Cross-border mergers and acquisitions with heterogeneous firms: Technology vs. market motives

The most common form of foreign direct investment (FDI) is cross-border mergers and acquisitions (M&A). A common explanation for M&A activity identified in the industrial organization literature is that firms seek technological expertise. However, this has not been examined in the FDI literature. In this paper, I develop and estimate a model of cross-border M&A and focus on the technology seeking explanation. In particular, I develop a general equilibrium model of exporting, greenfield FDI, technology-seeking cross-border M&A, and market-seeking cross-border M&A with heterogeneous firms. The model predicts that firms from a larger country are more likely to acquire in a smaller country when M&A activity is driven by a technology-seeking motive, but the opposite is true when it is driven by a market-seeking motive. Using detailed data on worldwide M&A activity from 1985 to 2007, I find empirical evidence that cross-border M&A activity exhibits behavior consistent with this prediction.     

Bilateral M&A activity from the Global South

This paper studies the factors associated with outbound bilateral mergers and acquisitions (M&A) activity by firms located in emerging economies. We document recent trends in emerging market M&A flows, which have risen dramatically over the past decade, and explore the factors that may have contributed to this rise. We find distinct patterns for M&A deals according to whether the acquisition targets are in other emerging economies or advanced countries, and that these differences can be attributed to differing theoretical motivations behind foreign direct investment. We also consider the implications of our model for future M&A originating in the Global South, in light of the global financial crisis of 2008.     

Integration risk in cross-border M&A based on internal and external resource: empirical evidence from China

This paper concerns the high failure rate during the integration phase of cross-border M&A from the resource-based view. This integration risk in cross-border M&A comes from both firm’s internal resource and external resource integration. On this basis, we clearly analyze the relationship between resource similarity and firm’s internal resources integration risk, as well as resource complementarity and firm’s external resource integration risk. Then, we put forward the main conclusion: stronger external resource complementarity and stronger internal resource similarity between the acquirer and target firms will make integration in cross-border M&A less risky. For this study’s empirical stage, we collect a large amount of questionnaire data from Chinese firms with cross-border M&A experiences. We use the logistic regression method to verify hypothesis. This paper provides both the acquirer and target firms with fresh ideas of how to avoid the integration risk of cross-border M&A. We hope to help firms from developing country to achieve more outstanding results through cross-border M&A in an intense global competitive environment.     

The role of human resource management in cross-border mergers and acquisitions

Cross-border mergers and acquisitions (M&As) have become the dominant mode of growth for firms seeking competitive advantage in an increasingly complex and global business economy. Although human resource management (HRM) can play a value-adding role in the merger process, existing research and evidence does not clearly demonstrate how it can do so. This paper addresses the neglected human side of M&As by providing a strategic fit framework to assess the link between M&A strategy and HRM strategy. Because cross-border M&As are of an order of magnitude more complex than domestic mergers, we examine contingencies in national contexts that influence outcomes in the merger process. We draw on recent empirical evidence to highlight HRM roles in terms of resources, processes and values that reflect the influence of both strategic fit and national context in the integration stage of cross-border M&A.     

Cross-border mergers and acquisitions of emerging economies' multinational enterprises — The mediating role of socialization integration mechanisms for successful integration

There has been recent surge of cross-border mergers and acquisitions (M&As) by emerging economies' multinational enterprises (EMNEs), however no conceptual model exists that can be utilized in global context to understand the success of these cross-border activities. In this article, a conceptual model is developed which suggests that distributed leadership increases the chance of the EMNEs' cross-border M&A success through the mediating role of socialization integration mechanisms. In addition, we identify the degree of autonomy given to the acquired firm as a potential moderator of the relationship between distributed leadership and the success of cross-border M&As of EMNEs. Irrespective of the country of origin, this model has the potential to be utilized in creating strategies for developed and emerging economies' MNEs' cross-border M&As' success.     

The impact of psychological ownership on employee retention in mergers and acquisitions

Research has demonstrated that turnover rates among employees and executives in the acquired firm are much higher during an M&A event. Recent empirical and review articles on M&A have also shown that employee retention/turnover can best be understood by looking at psychological attributes and perceptions of M&As, thus drawing significant attention to the psychological and ‘human’ side voids to theoretically exploit and enhance understanding of people-related problems in M&A endeavors. In this article, we develop a moderated mediation model and propose that acquired firm employees' psychological ownership is positively related to acquired firm employees' retention through the direct and mediating effects of employees' commitment and involvement in M&A. We also propose that the effect of acquired firm employees' psychological ownership on employees' commitment and involvement and, ultimately, acquired firm employees' retention is moderated by loss of acquired firm autonomy. We also discuss implications for theory and practice, as well as future research directions of such an employees' psychological ownership perspective on retention effects.     

Democratization in the host country and institutional risk of cross-border M&A: an empirical study on Chinese listed enterprises

We take the sample of Chinese listed enterprises’ cross-border M&A from 1999 to 2010 to construct a Poisson distribution model, and theoretically explore and empirically research how democratization in the host country influences the going-out process of Chinese enterprises. The overall results show that democratization impedes the inflows of Chinese enterprises’ cross-border M&A, because the higher the degree of democratization in the host country, the stronger the intensity of industry protection and the greater the power of trade unions—and this creates institutional risk for Chinese enterprises. We also find institutional risk aroused by democratization deeply influences the cross-border M&A of Chinese state-owned enterprises and the M&A flowing into the natural resources industry. This study contributes to further understanding democratization degree and institutional risk, and at the same time, it is also significantly meaningful for guiding the development and implementation of Chinese enterprises’ internationalization strategy.     

Mergers and Acquisitions in European banking higher productivity or better synergy among business lines?

This paper aims at assessing the extent to which M&As in European banking sector over the period 1996–2003 result in two simultaneous catching up and convergence processes of consolidating groups. First, do the M&As significantly contribute to the consolidating banks to catch-up with the productivity benchmark? Second, in terms of synergies or complementarities among business lines, is there a convergence process of output mixes among the individual banks of the M&A operations? Our sample is made up of 42 M&A transactions and 587 non-merging banks in Europe. The main conclusion is that M&A operations in the European banking industry appear to be essentially motivated by an objective of improving complementarities among lines of work from each component of M&As rather than increasing productivity at the merged banks.     

The (mis)measurement of M&A performance—A systematic narrative literature review

This paper seeks to further the understanding of the variety of meanings M&A scholars attach to the label “M&A performance” by providing an alternative way to interpret the claimed inconsistency of M&A research findings. While many scholars contend that the problem stems from the multiplicity of M&A performance measures, we believe the problem rests in trying to compare different measures as if they were measuring the same feature of the organization. Through our narrative review of empirical research we analyze factors shaping the M&A – as well as the organizational – performance measurement process. The conclusion is that it is not possible to talk about M&A performance as if it was a universal construct.     

Is agglomeration really good for growth? Global efficiency,interregional equity and uneven growth

According to NEG literature, spatial concentration of industrial activities increases growth at the regional and aggregate level without generating regional growth differentials. This view is not supported by the data. We extend the canonical model with an additional sector producing non-tradable goods which benefits from localized knowledge spillovers coming from the R&D performing industrial sector. This view, motivated by the evidence, generates both an anti-growth and a pro-growth effect of agglomeration for both the deindustrializing and the industrializing regions and leads to two novel results: (1) when agglomeration takes place, growth is lower in the periphery; (2) agglomeration may have a negative effect on the growth rate of real income, both at the regional and at the aggregate level. Our conclusions have relevant policy implications: contrary to the standard view, current EU and US regional policies favouring industrial dispersion might be welfare-improving both at the regional and the aggregate level and may reduce regional income disparities.     

Empirical research on M&A performance of private enterprises in China

With the development of the security market and the growing power of the private enterprises, the M&A(Mergers and Acquisition) of private enterprises is becoming increasingly popular. This article selects the M&A cases in Shanghai and Shenzhen Exchanges from 2000 to 2001 and examines the performance of private enterprises pre- and post-M&A based on the financial index method and the event study method. The research reveals that the M&A performance is mixed in China. Meanwhile, the empirical research indicates that the stock market overreacts to the M&A events.     

International mergers and acquisitions: A jump diffusion model application

This paper empirically investigates international mergers and acquisitions (M&As) of foreign targets and bidders by analyzing the stock price behavior of the firms involved. The jump diffusion model is employed to study the effects of the M&A announcements on stock prices. The results indicate that acquisition announcements are perceived as a surprise by the market, but prices seem to adjust rather rapidly, supporting the semi-strong form of the market efficiency hypothesis. In addition, a comparison of the pure diffusion and jump diffusion models indicates that the jump diffusion model is statistically superior to the traditional event study methodology (pure diffusion model). (JEL G34)     

The role of HRM and social capital configuration for knowledge sharing in post-M&A integration: a framework for future empirical investigation

The literature on human resource management (HRM) indicates that HRM plays an important role in merger and acquisition (M&A) integration success, but pays little attention to the mechanisms for knowledge sharing in post-M&A integration. Limited work has been carried out to provide understanding on how social capital and HRM practices influence intra-organizational knowledge sharing in M&A integration. This paper primarily focuses on the phenomenon of social capital and HRM practices – one of the primary means by which knowledge sharing can occur within firms. The main aim of this paper is to provide an alternative framework that introduces the literature on HRM and social capital to discuss how HRM practices and the various dimensions of social capital may enhance knowledge sharing in post-M&A integration. Drawing on the literature on social capital and HRM, we offer an alternative view on the issue of knowledge sharing in M&A integration by explaining how specific HRM practices that have an impact on employees’ knowledge, skills and abilities for participating in knowledge sharing activities may depend on relational, cognitive and structural social capital. We isolate a number of HRM practices and social capital variables that may enhance knowledge sharing in post-M&A integration, and develop a research model and propositions for future empirical investigation.     

Global post-merger agility,transactive memory systems and human resource management practices

In this article, a conceptual model is developed in the context of global mergers and acquisitions (M&As). The model integrates ability, motivation and opportunity (AMO)-enhancing human resource management (HRM) practices framework and transactive memory system (TMS). To date, AMO-enhancing HRM practices and TMS have not been brought together in a global context; in particular, their influence on post-merger agility (PMA) is neither well-known nor theorized in the extant literature on M&As. In this article, we theorize TMS as key mediator between AMO-enhancing HRM practices and PMA in the context of global M&As. In doing so, we bring AMO-enhancing HRM practices and TMS together and explicate their impact on PMA in the global M&As context.     

Theorizing in the qualitative study of mergers & acquisitions

This paper focuses on theorizing in the study of mergers and acquisitions (M&As), a globally significant inter-organizational phenomenon. We analyze 76 qualitative papers on M&As published in leading management journals between 1966–2016. We identify five modes of theorizing in the study of M&As. We find that M&A scholars make theoretical contributions using different theoretical positioning and research design strategies. The majority of the papers offer a contribution to middle-range theorizing (i.e., the literature on M&As), while a third of the papers also contribute to higher-order, or grand theories in management. In closing, this leads us to call for a rejuvenation of middle-range theorizing in management research.     

Cultural influences and the mediating role of socio-cultural integration processes on the performance of cross-border mergers and acquisitions

This paper reports findings from a longitudinal case study (2005–2011) of a merger between an Austrian and a German energy provider. I develop a model of socio-cultural integration processes based on an analysis of critical incidents expressed in 71 problem-centred interviews and observations with acquired and acquiring employees at four different points of time: immediately before the takeover and during the first negotiation talks, and one, three and six years after the takeover. The findings suggest that the relationship between national and organizational cultural differences and M&A outcomes is mediated by socio-cultural integration processes defined in terms of the formation of interpersonal relationships, trust and shared identity. Based on these findings I formulate specific propositions and build an evidence-based model of M&A socio-cultural integration processes that guides future research and practice.     

Human resource practices and performance of mergers and acquisitions in Israel

An extensive body of literature has investigated financial and strategic variables as predictors of mergers and acquisitions (M&A) performance without finding clear relationships. This paper proposes a knowledge-based view of acquisitions and suggests that to enhance M&A performance acquirers must use human resources (HR) practices that develop integration capabilities during post-merger integration. The paper explains the specific effects of HR practices in M&A in Israel, a country that serves as a microcosm for developed Western countries.     

Talent management and the HR function in cross-cultural mergers and acquisitions: The role and impact of bi-cultural identity

This paper examines bi-cultural talent in relation to human resource management (HRM) practices in cross-cultural merger and acquisitions (M&A). The intersection of HRM, bi-cultural talent management and cross-cultural M&A literature proposes a conceptual framework to capture the complexity of bi-cultural talent management and reveals the dominant macro-characterization of the extant HRM literature focussing on a more micro-orientated perspective. The paper develops a matrix by underlining spatial dimensions (spanning micro-aspects of the individual employee through to the macro-entity of firm and its location in the macro-national cultural context) and temporal dimensions (consisting of pre-merger, during merger and post-merger phases). This provides a template which examines the multi-level dynamics of bi-cultural talent management. The argument identifies ways in which extant cross-cultural lenses require deeper understanding of bi-cultural talent management in M&A settings. Future research directions and agendas are identified.     

The impact of innovation on companies’ cross-border mergers and acquisitions: evidence from China

Quality & Quantity - This paper contributes to the literature on the effects of companies’ current innovation capability on cross-border M&A initiation decisions by providing...     

Riding the tides of mergers and acquisitions by building a resilient workforce: A framework for studying the role of human resource management

Mergers and acquisitions (M&As) have been a popular strategy for firms to increase their competitive advantage. Existing research has revealed a wide range of implications for the workforce and human resource management (HRM) stemming from M&As. However, insufficient attention has been paid to issues related to employee resilience. We argue that employee resilience, a concept that is still to gain widespread attention in HRM research, is crucial to organizations wishing to manage their M&As successfully, especially in the post-M&A integration. We develop a set of complementary propositions, present a research framework, and indicate directions for future studies.