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.     

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.     

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.     

Consolidation in the European banking industry: how effective is it?

The European banking industry is becoming increasingly consolidated as banks engage in domestic and cross-border merger and acquisition (M&A) activities. Due to cultural differences in cross-border consolidations, the benefits of domestic and cross-border consolidations are likely to differ. This paper examines the effectiveness of merger processes, with a detailed analysis of both domestic and cross-border consolidations in Europe from 1998 to 2004. Effectiveness is measured via several criteria: improvement in costs, return on assets (ROA), and return on equity (ROE). To analyze potential cost efficiency improvement, we use a stochastic cost frontier approach. The same methodology is used for ROA and ROE to estimate efficiency in profitability. Finally, considering cross-border mergers as a form of entry, we carry out an analysis of the entry effect in response to the performance and profitability of the incumbent market participants. Results show that mergers in the European banking industry have been effective. Although domestic M&As are more common than cross-border M&As, banks involved in cross-border M&As are more efficient. Moreover, cross-border merged banks seem to outperform incumbent banks.     

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

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.     

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...     

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.     

制度约束、国家文化差异与企业跨国并购绩效——文化差异的竞争性中介作用

本研究结合组织行为和战略管理的相关理论,从制度约束和文化差异两个方面因素入手,研究了影响中国企业跨国并购绩效的原因.先构建了这三个变量的多元回归模型,然后分别用Baron和Zhao提出的方法来检验中介变量.研究发现:(1)中国企业在制度环境复杂的国家的并购绩效比较好;(2)并购双方所在的国家文化距离越大,并购之后的协同效应越大;(3)文化差异在以营商环境指数表示的制度环境与以Tobin'q表示的并购绩效之间起到竞争性中介效应.     

Government intervention in European mergers and acquisitions

The increasing globalization of economies has leveraged protectionist attitudes in different countries during the last decades. In the context of cross-border mergers and acquisitions (M&A), national governments have intervened to “protect” big domestic firms and their industries from foreign bidders. Despite the potential for severe implications of these actions on the internationalization of firms and development of markets, the research in this area is relatively scarce, and we still know very little about the real causes and consequences of government intervention. In this paper, we study government opposition to cross-border European M&A during the period 1997–2017, an era of important changes in Europe. Using an event study methodology, we examine abnormal returns for targets and their rivals in the time period prior to actual intervention to gauge if investors perceive intervened deals as harmful events for the industry, which could justify government intervention. We use a hand collected sample of 1,574 EU15 rival firms for 48 mergers, of which 18 experience government intervention. Entropy balanced regression models show that rivals of intervened targets earn significantly lower returns relative to rivals of non-intervened targets on deal announcement. Nevertheless, rivals’ abnormal returns are not negative, suggesting that intervened deals are not perceived ex ante as harmful for industry competitiveness. The results are more consistent with investors’ ability to identify likely blocked deals, which puts downward pressure on abnormal returns to both the target companies and their rivals. These findings indicate that government interventions against foreign bidders seem to have an economic cost in the sector that is anticipated by the investors.     

海归董事降低了跨国并购溢价吗？——基于沪深A股上市公司的经验证据

基于高阶梯队理论,以2009—2017年沪深A股上市公司跨国并购交易为样本,实证分析海归董事对跨国并购溢价的影响。研究结果表明：具有海外学习、工作经历的海归董事具有特有的信息优势和关系资源,在跨国并购定价过程中可以有效发挥咨询功能,显著降低了并购溢价;海归董事对跨国并购溢价的抑制效应在更大的国内市场竞争、国有企业、并购目标涉及资源与通信类等敏感性行业中更加显著。进一步分析发现,与海外学习背景相比,海归董事的海外工作背景能够对跨国并购溢价发挥更大的边际作用,并且只有外部海归董事才会对跨国并购溢价产生抑制作用。     

A Blessing and a Curse: Institutional Embeddedness of Longstanding MNE Subsidiaries in Emerging Markets

This article examines the institutional strategies of multinational enterprises (MNEs) operating in an emerging market, drawing attention to how longstanding foreign subsidiaries proactively negotiate their involvement with socio-political actors. We build on institutional logics to explain how MNE subsidiaries develop sustained political, cultural, and cognitive embeddedness. Using an inductive, interpretive study of four century-old Dutch MNE subsidiaries with a colonial legacy in Indonesia, we examine these three dimensions of the institutional environment, finding that local employees embedded in both the MNE and the host country sets of logics ‒ rather than expatriate managers ‒ most effectively facilitated sustained institutional embeddedness. Our findings also suggest that embedding practices in host institutional contexts and developing structures that align with host institutional expectations provided a platform for the unfolding of institutional strategies by local employees. However, MNE subsidiaries face contrasting logics between home and host country institutions, placing significant strains on MNEs’ ability to enact change.     

Managerial mindset as the mechanism of the country-of-origin effect: evidence from Chinese multinational enterprises’ approach to employer associations

The country-of-origin effect (COE) on employment practices in multinational enterprises (MNEs) has become an important area of international human resource management research. However, research on the mechanisms of the COE, a fundamental and critical aspect of the country-of-origin phenomenon, is scant. This study seeks to empirically explore the mechanisms through which country-of-origin influences Chinese MNEs’ approach to host-country employer associations. Analysis of qualitative data from 13 Chinese MNEs revealed that country of origin affected the approach of Chinese MNEs to host-country employer associations in the form of transfer of managerial norms. It also revealed that it was the mindset of those home-country nationals who were key decision-makers at subsidiaries that enabled the COE in Chinese MNEs. This paper highlights the importance for future studies of international strategic human resources management to pay attention to micro-foundations of cross-border practice transfer and to incorporate analyses of managerial cognition in the investigation of MNEs’ management practices.     

企业并购经营者控制权激励动因分析

本文认为,管理主义动机是推动西方企业并购的主要因素之一,在我国特殊的制度背景下,企业高层经营管理者基于维护控制权及其控制权收益(包括政治收益)的管理主义动机则是促进我国国有企业并购行为的深层次原因。分析表明,并购有利于提高经营者的控制权收益,并且在一定程度上能满足经营者体现其“企业家精神”、自我实现的控制权需要。经营者控制权激励(即对控制权收益最大化的要求)是推动我国国有企业并购的制度动因。     

The Roles of Chinese CEOs in Managing Individualistic Cultures in Cross-border Mergers and Acquisitions

The individualism-collectivism culture represents an important and well-researched distinction across cultures. Yet research is less clear about how the different levels of individualistic cultures in host countries affect the success of an increasingly important firm strategy – cross-border mergers and acquisitions (CBMAs). This study addresses this key research question in the context of Chinese firms’ CBMAs, as Chinese firms are increasingly acquiring targets outside of China in the New Normal global business landscape. This study further theorizes and tests how the Chinese acquirer CEOs’ characteristics moderate the wealth creation relationship. In an analysis of 404 Chinese firms’ CBMAs, we found that an individualistic culture in the host country is negatively associated with Chinese acquirers’ CBMA wealth creation. We also demonstrate that Chinese CEOs’ exposure to foreign culture and female gender weaken that negative relationship, while CEO duality strengthens this negative relationship. Our research thus suggests that culture in host countries can negatively affect acquirers’ CBMA performance, but CEOs may be able to manage the effects of the culture to increase their CBMA performance.     

Viceroys or Emperors? An Institution‐Based Perspective on Merger and Acquisition Prevalence and Shareholder Value

We study how cross‐country variance in institutions that aim to address core agency problems influences consequential strategic decisions of firms around the world. Scholars frequently argue that the interests of minority shareholders are threatened by merger and acquisitions (M&As) due to principal‐agency problems. Rather than acting in shareholders’ best interests, managers potentially act as viceroys, using M&As to cushion themselves from risk and extract more pay. Yet equally salient is the issue of principal‐principal agency, where controlling shareholders can behave as emperors who use M&As to siphon off assets and profits, and appropriate wealth of shareholders with fewer control rights. Taking an institution‐based perspective on these ‘viceroy’ and ‘emperor’ problems, we conjecture that institutions aimed to address these agency problems can generate the desired outcome regarding M&A prevalence, but may also produce unintentional negative consequences for shareholder value as a side‐effect. Empirical evidence covering M&As from 73 countries supports our hypotheses.     

制度视角下中国OFDI区位选择的路径研究——基于模糊集的定性比较分析(FsQCA)

以2015年为基期,将54个国家的中国对外直接投资(OFDI)存量作为样本,利用模糊集定性比较分析法(FsQCA),从东道国制度环境、东道国与中国之间的制度距离以及双边投资协定(BIT)三个方面考察了制度视角下中国OFDI区位选择的路径。选择了5个指标作为前因变量——母国与东道国文化距离、经济制度距离、政治制度距离、双边投资协定以及东道国制度环境,分析前因变量之间的何种组态可以最终导致结果变量——中国对东道国高OFDI投资规模的产生。研究结果表明:中国与东道国之间的文化距离小是中国对其进行OFDI投资的必要条件;东道国与中国之间签订的双边投资协定与两国之间较小的正式制度距离,包括政治制度距离和经济制度距离存在替代性;良好的东道国制度环境会对中国对其OFDI规模产生正向的影响。     

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.     

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.     

中国企业跨国并购投资中的风险分析

国际形势风云变幻,世界金融危机席卷全球,欧美国家的企业纷纷出现经营困境,世界经营格局发生了巨大变化。这些都为中国企业的跨国并购提供了难得的良机。然而,跨国并购并不是一帆风顺的,甚至可能是一个巨大的陷阱,对并购行为中风险的模糊认识会危及并购企业本身。跨国并购风险分析已经成为了企业实施并购行为时的必要工作。     

基于消费者偏好的中国对东盟投资产业类型选择研究

综合考虑东盟消费者对中国企业和东盟企业的偏好差异以及技术水平和生产要素依赖度的不稳定性,基于不同产业类型的层面,对中国企业以及东盟企业的市场份额和消费者偏好进行实证分析。当两个不同地区的企业都从事第三产业时,消费者偏好于中国企业生产的产品,且随着技术水平的提高,这种偏好也会增加,中国企业的市场份额高于东盟企业;当两个不同地区的企业都从事第二产业时,消费者偏好于东盟企业生产的产品,且随着生产要素依赖度的提高,这种偏好也会增加,但东盟企业的市场份额低于中国企业。中国企业应根据东盟国家经济环境、资源禀赋和产业基础等的不同,选择合适的投资产业类型。