The international experience in domestic mergers – Are purely domestic M&A a myth?

Abstract

Paralleling the rise of cross-border mergers and acquisitions (M&As) over the last decades, the academic study of the international dimensions and challenges of cross-border M&A has increased. This has led to a conceptual distinction between domestic M&As on the one hand, and cross-border M&As on the other hand. Our two ethnographic case studies on domestic mergers enable us to contradict this wellestablished assumption. We observe domestic mergers to be impacted by cross-border dimensions. These influences bear particular relevance on the merging organizations' employees' experience of the merger. In this light, the employee experience is deemed an international vs. domestic one. This leads us to posit that both academics and practitioners engaged with M&As need to bear caution with respect to the established domestic vs. cross-border divide. Our main contribution claims that in a globalized environment, purely domestic M&As are a myth. This finding bears important implications on the practice and theorizing on M&As and international management at large.

Motivation behind alternative growth modes in SMEs: a systematic literature review

“…Based on the results, product diversification and internalization are the major strategic reasons for SMEs to do M&As. They pursue AG to diversify own product portfolio or product-related processes (Achtenhagen et al 2013;McCann 1991;Reynolds and Teerikangas 2016;Soni et al 2019) and reach new markets (Knoerich 2010;Öberg 2012).…”

“…It is not surprising that M&A is 'a fundamental evolution' for innovative SMEs (Bonardo et al 2010). Finally, SMEs aim to purchase managerial know-how (Clarysse et al 2011;Reynolds and Teerikangas 2016). Gaining managerial expertise as a motivation for M&As finds support in the evolutionary perspective on firm growth (Penrose 2009).…”

“…It is so because firms operating in high-tech industries innovate simply because of industry dynamism in order to survive, while SMEs in low-tech industries gain strong competitive advantages by purchasing innovation and technological know-how (Cefis and Marsili 2011). The uncertainty of dynamic industries as an antecedent of AG in SMEs has been previously explained to trigger the purchase of innovative technological solutions (Clarysse et al 2011) and save firms from future unpredictability (Reynolds and Teerikangas 2016).…”

“…First, a competitive business environment pushes SMEs towards M&As. In response to intense competition, SMEs perform M&As to establish global presence (Reynolds and Teerikangas 2016), win competition for a certain customer group (Sharkley 2006), and increase overall performance in comparison to others (Agnihotri 2014;Hussinger 2010).…”

Shareholders wealth and mergers and acquisitions (M&As)

“…Economies of scale and cost effectiveness -The motives for M&As often include a desire to achievement economies of scale and greater cost effectiveness. Reynolds and Teerikangas (2016) suggest that firms use M&As for strategic expansion and to develop new competences and capabilities. Finance theory suggests that M&As take place to increase shareholders' wealth and take over control of poor performing firms.…”