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.     

HRM practices affecting extrinsic and intrinsic motivation of knowledge receivers and their effect on intra-MNC knowledge transfer

This paper explores why and how human resource management (HRM) matters for knowledge transfer within multinational corporations. It is built on the premise that there are certain HRM practices influencing extrinsic and intrinsic motivation of knowledge receivers. It is found that complementarity among HRM practices exists but does not always have a positive effect on knowledge transfer. Three hypotheses derived from these arguments are tested on data from 92 subsidiaries of Danish multinational corporations located in 11 countries.     

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.     

Institutional determinants of ownership stake in cross-border acquisitions in Africa: The moderating role of geographic distance

We look at how emerging markets' institutional features affect ownership stake in cross-border acquisitions (CBAs) within Africa. Particularly, we show that the presence of shared colonial history between the home and host country and the extent of fractionalization distance and formal institutional distance influence the acquiring firm's decision regarding its ownership stake in the target. Moreover, we show that geographic distance between the home and host country, by augmenting uncertainty faced by acquiring firms, moderates the relationship between these institutional features and ownership stake. We test our hypotheses in a sample of 341 intra-Africa CBAs from 2001 to 2016. Generally, we find that greater ex ante uncertainty and ex post costs increase ownership stake. Specifically, greater geographic distance strengthens the positive relationship between shared colonial history and ownership stake and reverses the negative relationship between formal institutional distance and ownership stake. As for fractionalization distance, the relationship is more nuanced and needs to be further studied. We contribute to advance research on south–south CBAs in general, particularly within Africa, as well as to extend hostage theory in foreign market entry strategies in and from emerging markets.     

Managing relational conflict in Korean social enterprises: The role of participatory HRM practices,diversity climate,and perceived social impact

Social enterprises are hybrid organizations that primarily pursue social missions while also seeking economic gains. Drawing on workplace diversity and conflict theories, this article addresses recent calls for further research to explore how employees within social enterprises experience internal conflicts arising from the organizational pursuit of dual, competing missions (i.e., social and economic), and how social enterprises manage, and potentially overcome, these challenges. In the context of Korean social enterprise, we conducted a quantitative study that built on an initial explorative qualitative study. Our research examined whether perceived participatory human resource management practices and diversity climate increase employees’ affective commitment by reducing their relational conflict. We further explored a boundary condition, perceived social impact, which strengthened this mediation relationship. Our results offer significant insights into social enterprise, business ethics, and broader management literature. Implications for future research and practice are also discussed.     

Uncovering neglected success factors in post-acquisition reverse capability transfer: Evidence from Chinese multinational corporations in Europe

Based on empirical evidence of four Chinese firms’ outward mergers and acquisitions (M&As) to European countries, this paper examines previously neglected key success factors in post-acquisition reverse capability transfer. We identified three such factors: home-country advantage, motivation-oriented complementary resources, and acquirers’ attractiveness, and argue that post-acquisition capability transfer is affected by not only the process factors that occur during the post-acquisition phase but also by pre-acquisition status factors. In this way, the paper enriches the process perspective of M&A, thereby contributing to the international M&A literature and to studies of multinational corporations (MNCs) from emerging economies.     

The stock market performance of exploration-oriented and exploitation-oriented cross-border mergers and acquisitions: Evidence from emerging market enterprises

This study builds on insights from mergers and acquisitions (M&A) studies and the perspective that stock market performance is affected by the M&A strategies of firms. Past studies show that acquisitions are an effective way to exploit existing knowledge and explore new possibilities. We argue that stock market performance can be a response to exploration/exploitation strategies in the context of cross-border M&As by emerging market multinationals. Based on cross-border M&A data of Chinese multinationals, we find that exploration-oriented acquisitions have worse stock market performance than exploitation-oriented acquisitions. Furthermore, we find support for our premise that acquiring firms can reduce the risk of exploration-oriented acquisitions by having more high-discretion slack resources or by maintaining a high level of equity share of the target firm. In addition, acquiring firms perform better if they conduct exploration-oriented acquisitions in related industries. Our results contribute to a better understanding of exploration and exploitation in the context of M&As.     

Repatriate knowledge transfer: Antecedents and boundary conditions of a dyadic process

In this study, we build on the ability-motivation-opportunity framework to test whether both repatriates’ disseminative capacity and domestic employees’ absorptive capacity as well as their opportunities for interaction affect repatriate knowledge transfer. Further, we examine the moderating effects of two distinctive factors associated with repatriate knowledge transfer: repatriate knowledge characteristics and characteristics of international assignments. Using multi-source time-lagged data from 101 dyads, we find support for most of our hypotheses. Our study contributes to theory and practice by providing an integrated analysis of antecedents and boundary conditions of repatriate knowledge transfer and by highlighting its dyadic nature.     

In CEOs we trust: When religion matters in cross-border acquisitions. The case of a multifaith country

This paper examines the emergence of trust by multifaith target-firm personnel in foreign acquirer CEOs during early post-acquisition integration, a decisive period for acquisition success, yet considerably under-researched. Combining self-categorization and similarity-attraction theories, we argue that religious similarity with the foreign acquirer’s CEO represents shared values to the personnel, from which trust in the CEO arises. Further, we scrutinize the moderating effects of the personnel’s religiosity and prior alliance success between the acquirer and target firm. We test our model using field-experimental data from 411 multifaith Malaysian personnel. The findings show that personnel-leader trust occurs more readily with religious similarity than religious dissimilarity, and that the personnel’s religiosity strengthens this relationship. However, a successful prior alliance does not weaken the religious similarity–trust relationship. Our research encourages acquisition managers to consider religion, a factor beyond the traditional acquisition playbook, as a trust antecedent during early post-acquisition integration.     

Cultural differences and synergy realization in cross-border acquisitions: The moderating effect of acquisition process

Research on cross-border acquisitions (CBAs) consistently recognizes the importance of cultural differences, yet it lacks consensus on whether it has a positive or negative impact. While tied to the purpose and consequences of an acquisition, synergy realization has not received much attention in research on culture-performance relationship. Focusing on synergy realization in CBAs and applying a process and conditional perspective, we propose the relationship between national/ organizational culture differences and synergy realization to be moderated by the quality and extent of due diligence and post-acquisition coordination. Drawing from cross-cultural interaction and inter-organizational learning arguments, we further propose idiosyncratic effects of cultural differences in different synergy realization contexts, where we contrast explicit with implicit synergy realization. Our analysis is based on a unique survey on a sample of 103 cross-border acquisitions. The results indicate that both national and organizational culture differences exert a negative impact on the realization of implicit synergies while no impact on the realization of explicit synergies. National culture differences are found to have a stronger negative effect than organizational culture differences on synergy realization. Sufficient culture and human due diligence prior to the acquisition is found to significantly moderate the impact of high cultural differences.     

Board experience and value creation in cross-border acquisitions: The role of acquirer and target country institutions

Our study investigates the effects of board acquisition experience on value creation in cross-border acquisitions and the dependence of this relationship on acquirer and target country institutions. We draw on cross-border acquisition research and institution-based corporate governance research to argue that the effect of board acquisition experience depends on the institutional characteristics of the acquirer and target countries and on cultural differences between these two countries. Based on 1775 cross-border acquisitions of U.S. and European acquirers, we show a positive effect of board acquisition experience on the announcement returns of cross-border acquisitions, which is even stronger when the target country’s takeover regulations are less friendly and when the target and acquirer countries are culturally more distant.     

Facilitating factors in the cross-cultural transfer of management practices: The case of a German multinational in Brazil

The transfer of management practices in multinational companies has been discussed as a central topic in international business. Research has mainly focused on the challenges associated with transfer processes, but little is known about facilitating factors in cross-cultural transfer, even less in emerging markets. Based on a single case study of a German multinational in Brazil, we examine the transfer of quality management practices and map this process into three ideal-typical stages. We identify nine facilitating factors that play different roles during the three stages and highlight their support for the subsidiary’s successful development. Our findings contribute to constructive approaches of cross-border transfer and show that the emergence of a hybrid organizational culture through mutual learning favors the transfer of management practices in multinationals.     

Rhetorics and realities of management practices in Pakistan: Colonial,post-colonial and post-9/11 influences

This study explores how colonial laws and administrative practices shaped the evolution of employment management in Pakistan. It identifies important mechanisms used by the British Raj (the period of British rule of the subcontinent) to institutionalise legal and administrative frameworks: the legacies of these structures continue to influence contemporary management practices in government sector organisations. This article investigates the legacy of the Raj's ‘quota system’ in the civil services and the doctrine of the ‘martial race’ in military services, both of which offered enduring structural advantages in the labour market to designated groups. It further considers the implications of the study's findings for international HRM in particular, but also management theory, comparative HRM and comparative management in post-colonial societies.     

Determinants of knowledge transfer strategy in franchising: integrating knowledge-based and relational governance perspectives

This study presents an integrative model on the franchisor's choice of knowledge transfer strategy by deriving hypotheses from the knowledge-based theory and the relational governance view. First, based on the knowledge-based view, tacitness of system-specific knowledge influences the choice of the knowledge transfer strategy of the franchisor. The higher the degree of tacitness of knowledge, the more knowledge-transfer mechanisms with a high degree of information richness (HIR) are used, such as training, seminars, visits and formal meetings, and the more likely the franchisor chooses a personalization strategy (P-S). Conversely, the lower the degree of tacitness of system-specific knowledge, the more knowledge transfer mechanisms with a low degree of information richness (LIR) are used, such as reports, emails, intranet, databases, and the more likely the franchisor chooses a codification strategy. Second, based on the relational view of governance, trust influences the choice of knowledge transfer strategy of the franchisor. If trust reduces relational risk, more trust reduces the franchisor's use of HIR-knowledge transfer mechanisms and increases the franchisor's use of LIR-knowledge transfer mechanisms. If trust increases knowledge-sharing between the network partners, it increases the franchisor's use of both HIR- and LIR-knowledge-transfer mechanisms. The hypotheses are tested by using data on the use of the P-S in the Austrian franchise sector. The data provide some support for the hypotheses. A new model on the franchisor's choice of knowledge transfer strategy, using knowledge-based theory and relational view of governance is developed, and specifically, the knowledge-based view of Windsperger and Gorovaia [(2011). Knowledge attributes and the choice of knowledge-transfer mechanisms in networks: The case of franchising. Journal of Management and Governance, 15(4), 617–640] is extended by considering trust as additional explanatory variable of the knowledge-transfer strategy.     

The micro-foundations of strategic ambidexterity: Chinese cross-border M&As,Mid-View thinking and integration management

Chinese cross-border mergers and acquisitions (M&As) display several unique properties in relation to the ways in which their international business operations are organised and managed. Their seemingly puzzling ‘light-touch’ integration approach can be significantly understood from a strategic ambidexterity perspective: on the one hand, the ‘light-touch’ enables the exploitation of the targets’ existing knowledge bases; on the other hand, elements of the ‘light-touch’ facilitate the exploration of the new knowledge arising from the collaboration between targets and acquirers. However, an important theoretical gap remains: why do Chinese companies deploy such a strategic ambidexterity approach in their post-acquisition integrations? This paper aims to fill this gap by proposing Mid-View thinking as a micro-foundation of strategic ambidexterity in integration management from a cultural and philosophical perspective. To illuminate our conceptualization and argument, we conducted qualitative in-depth interviews with CEOs/high-level managers of acquired German companies. Communication approach and organizational control—as two critical aspects in integration management—reveal how Mid-View thinking can serve as a micro-foundation of strategic ambidexterity. We conclude this paper by presenting its theoretical contributions, managerial implications, and future research directions.     

Multinational mining companies,employment and knowledge transfer: Chile and Norway from ca. 1870 to 1940

Abstract

This article compares employment at multinational mining companies in Chile and Norway from ca. 1870 to 1940. I find that multinationals in Chile recruited foreigners to managing and middle-management positions, while Norwegian workers were heavily involved in management of multinationals in Norway. The exclusion of Chileans encouraged enclave tendencies and prevented knowledge transfer, while strong networks were created between multinationals and the local industry in Norway through job switching. Evidence suggests that local workers were employed if they were qualified and that discrepancies in institutions stimulating capacity building in the two countries largely explain the different employment patterns.     

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.     

Mobility of public researchers, scientific knowledge transfer, and the firm's innovation process

The present study provides evidence on the mobility effects of researchers from the public R&D system with regard to firm's innovation process. This issue is particularly novel and important as these researchers contribute to the production and transfer of knowledge previously developed and accumulated in the public R&D system. The findings confirm that scientific knowledge which public researchers provide has a positive influence on both inputs and outputs of the firms' innovation process. The fact that firms have access to additional knowledge which is complementary to that they already hold represents a spur for exploiting and applying this new knowledge. The firms in this study continually increased their in-house R&D investments. As a result of these investments firms create new knowledge of a unique and valuable type. The study draws two important conclusions geared to providing a greater efficiency in human resource management and to improve the design of technology policies.     

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.     

The challenge of Chinese state‐affiliated multinationals in benefiting from foreign subsidiary knowledge transfer: A criticism of light‐touch integration

Acknowledging the sharp growth of Chinese state‐affiliated multinationals and their strategic asset‐seeking investments abroad, this study investigates the effects of headquarters' home‐country political ties on the multinational‐wide benefits gained from subsidiary knowledge transfer in Chinese multinationals. It also looks at how these effects are mediated by organizational distance and social integration between headquarters and subsidiary. Based on a survey of 177 subsidiaries of 99 Chinese multinationals, we find that headquarters' political ties trigger organizational distance and hinder social integration between headquarters and foreign subsidiaries and these, in turn, hamper the potential benefits that Chinese multinationals derive from subsidiary knowledge transfer. This study identifies new challenges related to political ties and light‐touch integration in gaining benefits from subsidiary knowledge transfer.