisition Performance

Navigating the New Normal: Political Affinity and Multinationals’ Post‐Acquisition Performance

The role of government and the international competitiveness of SMEs

Corporate name change: Investigating South African multinational corporations' postacquisition performance

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