Determinants of cross-border M&As in Latin America

This article analyzes the determinants of cross-border M&As in the Latin American region during the period 1998-2004. Using a unique dataset of 868 Mergers and Acquisitions (M&A) events, the study focuses attention on the effect of macroeconomic and investor protection conditions in the countries where the companies reside over the likelihood of these companies participating in a cross-border M&A transaction. The study considers the effect of company-specific variables in the likelihood of going cross-border. Univariate analysis and logistic regressions strongly support the idea that better economic and business-friendly conditions in the countries where the target operates, increase the likelihood of cross-border merger. Results show that not only is the business environment in the target country important but also in the bidder country. Lower levels of property rights protection in the acquirer country negatively affect the likelihood of a cross-border deal. Finally, the likelihood of a cross-border merger increases when the target faces higher cost of funding than the acquirer's.     

Greenfield FDI,cross-border M&As,and government size

This study examines the effects of greenfield foreign direct investment (FDI) and cross-border mergers and acquisitions (M&As) on government size in host countries of FDI. Using panel data for up to 130 countries for the period from 2003 to 2011, the study specifically tests the compensation hypothesis, suggesting that by increasing economic insecurity, economic openness leads to larger government size. It is found that greenfield FDI increases labour market volatility and thereby economic insecurity while M&As are not significantly associated with labour market volatility. The main results of this study are that greenfield FDI has a robust positive effect on government size, while M&As have no statistically significant effect on government size in the total sample of developed and developing countries, as well as in the sub-samples of developed and developing countries.     

The emotions of top managers and key persons in cross-border M&As: Evidence from a longitudinal case study

Building on prior research on emotions in M&A, this paper analyses the post-M&A emotions of top managers and key persons from the acquired company by examining what triggers emotions during the post-acquisition integration stage, and what the consequences of those emotions are. This study applies cognitive appraisal and affective event theories with empirical evidence based on a longitudinal, single case study of an Indian–Finnish acquisition. The main findings imply that M&As are very emotional for top managers and key persons. Our findings reveal that they experience a wide range of positive and negative emotions triggered by individual and company-level triggers. Interestingly various triggers can have different and opposite appraisal outcomes in the short and long-term. In addition, top managers and key persons are often restricted in the range of behavioural outcomes caused by emotions.     

Fostering integration through HRM practices: An empirical examination of absorptive capacity and knowledge transfer in cross-border M&As

Transfer of knowledge-based resources from acquirers to the acquired units has been ubiquitously emphasized as an important driver of post-acquisition integration. Equally emphasized is the importance of recipient unit’s absorptive capacity for the success of knowledge transfer and the facilitating role of HRM practices in developing absorptive capacity. In this paper, we integrate different streams of research on post-acquisition integration, knowledge transfer, absorptive capacity and HRM practices. Different from most past research, we pay attention theoretically and empirically to the multi-dimensional nature of both knowledge transfer and absorptive capacity. We test our hypotheses on a sample of acquired Chinese subsidiaries of 181 multinational corporations from seven countries. We find that successful inflow and implementation of knowledge require the acquired unit to have distinct types of capabilities each of which can be developed by a specific HRM practice. These results contribute literature by recognizing absorptive capacity as a manageable capability and identifying how different components of this capability could be developed by specific HRM practices. Furthermore, our results shed light on human side of M&As by examining how companies can foster post-acquisition integration by fine-tuning the absorptive capacity of acquired units.     

Managers as the bridge: How cultural friction influences the integration of cross-border mergers and acquisitions

Going beyond cultural distance, the present study adopts a more contextualized view of cultural friction to account for the “actual cultural contacts” in cross-border mergers and acquisitions (CBMAs), and meanwhile builds a case-based measure of cultural friction to quantitatively capture the country- and deal-level cultural differences between the acquirer and the target in each CBMA. Differing from the existing research that takes the influence of cultural differences on CBMA performance for granted, we highlight the importance of managers from the acquiring firm by theorizing that cultural friction between the acquirer and the target can shape acquiring managers' choice of managerial practices to complete the managerial tasks during integration, leading to different performance. In particular, we postulate a curvilinear relationship between the cultural friction and CBMA performance. By incorporating regulatory focus theory into our analytical framework, we further hypothesize how this curve is shaped by managers’ regulatory focus, a key motivational trait at the firm management level. Using a sample of 304 completed CBMAs conducted by Chinese listed firms, our empirical results verify the U-shaped relationship between cultural friction and the CBMA integration performance, and suggest that this relationship is flattened by acquiring managers’ prevention focus.     

Comparison of merger and acquisition (M&A) success in horizontal,vertical and conglomerate M&As: industry sector vs. services sector

Due to the high failure rate of the merger and acquisition (M&A) strategy, this study raises the question of whether there is a difference between the types of M&A in relation to M&A success. The study presents a research model to examine how each of the types of M&As – horizontal, vertical and conglomerate – separately affect M&A success. The study compares between the industry sector and the services sector. The results show that horizontal M&As lead to integration success and synergy success in the industry sector, but in the services sector, it leads to a failure of the integration stage, and in the both sectors it hinders the profitability. Vertical M&As lead to a success only in relation to synergy in the services sector, while conglomerate M&As lead to integration success and synergy success in the both sectors, but without success in relation to the profitability in the both sectors.     

A comparative ownership advantage framework for cross-border M&As: The rise of Chinese and Indian MNEs

MNEs from emerging economies (EE MNEs) have recently undertaken aggressive cross-border mergers and acquisitions (M&As). This phenomenon challenges the current understanding in the international business literature. Integrating the comparative advantage theory with Dunning's OLI paradigm, this article develops a comparative ownership advantage framework characterized by five attributes: (1) national-industrial factor endowments, (2) dynamic learning, (3) value creation, (4) reconfiguration of value chain, and (5) institutional facilitation and constraints. We test five propositions with a dataset of 1526 cross-border M&As by Chinese and Indian MNEs from 2000 to 2008. Preliminary results support the new comparative ownership advantage framework.     

Hybridization: Understanding the microdynamics of a postacquisition integration process

There is no shortage of theoretical or empirical research on mergers and acquisitions (M&A). Knowledge on the subject has grown substantially in recent decades. However, the integration of firms involved in M&A remains a challenging and often unsuccessful process. In addition, there is a scarcity of research on temporal dynamics within integration projects. This article reports on the postacquisition integration of a business school into a university using the concept of organizational hybridization as a theoretical lens. The aim was to identify the microdynamics that occurred during integration. We conducted an inductive case study, interviewing professionals involved in the integration process, analyzing a wide range of documents, and conducting participant observation over 6 years. Field research revealed that different organizational components underwent distinct hybridization processes that were characterized by different degrees of conflict. This study contributes to the understanding of the microdynamics that occur in postmerger or postacquisition integration processes, focusing on the complex adjustments inherent in these developments.     

The Role of Business Ethics in Merger and Acquisition Success: An Empirical Study

The purpose of this paper is to explore job performance, mergers and acquisitions (M&A) from an ethical perceptive. A great number of studies have extensively discussed the link between M&A and performance; however, most focused on the financial functions and strategy selections. Although ethical issues emerge in the M&A process, it is a less studied area. This study adopted the structural equation modeling approach to empirically test our hypotheses. Based on 264 samples from financial companies, data analyses indicated that ethical conduct in M&A is significantly correlated with employee job performance. Ensuring employment security and caring practices can significantly explain organizational commitment. Organizational commitment also plays a significant mediating role between a company’s ethical conduct and employee job performance. Managerial implications are also provided.Carol Yeh-Yun Lin is a Professor of the Department of Business Administration at National Chengchi University in Taiwan. She received her Ph.D. in Human Resource Development from the University of Texas at Austin in 1992. She has published previously in the Journal of Small Business Management, Journal of Psychology, Journal of Engineering and Technology Management, Industrial Relations Journal, International Journal of Human Resource Management, and a number of other scholarly journals. Yu-Chen Wei is a doctoral candidate of the Department of Business Administration at National Chengchi University. Her research interests include intellectual capital, high-performance work system and business ethics.     

Effects of foreign acquisitions on financial constraints,productivity and investment in R&D of target firms in China

This paper examines whether foreign acquisitions lessen financial constraints, improve investment in research & development (R&D) and productivity of the target firms in China based on a sample of 914 cross-border mergers and acquisitions (CBM&A) over the period of 1994–2011. Using investment to cash-flow sensitivity to measure financial constraints, we find that foreign acquisitions in China are associated with a reduction of target firms’ financial constraints, irrespective of the ownership type of the target firm. However, the extent of financial constraint reduction is pronounced for non-SOEs compared to state-owned enterprises (SOEs). This study also provides evidence that foreign acquisitions improve Chinese target firms’ productivity and investment in R&D.     

The role of experiential and non-experiential knowledge in cross-border acquisitions: The case of Indian multinational enterprises

This paper investigates the antecedents of the internationalization of emerging economy multinational enterprises (EMNEs) through cross-border acquisitions. Using a panel data set of 1138 cross-border acquisitions made by 515 Indian multinational enterprises (MNEs) during 2000–2013, it examines interactions of in-house resources with experiential and non-experiential knowledge to explore how EMNEs manage and exploit their knowledge base when internationalizing. The results show that Indian multinational enterprises have ‘interface competence’. They combine in-house resources with experiential market and externally sourced technological knowledge for undertaking cross-border acquisitions. The Uppsala model provides insights in analyzing the role of market knowledge and the Global Factory model helps in analyzing the role of technology in cross-border acquisitions by EMNEs.     

Boundary spanners,HRM practices,and reverse knowledge transfer: The case of Chinese cross-border acquisitions

This paper investigates the role of boundary spanners in reverse knowledge transfer in EMNEs’ cross-border acquisitions. Applying a micro-foundational approach and building on boundary spanning as theoretical perspective, we conducted case studies of acquisitions by Chinese companies in Germany and the UK. We find reverse knowledge transfer is a collective endeavour that relies on both the ability and motivation of individual boundary spanners as well as team-based international collaborations. We propose a conceptual framework of reverse knowledge transfer with two mechanisms—enabling and materializing. Their successful implementation depends not only on the personal characteristics of boundary spanners, but on supportive HRM practices.     

Linking strategic HRM,performance management and organizational effectiveness: perceptions of managers in Singapore

Strategic human resource management (SHRM) theory is predicated on the assumption that effective human resource management (HRM) processes have the capacity to contribute significantly to organizational effectiveness, expressed in terms of productivity, flexibility, effectiveness, efficiency, return on investment, competitiveness, and ultimately, profitability. Earlier research studies have explored the overall value-adding potential of HRM processes as a whole. Few have focused on the links between strategic HRM, performance management systems and organizational effectiveness, and even fewer have examined these relationships in Southeast Asia. This paper addresses this gap in the literature by examining the perceptions of a split sample of senior managers in Singapore. It reveals an interesting gap between their rhetoric and the realities of their performance management systems, and suggests future research directions.     

Private information,institutional distance,and the failure of cross-border acquisitions: Evidence from the banking sector in Central and Eastern Europe

In this paper, we develop an information theory-based framework about cross-border acquisitions in the financial intermediation industry. We argue that even though “soft” information embedded in customer relationships of local banks can, in principle, help multinational banks (MNBs) overcome informational disadvantage in host countries, the cost of verification of this private information may, paradoxically, make local banks with significant customer relationships unattractive for cross-border acquisition. Further, we propose that the relationship between the amount of customer information embedded in an incumbent bank and the likelihood of its acquisition by a MNB is modified by the institutional distance between the home and host countries of the MNB. Specifically, the strength of the negative relationship increases with institutional distance between home and host countries because the verification cost of private information increases with institutional distance. Our hypotheses find support in the context of Central and Eastern Europe.     

Internationalization process,impact of slack resources,and role of the CEO: The duality of structure and agency in evolution of cross-border acquisition decisions

This paper examines how the internationalization process evolves. We do so by examining the cross-border acquisition (CBA) decisions of multinationals under the contingent impact of slack resources and CEO power and influence. Grounding our arguments in Giddens’ (1984) structuration theory, we identify how and why path-dependencies associated with CBA decisions give way to strategic change, demonstrating the duality of structure and agency in this evolutionary process. Further, we show that organizational slack and CEO overconfidence affect this relationship, albeit in dramatically different ways. Our hypotheses are tested on a large sample of 4812 CBAs of U.S. firms during 2000–2010, across 41 industries and in 44 target countries. The results hold for acquisition trajectories of multinationals in both categories of CBA decisions: majority as well as minority-owned.     

Understanding cross‐border mergers and acquisitions of African firms: The role of dynamic capabilities in enabling competitiveness amidst contextual constraints

This article builds on existing international business literature that examines the drivers of cross‐border mergers and acquisitions (M&As) within emerging and developing economy contexts, theoretically exploring how dynamic capabilities (DCs) are connected to these drivers, and how African emerging multinational enterprises (EMNEs) can pursue them to achieve competitiveness. The article's contribution is the development of a DC framework and testable propositions for African EMNEs' cross‐border M&As. The theoretical framework shows the division of DC dimensions—sensing, seizing, and transforming—and establishes explanations for their linkage with institutional and resource drivers for African EMNEs' cross‐border M&A competitiveness. In addition, the article outlines managerial implications to this effect. Overall, the article contributes to the emerging literature on the international expansion of African EMNEs through cross‐border M&As by underscoring the role of DCs.