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Cross-border post-merger integration and technology innovation: A resource-based view
Abstract
We construct a Markov game of cross-border post-merger integration on technology innovation. The acquirer chooses the integration degree considering resource backgrounds and then makes innovation collaborations. Equilibrium analysis and numerical examples suggest that when resource similarity is high and resource complementarity is low, the acquirer should choose a high integration degree to improve the number of innovation collaborations and increase technology innovation. When resource similarity is low and complementarity is high, the acquirer should choose a low integration degree. When resource similarity and complementarity are both high, the acquirer should choose a medium integration degree. We run quantile regressions using samples of cross-border mergers and acquisitions proposed by acquirers from China, Japan and the United States in the period of 2000-2013. The dynamic game and quantile regressions altogether provide new insight and empirical evidence for understanding post-merger integration's effect on technology innovation under different resource backgrounds. The paper provides theoretical direction for choosing proper cross-border post-merger integration degree to improve innovation with resource-based view.
... Fisch et al. (2019) find that knowledge-relatedness raises post-acquisition patent output, but do not further specify resource characteristics. Chen et al, (2017Chen et al, ( , 2018 show the impact of resource characteristics and their interactions with the integration approach based on the relatedness of firms' overall resources, as gleaned from previous literature (e.g. Bauer & Matzler, 2014). ...
... Second, and more importantly, our results show that the impact of both similarity and complementarity in technological resources is contingent on the technological gaps between acquirers and targets at both firm-and region-level. Our findings add to insights from related previous studies that the impact of complementarity is contingent on other factors, such as integration degree (Chen et al., 2017(Chen et al., , 2018. The consideration of technological gaps was motivated by the unique characteristics of Chinese MNEs in terms of their latecomer status and their different regional institutional environments, compared with multinationals from developed countries. ...
... Qualitative research examining integration-related factors (e.g. Chen et al., 2017Chen et al., , 2018 and tapping into how regional factors happen in practice will further advance our understanding of Chinese MNE's acquisitions. ...
We investigate the impact of acquiring similar or complementary technologies on the innovation performance of Chinese multinationals’ strategic asset-seeking M&As in the EU, and whether such impact is contingent upon firm-level and region-level technological gaps. Results show that technological complementarity enhances Chinese multinationals’ innovation performance. Firm-level technological gaps have a positive moderating effect for both complementary and similar technologies. Region-level gaps enhance innovation when Chinese firms acquire similar technologies, but they undermine the positive impact of technological complementarity on innovation performance. We advance understanding of Chinese MNEs’ learning scope and strategic intents in their strategic asset-seeking M&As.
... In a similar vein, resources are linked to the outcomes of acquisitions. It has been argued that acquirers look for complementary resources (Harrison, Hitt, Hoskisson, & Ireland, 2001) and that acquisitions perform better when acquirer and target resources are more complementary (Colombo & Rabbiosi, 2014;Chen, Meng, & Li, 2018). However, difficulties with post-acquisition integration are an obstacle to utilizing target resources (Schweiger & Lippert, 2005;Puranam, Sing, & Zollo, 2006); firms that can manage post-acquisition integration successfully enjoy more positive outcomes (Kim & Finkelstein, 2009;Jemison & Sitkin, 1986). ...
... All of these circumstances highlight the critical importance of performing due diligence before an acquisition. Companies should not be hesitant to allocate resources to due diligence process, especially when it comes to assessing target resources because identifying appropriate resources is critical to the success of an acquisition (Chen et al., 2018). Also, more effort should be spent on alleviating problems with post-acquisition integration, which has the potential to lower the creation of synergies. ...
The resources of both acquirers and targets have been studied in terms of the drivers and success of acquisitions. Despite the large number of studies that have been conducted, we still do not know whose resources are more critical to the success of acquisitions. This study aims to examine the role of acquirer and target resources in the success of acquisitions. All acquisitions that took place in Turkey between 1990 and 2017 were analyzed to investigate the research question. The findings of a regression analysis of 425 acquisitions in this emerging market context reveal that acquirer resources are more critical than target resources in acquisition performance. The effects of resources on domestic and international acquisitions are also compared, and it is found that acquirer resources are more critical in domestic acquisitions, whereas target resources are more important in international acquisitions. The implications of these findings are discussed in terms of information asymmetry and post-acquisition integration issues, and directions for future research are suggested.
... . A study done by Li J. in the context of China to promote green innovation as a part of firm strategy and driven by technology or studies done byFuest C. et al., 2022;Yu H. et al., 2019;Hayashi D., 2018;Yakob R. et al., 2018 andChen F. et al., 2018 have forwarded there claims that technology transfer does occur in any acquisition and it aims at asset upgradation and capability building as a part of corporate strategy. "Cross-border" and "industrial performance" are the third-ranking significant terms to be covered in the word cloud. ...
Purpose
The purpose of this paper is to review how knowledge transfer, including knowledge integration, absorptive capacity and reverse knowledge transfer (RKT) in cross-border acquisitions, is examined in existing research work. The authors also propose directions to advance research in cross-border acquisitions.
Design/methodology/approach
A systematic literature review is conducted, and related propositions are advanced based on scientometric and bibliometric analysis of 146 papers published over 10 years about tacit knowledge transfer, innovation activities, industrial policy effect on merger decisions, top management experience and value creation in cross-border acquisition. First, the authors searched major themes with the help of Scopus, and later, the authors analysed all received literature with the help of VOS Viewer.
Findings
This review facilitates us to identify six clusters and main author keywords. These six clusters are the underlying six research streams, including RKT, cultural distances, value creation, absorptive capacity, innovation and reference to India and China.
Originality/value
Despite knowledge transfer constituting important antecedents and critical factors for the success of cross-border acquisitions, knowledge management in the acquired company through proper knowledge transfer and knowledge integration is not given enough attention. Current literature still fails to provide a holistic picture of how firms strategically manage knowledge post-acquisition. To the best of the authors’ knowledge, this study is the first to analyse the dynamics of knowledge transfer in cross-border acquisitions. The study is a novel attempt to relate current research themes to emerging areas of cross-border acquisitions.
... As well as Gantumur and Stephan's research on the determinants of innovation in mergers and acquisitions activities in the telecommunications equipment industry and the impact of mergers and acquisitions on technological potential and innovation performance, both propose that mergers and acquisitions have achieved significant growth in enterprise innovation performance [5]. Meanwhile, Chen et al. conducted research on integration and technological innovation after cross-border mergers and acquisitions from a resource perspective, and found that cross-border technology mergers and acquisitions have become an important means of achieving technological breakthroughs [6]. It is not difficult to find that compared to domestic mergers and acquisitions, cross-border mergers and acquisitions with a broader market perspective have a more significant impact on technological innovation. ...
As market competition becomes increasingly fierce, in order to maintain a leading position in the industry, companies must enhance their core competitiveness to gain priority discourse power in the market. Corporate mergers and acquisitions are the act of acquiring property rights of other legal entities through certain economic means on the basis of equality, voluntariness, and equal compensation. They are a major form of capital operation and management for enterprises. This article aims to study the impact of mergers and acquisitions on technological innovation in enterprises, by analyzing the financial statements of enterprises and exploring the impact of mergers and acquisitions on their main business. Research has found that mergers and acquisitions are a business tool that can effectively enhance a company's technological level without increasing profits, while using less time cost. This provides a reference for enterprises to enhance their market competitiveness, differentiate their products, and adjust their business strategies.
... We also recommend that practicing lawyers, whenever relevant, argue for post-merger gains in innovation, rather than focusing solely on efficiencies (Abernathy & Utterback, 1978;Burns & Stalker, 1961;Holland, 1975;Kuran, 1988;March, 1991;Sarkees & Hulland, 2009;Schumpeter, 1934). Post-merger innovation gains can be assessed using various metrics and variables, including patenting activity (De Man & Duysters, 2005), post-acquisition R&D investment (Zhao et al., 2019), and levels of resource similarity and resource complementarity (Chen et al., 2018;Colombo & Rabbiosi, 2014). The degree of innovation persistence, as reflected by various indicators such as patents and the introduction of new products or processes, can serve as an additional measure (Cefis & Marsili, 2015). ...
Innovation plays a crucial role in defining competitive dynamics. Given this fact, one might expect ‘innovation’ to play a consistent role in antitrust law. The present article conducts a systematic content analysis of the case law of the Court of Justice of the European Union to test this hypothesis. The findings suggest that EU courts treat innovation inconsistently in competition law cases, often assigning different weight to innovation in similar contexts and neglecting central parameters agreed upon in the literature. To address this inconsistency, the article proposes measures to maintain the predictability of competition law analysis while giving innovation a more central role in the definition of relevant markets, evaluation of market power, and assessment of practices.
... Both high levels of relatedness and unrelatedness will hurt the innovation output of acquirers. Since the highly overlapped knowledge base will impede the knowledge learning process while too little relatedness simply means that the motivation behind the deal is not innovation-driven (Chen et al., 2018). As for Chinese firms, Du and Boateng (2015) conducted a study analyzing how state ownership and institutions in both home and host countries impact the value of Chinese firms involved in CBM&As. ...
This study examines the impact of the incompatibility between Chinese firms’ learning ability and knowledge-seeking opportunities on their innovation performance following cross-border mergers and acquisitions. Using a sample of 239 firms from 2014 to 2018, a quasi-Poisson model is employed to analyze the direct and indirect relationships among study variables. The findings indicate that firms that aggressively pursue cross-border mergers and acquisitions experience a decline in innovation performance. In contrast, innovation performance is strengthened when the host countries’ legal frameworks are strict. The study suggests that firms seeking to enter the global market must strike a balance between their learning abilities and knowledge-seeking opportunities. The study also infers that managers should consider not only firm-level factors but also industry-level and country-level factors that could affect the relationship between cross-border mergers and acquisitions and innovation outcomes.
... From a resource-sharing standpoint, listed companies extract invaluable information about target markets-such as macroeconomic data, regulatory landscapes, and cultural contexts-from industrial policies, providing valuable insights for their cross-border M&A ventures 54,55 . From a technological vantage, industrial policies cater to the technological and knowledge requisites of listed companies, setting the foundation for the technology and knowledge indispensable for their cross-border M&As 56 . These findings articulate the positive role of industrial policies in shaping M&A decisions of listed firms from perspectives of directional guidance, resource-sharing, and technological support. ...
This study explored the potential links between Chinese industrial policy and cross-border mergers and acquisitions by Chinese firms from 2009 to 2019. Based on describing China's industrial strategy and evaluating the then-current situation of Chinese enterprises' cross-border mergers and acquisitions, this empirical study constructed a two-way fixed-effect panel model and an intermediate effect model to assess the mechanism of industrial policy's influence on Chinese enterprises' cross-border mergers and acquisitions decisions. The findings were as follows: (1) Industrial policy could promote the implementation of cross-border mergers and acquisitions of Chinese enterprises; (2) By easing financial restrictions, industrial policy could improve firms' access to capital and encourage cross-border mergers and acquisitions. (3) Industrial policies could promote the high political relevance of state-owned enterprises, thus promoting the success of transnational mergers and acquisitions of enterprises. Therefore, it was significant to promote the transformation of industrial policy from subsidy-oriented to performance-oriented and rationally evaluate the risks and benefits of M&A for enterprises to complete cross-border M&A.
... This was confirmed by (F. Chen et al., 2018) in their post-merger research that banks needed to provide a micro for technological integration and innovation. (Ansari et al., 2021) also stated that using soft information technology in loans could provide a comparative advantage. ...
Banking plays the role of a financial intermediary and is also considered to have a central position in the economy. The strategy pursued by Islamic banking is to merge with the aim of improving various aspects of it. This study aims to analyze the important aspects of Islamic banking, especially post-merger. This study uses qualitative research with the A Systematic Literature Review (SLR) approach. Data collection was carried out by surfing the internet from Google Scholars and Emerald. The research data population is journals with a focus on aspects of development in post-merger Islamic banking as many as 25 indexed journals from various publishers or journal publishers. According to the findings of this study by a systematic literature review show that several aspects that need to be improved after the merger are Profitability, Shariah Compliance, Technology, Human Resources, Management, Business and Marketing, and Efficiency. Humam resources aspect is a dominant aspect in building a positive image of sharia banking has escaped his attention after merger. This research implies to shariah banking for know the urgency of increasing post-merger and to be improve several aspects for development the Islamic bank in Indonesia.
... In the research on the relationship between M&A and innovation performance, there is no unified conclusion on whether M&A promotes innovation performance. Some scholars have argued from the perspectives of synergistic effects [16], resource complementarity [17][18][19][20], knowledge transfer [21,22], and learning [23][24][25], that M&A enhances innovation performance. Firms reconfigure advanced technology, equipment, technological assets, and technical personnel through M&A, thereby reducing innovation costs and achieving economies of scale and scope in innovation. ...
Based on the sample of serial M&A of Chinese listed companies from 2010–2019, this paper intends to investigate the impact of serial M&A on innovation performance and the impact of financing constraints and digital inclusive finance (DIF). The empirical results show that an inverted U-shaped relationship exists between serial M&A and innovation performance that first goes up and then goes down. The results of mechanism analysis show that financing constraints play a mediating role in the inverted U-shaped relationship between serial M&A and innovation performance, while DIF plays a moderating role in the mediating effect of serial M&A on innovation performance through the financing constraint. The heterogeneity analysis finds that the inverted U-shaped relationship between serial M&A and innovation performance is more significant in firms with non-state ownership property, a higher business environment index, and medium and large-scale firm size. The research results not only help to promote the in-depth analysis of the impact of serial M&A on innovation performance, but also help to provide targeted theoretical reference and practical guidance for corporate management decision making.
... Complementary resources allow companies to create a complete business portfolio (Kim and Finkelstein, 2009) and provide unique values that may be difficult to imitate (Harrison et al., 1991;Barney, 1988;Helfat, 1997). Synergies acquired from complementary resources will increase sales and lower the cost of research and development per product, hence encouraging further research and development (Chen, Meng and Li, 2018). Complementary resources also provide opportunities to enhance new learning and capacity building (Hoskisson and Busenitz, 2001;Prayogi, 2019). ...
This study intends to examine what factors were determined the quality of financial statements. We examined the impact of internal audit quality, corporate governance, and CSR performances on financial reporting quality. Since financial reporting quality was difficult to observe directly, we used the accrual earnings management (EM) approach. Using 78 firm-year observations of 39 public companies listed in the LQ-45 index from 2019 to 2020, We employed Ordinary Least Squares (OLS) regression as our data analysis technique. The number of audit committees and board size became the measurement indicators of internal audit quality and corporate governance. Moreover, CSR ratings provided by CSR Hub measured CSR performances. Our findings indicated a positive relationship between internal audit quality and corporate governance on the quality of financial performance. It means that both internal quality and corporate governance become the determinant factors of financial reporting quality. On the other hand, CSR performances did not have any relationship with the financial reporting quality. This paper provides fruitful insight into the factors that driven financial reporting quality. Using different aspects of factors influencing the quality of financial statements, we initially offer valuable insight for business practitioners and potential investors to assess the quality of financial performance
... Complementary resources allow companies to create a complete business portfolio (Kim and Finkelstein, 2009) and provide unique values that may be difficult to imitate (Harrison et al., 1991;Barney, 1988;Helfat, 1997). Synergies acquired from complementary resources will increase sales and lower the cost of research and development per product, hence encouraging further research and development (Chen, Meng and Li, 2018). Complementary resources also provide opportunities to enhance new learning and capacity building (Hoskisson and Busenitz, 2001;Prayogi, 2019). ...
This study examines the effect of resource complementarity on a post-merger and acquisition company's performance, moderated by the bidder's merger and acquisition experience. Resource complementarity is an important aspect that needs to be considered when carrying out mergers and acquisitions (M&A). This study uses a purposive sampling method, which has specific criteria for selecting the sample, while the dataset is cross-sectional. Tests have been conducted on 97 non-financial companies that carried out M&A in Southeast Asia between 2007 to 2017, and their post-M&A performance has been examined. This research’s methodology utilizes a quantitative approach and explanatory variables. The results indicate that resource complementarity has a significant effect on the performance of post-M&A companies. In other words, resource complementarity has a positive and significant effect on changes in the performance of companies after their M&A. The moderation test shows exciting findings, namely, for companies with little experience, the effect of resource complementarity on post-M&A performance is more substantial. This study has practical recommendations for decision-makers. When conducting their M&A, organizations should select targets with complementary resources and not depend on prior experience, since it is not necessarily applicable to the present circumstances. Furthermore, as they integrate feedback systems to relate earlier experiences, the acquisition experience will have a more robust learning impact.
... If the firm status is public, government owned, joint venture and subsidiary the more complex and difficult the contract to be approved as the firm is relating to some other governance structure which increases the liability of the acquirer towards these additional governances. Resource similarity refers to the percentage of resources similar between target and acquirer firms calculated by formula used by Chen , Meng, and Li (2018) in their study. Less resource relatedness increases the chances of M&A contract ineffectiveness. ...
Advisory organizations on cross-border mergers and acquisition deals performed as advisory governance can fill the distance between the formal institutional environment of host and home economies. This study examined the formal institutional distance between emerging and developed economies and their role in M&A initial contract ineffectiveness by expanding the phenomena of the pre-completion stage of M&A-contracts. We examine our key questions using data of 832 cross-border M&A-contracts of developed economies’ firms with emerging economies’ firms in the international business high-technology industry from 1984-2011. We find that formal institution distance explains part of the variation in the ineffectiveness of M&A-contracts. Further the gain from the external capabilities provided by advisory organizations helps in reducing the effect of institutional distance on the M&A-contract ineffectiveness.
... Finally, from the perspective of technology acquisition rather than technology spillovers, TDC M&As have a stronger learning effect (Chen et al. 2018). Due to the urgency and difficulty of acquiring cutting-edge technology resources, firms participating in TDC M&As have a stronger learning incentive, which promotes their in-depth understanding of technology and thus helps improve their green innovation ability. ...
Emerging markets face severe ecological and environmental problems in periods of economic and political transition. The existing literature analyses the impact of technology on environmental benefits and the role of technology on the green innovation of enterprises, mostly from the perspective of technology spillover in enterprises in mature markets. Based on a sample of 229 Chinese cross-border mergers and acquisitions (M&As), this paper explores the role of technology-driven cross-border M&As (TDC M&As) in green innovation, finding that TDC M&As have a significant promoting effect on green innovation. A higher degree of ownership concentration positively promotes the relationship between TDC M&As and green innovation in the enterprise. This paper divides enterprises into state-owned enterprises (SOEs) and political connection enterprises, with the nature of SOEs negatively affecting the relationship between TDC M&As and green innovation, the nature of political connections significantly promoting the relationship. Similarly, formal institutional distance negatively interacts with TDC M&As to affect the green innovation of enterprises, while informal distance interacts positively with TDC M&As. This paper has important implications for emerging market enterprises in realising the transformation of the mode of economic growth and achieving harmonious development between enterprises and the environment.
... Although it is still a controversy among scientists whether M&A will improve or reduce company performance, many companies do cross-border mergers and there is a significant increase in post-M&A technology innovation. Bank Tabungan Pensiunan Nasional (Bank BTPN) uses M&A strategies for the purpose of innovating to be able to face the challenges encountered in the industrial era 4.0 { (Chen, Meng, & Li, 2018), (McKinsey&Company, 2020), (Stiebale, 2016)}. This study makes the following scientific contributions: First, to find out whether the company's performance has improved after the merger. ...
An organization will conduct a merger strategy with companies that have strong technology to overcome the challenges of industrial transformation 4.0. In 2018 Bank BTPN merged with SMBCI with the hope of strengthening banking technology so that it could serve customers of various segments with various services throughout Indonesia.This research is a case study conducted at Bank BTPN which contributes to prove whether with merger, Bank BTPN's financial performance has improved. The method used is ratio analysis by comparing the financial performance of Bank BTPN before merger and after merger and the data obtained from the 2019 Annual Report and published financial statement 2020. The results showed that the merger strategy made Bank BTPN able to use assets, funding, and technology owned by SCMBI in innovating the digital banking business of Jenius banking products, BTPN Wow! and other banking products so that the post merger of Bank BTPN's financial performance has increased rapidly both in terms of assets to be the ninth largest in Indonesia, as well as 41% increase in net profit to Rp 2.9 trillion in 2019. This research proposes the concept of business model where merged bank should take five actions: 1) Innovation Business Digital Bangking, (2) Expansion of Customer Segmentation, (3) Diversification of Products/Market, (4) Quality of Human Resources, (5)Corporate Governance.
... An M&A deal, especially a successful deal, demands sufficient information on the target country's work ethic, tastes, and beliefs. Halkos and Tzeremes (2011) and Chen et al. (2018) demonstrate that cultural conflicts increase the integration costs and agency costs required to manage foreign subsidiaries; Guiso et al. (2013) find that frequent cultural flows promote cooperation among employees from different countries and enhance synergy gains. The likelihood of a merger's success can be inferred by the extent of information asymmetry generated by cultural distance. ...
Existing studies have demonstrated the necessities of formal institutions and negativity of cultural distance in international investments. Surprisingly, China’s exponential increase of cross-border mergers and acquisitions (M&As) and its low-quality institutions and distinct cultural norms contradict these studies. This paper aims to tackle this puzzle by examining the role of cultural imports in cross-border M&As. Our empirical evidence suggests that the trade of cultural goods significantly increases the volume and realized economic gains of M&As from importing to exporting countries. Our results are robust to alternative measures and an instrumental variable approach. On exploring potential channels, we find that imported cultural goods could drive cultural convergence between countries and also mitigate the adverse effect of cultural distance on merger outcomes. We further show that cultural imports could help firms in overcoming contractual barriers at target countries. This paper provides practical implications for cross-border investments in the current world with intensified cultural conflicts.
Purpose
This study aims to establish a robust evaluation framework for suppliers within the automotive supply chain, specifically in the stamping sector. The primary objectives are to elucidate the performance criteria of suppliers, identify indicators and scales for measuring these criteria and find the importance of the criteria.
Design/methodology/approach
The evaluation framework comprises a criteria hierarchy and indicators developed based on the evaluation criteria of major automotive manufacturers. Specific indicators and measurement scales are recommended for assessing suppliers. Importance weights for the criteria are assigned based on the input of nine experts using the Analytic Hierarchy Process (AHP). Finally, four sheet metal stamping tooling (SMST) suppliers are evaluated by four specialists using the proposed evaluation framework.
Findings
The study introduces a novel classification of criteria, encompassing financial and commercial perspectives, delivery capability, supplier facility and cultural approaches and business process necessities. The findings underscore the significance of financial and commercial stability in the selection of SMST suppliers, emphasizing their role in mitigating risks associated with disruptions, bankruptcies and unforeseen events. Additionally, several SMST evaluation factors identified in this study contribute to the development of resilience capabilities, highlighting the crucial importance of their inclusion and assessment in the proposed evaluation framework.
Originality/value
This research presents a comprehensive model for evaluating SMST suppliers, which tackles the multidisciplinary challenges within the automotive supply chain. Given the inadequacy or nonexistence of current SMTS selection models, this study bridges the gap by exploring potential and necessary criteria, alongside 116 specific indicators and measurement scales.
Previous reviews of cross-border mergers and acquisitions (M&As) have not provided an integrative and evolutionary analysis, and the academic literature generally reflects a fragmented research perspective. Therefore, this study combined a bibliometric analysis and text-mining to analyze the evolution of theories and topics as well as theory-topic co-occurrence. We also used a topic modelling technique to divide the articles into 10 subareas and further analyzed their subthemes and dynamics. Overall, we examined 1,197 articles published from 1989 to 2022. This study contributes to the current literature by providing data on theory-topic co-occurrence and its evolution in cross-border M&As, conducting theory-topic co-occurrence analysis that identifies popular research trends and provides new insights into how to integrate M&As practices with theories, identifying 10 sub-areas via bibliometric analysis and BERTopic modelling, and identifying key theories and emerging themes to be examined in future studies.
Purpose
This study aims to develop a new integrated decision-making framework specifically designed to address complexity and uncertainty for project portfolio management. It particularly focuses on managing portfolios in a post-merger context. The paper portrays a normative and prescriptive approach to effectively creating a well-balanced project portfolio in a post-merger scenario.
Design/methodology/approach
This study introduces hyper-project portfolio frame as a prospective methodology for evaluating post-merger portfolios. The proposed method especially addresses the challenges associated with integration following a merger.
Findings
Hyper-project portfolio frame provides fundamental leaps in post-merger project portfolios. The frame gives opportunities to check consistency with policy, organizational scalability, flexibility and product diversity. It also underpins achieving the strategic objectives of mergers and acquisitions (M&As).
Research limitations/implications
The literature synthesis is approached from an interpretative standpoint. The research incorporates discussions and comparative studies from the relevant literature and introduces a novel approach. Additionally, new descriptive studies can expand the proposed process-oriented decision-making. Moreover, this research does not consider hostile takeovers.
Originality/value
Nested in content and process-oriented fashion, the frame provides suitable prequalification analysis for portfolios in a post-merger under the concepts of complexity, uncertainty, risk and value.
The social network view claims that connections are an important determinant of information access. However, whether business group networks provide an information advantage has received little attention. This paper provides evidence of the information advantage in the context of technology acquisitions. Using a sample of listed business groups in China from 2004 to 2017, we find that the propensity for technology acquisition is positively associated with network centrality in business groups. Greater centrality allows affiliates to gather valuable information, thus resulting in lower acquisition premiums, acquiring companies with more patents, and greater innovation efficiency. Additional analyses show that technology acquisitions by business groups with greater centrality enhance firms’ marginal innovation output and generate superior acquisition performance. We also find that non-state-owned firms and firms in high-tech industries benefit more from network centrality in technology acquisitions. Overall, this study sheds light on the information benefits of network centrality in business groups.
Purpose
As the application of artificial intelligence (AI) becomes more prevalent, many high-tech firms have employed AI applications to deal with emerging societal, technological and environmental challenges. Big data analytical capability (BDAC) has become increasingly important in the AI application processes. Drawing upon the resource-based view and the theory of planned behavior, this study aims to investigate how BDAC and collaboration affect new product performance (NPP). Practically, a harmonic working team is particularly important for creating management synergies, this empirical analysis demonstrates the importance of BDAC and collaboration for NPP.
Design/methodology/approach
This paper focuses on the performance of firms that applied AI in their operations. This study collected data from firms in Greater China, including China and Taiwan, as Greater China is currently the leading manufacturer of semiconductor, electronic and electric products for AI applications in the manufacturing process. Confirmatory factor analysis and structural equation modeling is employed for statistical analysis.
Findings
The analytical results indicate that BDAC positively relates to collaboration capability (CC) in AI applications but not to team collaboration (TC). CC positively correlates with TC, and both CC and TC positively correlate with NPP. Further, the mediating effect was examined using the Sobel t -test, which reveals that CC is a significant mediator in the influence of BDAC on NPP.
Practical implications
The strategic implementation of BDAC and collaboration can allow an enterprise to improve its NPP when driven by the external environment to use AI, which further enhances NPP. These processes indicate that AI and BDAC are both crucial for the success of a company’s collaboration and for effective management to improve NPP in the face of global competition.
Originality/value
This study introduces the concept of BDAC to explain the relationship between CC and TC, as they pertain to NPP. This study presented a discussion of the theoretical and practical implications of the research findings and could provide a framework for managing BDAC.
Purpose
The purpose of this study is to test a model for cross-border technological acquisitions (CBTAs) focusing on the level of ownership acquired in the target firm and the acquiring firm's post-acquisition innovation performance (PAIP), with the degree of integration as a mediator, based on the dynamic capability perspective of the resource-based view. This study further concludes the role of the country-of-origin effect (COE) (when emerging economies' acquiring firms purchase technological resources from developed economies' target firms) on the success of the acquiring firms in CBTAs.
Design/methodology/approach
Data on CBTAs initiated by 542 acquiring firms was quantified from four high technology industries from 1995 to 2015 for the empirical investigation of the research hypotheses. Hierarchical fixed year effect negative binomial regression technique was used to analyze the proposed model for the success of CBTAs.
Findings
The analysis of the CBTAs confirmed that acquiring firms who opt for a higher level of acquired ownership strategy increase the degree of integration of the target firm's technological resource stock. The level of acquired ownership improves the PAIP of the acquiring firms; however, the degree of integration positively accelerates the relationship between the acquired ownership and the PAIP. Considering the COE, acquiring firms that initiated CBTAs from emerging economies to purchase technological resources from developed economies' targets have firm-specific technological capability holes to execute the integration, which negatively impacts the emerging economies acquiring firm's PAIP.
Originality/value
This study contributes to the CBTAs literature by exploring the enabling role of the degree of integration between the level of acquired ownership and the PAIP of the acquiring firms. Further, this study put forward empirics on the COE of the acquiring firms for their integrative capability to integrate the target firm's resource stock and subsequent innovation performance.
Purpose
Post-merger integration (PMI) is driven by coevolving processes. By integrating the literature on acquisitions with that of knowledge networks, this paper highlights different reconstruction mechanisms for dual knowledge networks during PMI – namely, internal knowledge network coupling and external knowledge network embeddedness. This paper aims to examine their coevolutionary relationships with PMI.
Design/methodology/approach
A coevolutionary framework is tested using a latent growth model and cross-lagged models. The analysis is based on longitudinal data collected from 116 Chinese technology-sourcing overseas merger and acquisition firms.
Findings
This paper unearths a novel idea that variations in post-merger reconstruction of dual knowledge networks can explain why some acquirers increase the degree of integration faster than the others. The results show that the internal knowledge network coupling leads to more knowledge similarity and, in turn, causes a higher degree of integration. The external knowledge network embeddedness also causes higher relative network status of the acquirer, which consequently leads to a higher degree of integration. Furthermore, results from cross-lagged models confirm that an increase in the degree of integration positively influences subsequent changes in the internal knowledge network coupling and external knowledge network embeddedness, thus forming a coevolutionary relationship over time.
Originality/value
This paper responds to recent calls for more insights into the dynamics of PMI. By highlighting different reconstruction mechanisms for internal and external knowledge networks during PMI, this paper explains why it is important to understand PMI dynamics from a dual knowledge network perspective. This paper is the first to adopt a coevolutionary perspective and provide a more comprehensive dynamic framework between PMI and reconstruction of dual knowledge networks. Besides, this paper contributes to the research on emerging market multinational corporations’ cross-border merger and acquisition integration from a dynamic perspective, revealing the time effects of traditionally favored light-touch integration.
There has been an increasing trend that multinational corporations from emerging economies (EMNCs) undertake cross-border mergers and acquisitions (M&As) with corporations in developed economies. As a burgeoning pattern of outward direct investment, reverse cross-border M&As enable EMNCs to access technological resources that are conducive to enhancing innovation efficiency. Deal activity involving Western corporations buying into emerging economies has been extensively studied; conversely, the nature and consequences of reverse cross-border M&As can hardly be explained by internationalization theories. Furthermore, extant studies paid less attention to how diversified knowledge resources affect EMNCs' innovation performance. In contrast, heterogeneous and diversified knowledge has been proven to be vital for generating novel knowledge combinations. We also believe that managerial ability will affect how acquirers reorganize and integrate knowledge, thereby influencing post-acquisition innovation performance. Drawing from the knowledge-based view and upper echelon theory, this study adopted the data of Chinese listed manufacturing corporations that engaged in reverse cross-border M&As from 2010 to 2018 to explore the influencing mechanisms between the two dimensions of knowledge diversity and innovation performance of multinational manufacturing corporations from emerging economies, while managerial ability was additionally analyzed as a mediator of the above relationships. The empirical findings suggested that manufacturing corporations with higher knowledge diversity present better post-acquisition innovation performance. Managerial ability plays a fully mediating effect between the knowledge heterogeneity and innovation performance of EMNCs but imposes a partially mediating effect between technological diversity and innovation performance. The findings help enrich the understanding of the integrating process of reverse cross-border M&A and the endogenous function mechanism of how knowledge diversity and managerial ability affect the promotion of EMNCs’ innovation performance.
Promoting home-country industrial innovation via overseas mergers and acquisitions (M&A) integration is crucial for latecomers. However, the transmission mechanism for innovation remains unclear. Taking the resource-based view, we apply network theory to illustrate this cross-level process. Based on technology-sourcing overseas M&A samples in China, a mediating effect model shows that with a lower resource similarity level, a higher resource complementarity level and a lower external network embeddedness, the acquirer should choose a lower integration degree to improve internal and external knowledge-network reconfiguration, thus benefiting home-country industrial innovation. Our findings help enrich overseas M&A research on enterprise’s dual-network embeddedness and help latecomers catch up.
Purpose
The primary purpose of this study is to explore the impact of acquired ownership in Chinese target firm on the innovation performance of developed economies (DE) acquiring firms. Furthermore, the study aims to empirically investigate the moderating influence of institutional distance between two parties’ home countries.
Design/methodology/approach
For the empirical investigation of the hypotheses, the authors identified cross-border technological acquisitions from the Securities Data Company between 1995 and 2015. A hierarchical negative binomial regression technique was used to analyze 177 technological acquisitions completed by DE acquiring firms in China.
Findings
Analysis of technological acquisition deals confirmed that acquired ownership undertaken in the Chinese target firms increases the DE acquiring firms’ post-acquisition innovation performance. The authors found that DE acquiring firms underperform in innovation in institutionally distant host countries.
Originality/value
This study contributes to the international business literature by explaining the importance of acquired ownership undertaken in the Chinese target firms for the DE acquiring firm’s innovation performance. Second, institutional theory defines how institutional uncertainty in terms of distance modifies the positive impact of acquired ownership on acquiring firm’s innovation performance.
Purpose
The purpose of the paper is to examine the coevolutionary dynamics between multistage overseas mergers and acquisitions (M&A) integration and knowledge network reconfiguration and the impact of this coevolution on industrial technology innovation.
Design/methodology/approach
This paper builds a coevolution analysis framework in stages and constructs structural equation models for empirical tests using the Chinese technology-sourcing overseas M&A events that occurred from 2001 to 2012.
Findings
Overseas M&A integration and knowledge network reconfiguration are in a coevolutionary relationship, driving industrial technology innovation. The acquirer adopts initial integration degree that matches the resource relatedness between the acquiring and acquired parties, promoting initial industrial technology innovation through initial knowledge network reconfiguration. Initial knowledge network reconfiguration will feed back to the M&A integration decision in the mid-to-late stage through increasing knowledge similarity and narrowing network position difference. The higher the improvement of mid-to-late integration degree, the more it can drive mid-to-late industrial technology innovation through mid-to-late knowledge network reconfiguration.
Research limitations/implications
Future research can accurately classify overseas M&A integration stages through case tracking and explore other network attributes.
Practical implications
Practical guidelines are provided for managers on how to implement a multistage overseas M&A integration strategy, optimize knowledge network reconfiguration and promote industrial technology innovation. Significant practical implications are presented, especially in academia, society and quality of life.
Originality/value
Different from the previous research considering M&A integration as a single-stage decision, this paper emphasizes the dynamics of the M&A integration process and explores the coevolution mechanism of multistage overseas M&A integration and knowledge network reconfiguration.
Overseas mergers and acquisitions (M&A) integration is an effective way to promote home-country industrial innovation. However, much remains unknown about this mechanism. We provide a comprehensive understanding, by taking a resource-based view, focusing on the role of internal and external networks as bridge, and exploring the moderating effect of home-country institution. Based on 119 samples in China and 311 samples in the U.S. of technology-sourcing overseas M&A, structural equation model analysis reveals that in a more developed home-country institution, American acquirers’ appropriate integration matched with resource relatedness significantly improves internal network cohesion and external network position, promoting industrial innovation. In contrast, constrained by a less developed home-country institution, Chinese acquirers’ internal network cohesion improvement is only significant in low-degree integration matched with high-resource-complementarity and low-resource-similarity, and the mediating effect of external network position improvement is significantly weaker than that of American. Research conclusions provide insights into the catching-up of latecomers.
Chinese enterprises’ technology-sourcing overseas mergers and acquisitions (M&A) integration is an important force to accelerate the high-quality industrial development. However, the existing theories lack a thorough explanation of this mechanism. Based on four typical cases in Chinese manufacturing industry, this study applied a multiple-case study method to explore the relationships among the four basic categories of ‘resource relatedness’, ‘integration degree’, ‘innovation network position’ and ‘industrial technology innovation’ by in-depth interviews with enterprise executives and second data analysis. We find out that acquirers’ appropriate integration degree which matches different combinations of resource similarity and complementarity, will efficiently enhance centrality and structural holes of the acquirers in the global innovation networks, and thus promote home-country industrial technology innovation in the three functional areas of research and development (R&D), operations, and upstream and downstream activities. Based on resource-based view and by emphasising acquirers’ centrality and structural holes improvement in the global innovation networks as the crucial links, this study deepens the overall understanding of the entire process of enterprises using overseas M&A integration to promote the home-country industrial technology innovation and provides insights into the technological leapfrogging of latecomers from developing countries.
Appropriate integration in technology sourcing overseas M&A is effective for acquirers to improve their innovation network positions and to promote domestic industrial innovation. We use the technology sourcing overseas M&A of Chinese and South Korean manufacturing industries as samples for empirical analysis. The results show that post-merger integration strategy should match resource characteristics between acquiring and acquired firms to promote industrial innovation through innovation network position improvement. Specifically, high-degree integration should match high-resource-similarity / low-resource-complementarity acquired firms, low-degree integration should match low-resource-similarity / high-resource-complementarity acquired firms, and moderate-degree integration should match high-resource-similarity / high-resource-complementarity acquired firms. The acquirer’s home country institutional development enhances the effect of post-merger integration. This study provides guidance for promoting industrial innovation through post-merger integration.
This study investigates the impact of foreign direct investment (FDI), economic growth and energy consumption on carbon emissions in five selected member countries in the Association of South East Asian Nations (ASEAN-5), including Indonesia, Malaysia, the Philippines, Singapore and Thailand. This paper employs a panel quantile regression model that takes unobserved individual heterogeneity and distributional heterogeneity into consideration. Moreover, to avoid an omitted variable bias, certain related control variables are included in our model. Our empirical results show that the effect of the independent variables on carbon emissions is heterogeneous across quantiles. Specifically, the effect of FDI on carbon emissions is negative, except at the 5th quantile, and becomes significant at higher quantiles. Energy consumption increases carbon emissions, with the strongest effects occurring at higher quantiles. Among the high-emissions countries, greater economic growth and population size appear to reduce emissions. The results of the study also support the validity of the halo effect hypothesis in higher-emissions countries. However, we find little evidence in support of an inverted U-shaped curve in the ASEAN-5 countries. In addition, a higher level of trade openness can mitigate the increase in carbon emissions, especially in low- and high-emissions nations. Finally, the results of the study also provide policymakers with important policy recommendations.
Overseas mergers and acquisitions (M&A) proposed by companies from emerging economies have been aiming to secure outward technology sourcing from developed countries in order to improve their technology innovation abilities in recent years. This paper proposes a comprehensive analytical framework of post-merger integration’s influence on technology innovation by global game modeling. We show how different resource similarity and resource complementarity backgrounds of the acquirer and target companies can affect post-merger strategies and technology innovation output through multi-stage analysis with an asymmetrical payoff structure. We focus on two main dimensions of post-merger integration, which are integration degree and target autonomy. Equilibrium analysis that is based on potential innovation output signals show that resource similarity has a positive relation with integration and a negative relation with target autonomy in overseas M&A; however, resource complementarity has the opposite effects compared with resource similarity. The positive interaction between resource similarity and complementarity will trigger more M&A and increase the degrees of integration and autonomy; M&A integration has a positive impact on technology innovation output. The innovation growth of the acquiring company is affected by the effectiveness of the post-merger process and the interaction of substitution elasticity with resource potential difference. Our study provides insight into the factors driving post-merger decisions and contributes to a multi-stage resource-based understanding of technology innovation induced by overseas post-merger integration.
Research summary : Inconclusive findings about the effect of national cultural differences on post‐acquisition performance may be created by the failure to distinguish among the different cultural dimensions and the asymmetry of cultural differences. To demonstrate a different approach, this study focuses on one dimension of national cultural values—power distance value ( PDV ) and develops a framework for the asymmetric effect of PDV differences in creating two types of conflicts. The analysis of 2,115 cross‐border acquisitions in the global information technology industry shows that PDV differences undermine the long‐term post‐acquisition performance of acquirers. This effect is stronger when acquirers are higher than targets in PDV than when the opposite is the case. This asymmetric effect of PDV difference depends on national status difference, business relatedness, and acquisition experience .
Managerial summary: National cultural differences can create “cultural clashes” to undermine the value creation by cross‐border acquisitions. During integration, individuals react to the acquirer–target hierarchy according to their respective power distance value ( PDV ): the extent to which they value equality (low PDV ) or hierarchy (high PDV ). PDV divergence results in two types of conflicts, depending on whether acquirers are higher or lower than targets in PDV . The two types of conflicts vary in the magnitude of their harmful effect on post‐acquisition performance. Both types of conflicts are more detrimental when acquirers are higher than targets in country status and when individuals need to interact more intensely. Acquisition experience can both help and harm post‐acquisition performance. These findings offer important implications for managing cross‐border acquisitions . Copyright © 2016 John Wiley & Sons, Ltd.
Cross-border M&A has become one of the leading approaches for firms to gain access to global markets. Yet there has been little progress in the research literature exploring the role that culture may play in the success of these ventures. Poor culture-fit has often been cited as one reason why M&A has not produced the outcomes organizations hoped for (Cartwright & Schoenberg, 2006). Cross-border M&A has the added challenges of having to deal with both national and organizational culture differences. In this chapter we review the literature on cultural integration in cross-border M&A and provide a framework designed to help manage the integration process throughout the M&A lifecycle. This framework presents culture assessment and integration as a crucial component to reducing poor culture-fit as a barrier to M&A success.
The management of technology acquisitions - acquisitions of small technology based firms by large established firms - poses a dilemma in terms of how to organize for innovation. Acquirers must integrate acquired firms in order to exploit their capabilities and technologies in a coordinated manner; at the same time, they must preserve organizational autonomy for acquired firms in order to avoid disrupting their capacity for continued exploration. In this study, we suggest that the coordination-autonomy dilemma can be better managed by recognizing that the effect of a structural form on innovation outcomes is contingent on the stage of development of the innovation trajectory of the acquired firm. Specifically, we show that structural integration lowers the hazard of new product introductions for acquired firms that have not launched any products prior to acquisition and for all acquired firms in the immediate aftermath of the acquisition, but these adverse effects disappear as the innovation trajectory evolves beyond these stages. We discuss implications for our understanding of post merger integration, and the organizational challenges of balancing exploration and exploitation in high velocity environments.
This paper examines the impact of acquisitions on the subsequent innovation performance of acquiring firms in the chemicals industry. We distinguish between technological acquisitions, acquisitions in which technology is a component of the acquired firm's assets, and nontechnological acquisitions: acquisitions that do not involve a technological component. We develop a framework relating acquisitions to firm innovation performance and develop a set of measures for quantifying the technological inputs a firm obtains through acquisitions. We find that within technological acquisitions absolute size of the acquired knowledge base enhances innovation performance, while relative size of the acquired knowledge base reduces innovation output. The relatedness of acquired and acquiring knowledge bases has a nonlinear impact on innovation output. Nontechnological acquisitions do not have a significant effect on subsequent innovation output. Copyright © 2001 John Wiley & Sons, Ltd.
Most of the efficiency studies of large multinational banks operating in different countries calculate banks' inefficiency levels without taking into account the environmental factors in which they are operating in. As a result the estimated inefficiencies are subject to a combination of true managerial inefficiencies and the impact of environmental factors which most of the time are not appropriately controlled in the analysis. This study by examining 282 multinational banks from 43 different countries calculates the influence of their national culture on their estimated efficiency levels. By using conditional and unconditional robust efficiency estimators this paper provides empirical evidence of how different cultural values influence banks' global practices and thus their performances. The results indicate that there is a cultural pattern that has a positive effect on banks' performance. That is lower masculine, uncertainty avoidance and power distance values and moderate individualistic values.
This study examines culture and the effects of cultural change during the integration process of cross-cultural acquisitions as perceived by the employees of the acquired companies. The sample consists of Korean employees of two international (German–Korean) acquisitions and German employees of domestic (German–German) acquisitions. Results of this study show that not only national cultural differences, but also cultural integration approaches by the acquirer, play a major role in cultural change after the acquisition. Further managerial implications are addressed.
Asubstantive body of theory and research on the role of culture in mergers and acquisitions (M&A) suggests that cultural differences can create major obstacles to achieving integration benefits. However, the opposite view---that differences in culture between merging firms can be a source of value creation and learning---has also been advanced and empirically supported. In an attempt to reconcile these conflicting perspectives and findings, we present a model that synthesizes our current understanding of the role of culture in M&A, and we develop a set of hypotheses regarding mechanisms through which cultural differences affect M&A performance. The results of a meta-analysis of 46 studies, with a combined sample size of 10,710 M&A, suggest that cultural differences affect sociocultural integration, synergy realization, and shareholder value in different, and sometimes opposing, ways. Moderator analyses reveal that the effects of cultural differences vary depending on the degree of relatedness and the dimensions of cultural differences separating the merging firms, as well as on research design and sample characteristics. The implications for M&A research and practice are discussed.
The abilities to efficiently identify potential innovation profits and form an optimal post-merger strategy are important in evaluating overseas merger and acquisition (M&A) performances. The paper uses a global game with asymmetric payoff structure and multi-agent simulation method to analyze the optimal overseas post-merger strategy. We model three stages of the M&A processes: merger decision stage, post-merger integration stage, and technology innovation after M&A, to analyze how different resource similarity and resource complementarity of the two companies influence the degree of optimal post-merger integration and target autonomy as well as technology innovation profit after M&A. The agent-based simulation shows that in overseas M&As, resource similarity has a positive relation with integration and a negative relation with target autonomy; however, resource complementarity has the opposite effect. The negative interaction effect between resource similarity and complementarity will decrease the degree of integration. In high resource similarity and low resource complementarity M&As, a high integration degree and low target autonomy will maximize innovation profit, while for high resource similarity and high resource complementarity M&As, a medium integration degree and target autonomy is best for innovation profit. For low resource similarity and high resource complementarity M&As, a low integration degree and high target autonomy will be the best post-merger strategy. Model outputs are robust to variations of the parameters.
In the theoretical and empirical growth literature, private and social returns to R&D have been identified as the key drivers of productivity gains and economic development. However, recently the debate on the relative importance of private vis-à-vis social returns has been reinforced by contributions in two emerging fields of the applied econometric literature, namely spatial panel modeling and the common factor approach, which stress the role of cross-sectional dependence as a source for a potential estimation bias linked to the measurement of returns to R&D. In this paper, we account for these methodical advances when estimating sectoral knowledge production functions for OECD countries under weak and strong cross-sectional dependence. By doing so, we are able to uncover technology- and trade-related R&D spillover channels associated with social returns to R&D, while effectively controlling for other types of productivity spillovers and latent macroeconomic shocks. Our results highlight the role played by international-intersectoral R&D spillovers for the social rate of return to R&D, while we get limited evidence for private returns to R&D once cross-sectional dependence is properly accounted for.
We show how knowledge-based and incentive-based perspectives complement each other to explain the effects of acquisitions on the productivity of inventors from acquired firms. Incentive-based theories account for their lower productivity relative to that of inventors at nonacquired firms, and both perspectives jointly explain why their productivity converges with that of inventors from acquiring firms. Higher productivity is achieved when there is greater overlap in routines and moderate overlap in skills, and when the acquired firm is large relative to its acquirer. This study clarifies the subtle manner in which incentives and the knowledge-based view are intertwined.
This paper examines the influence on technology spillover of the strategic decisions by local firms to adopt the advanced technology of multinationals, which has in fact been ignored in previous studies. To do so, we construct a theoretical model by combining technology adoption and technology spillover models through backward linkage. If the technological gap is large between the multinational and local firm, it may be reasoned that the local firm is making the strategic decision not to adopt the advanced technology in order to avoid direct competition with the multinational firm. In this case, even though the transferred technology is diffused and the local firm has the capacity to absorb it, the technology spillover may not occur. Additionally, we apply the model to analyze the effect of local content requirements (LCR) on technology transfer and technology spillover. The analysis shows that LCR may fail to enhance technology spillover because these do not encourage the adoption of the technology.
This paper develops a model in which the presence of a multinational leads to a technology transfer to its local suppliers and also modifies the degree of backward linkages in the local economy. First, we identify the domestic market characteristics under which the multinationals increase the level of backward linkages when they enter these markets. Moreover, we investigate the conditions under which the multinational could even benefit itself from transferring technology to its local suppliers. Finally, when the multinational transfers technology, we show when the level of backward linkages in the local economy increases.
This paper aims to disentangle the mechanisms through which technological similarity between acquiring and acquired firms influences innovation in horizontal acquisitions. We develop a theoretical model that links technological similarity to: (i) two key aspects of post-acquisition reorganization of acquired R&D operations – the rationalization of the R&D operations and the replacement of the R&D top manager, and (ii) two intermediate effects that are closely associated with the post-acquisition innovation performance of the combined firm – improvements in R&D productivity and disruptions in R&D personnel. We rely on PLS techniques to test our theoretical model using detailed information on 31 horizontal acquisitions in high- and medium-tech industries. Our results indicate that in horizontal acquisitions, technological similarity negatively affects post-acquisition innovation performance and that this negative effect is not mediated by the reorganization of the acquired R&D operations. However, replacing the acquired firm's R&D top manager leads to R&D productivity improvements that positively affect innovation performance.
In this paper, we develop a comprehensive model of M&A success. We integrate fundamental constructs of different schools and discuss their interdependencies with M&A success. Our theoretical framework was tested empirically across a sample of 106 SME transactions in the machinery, electronic, and logistic industries in the German-speaking part of Central Europe. The results of our study support the demand for an integrative perspective and theory on M&A. M&A success is a function of strategic complementarity, cultural fit, and the degree of integration. Strategic complementarity also positively influences cultural fit and the degree of integration. Cultural fit positively influences M&A success, but surprisingly has a negative impact on the speed and degree of integration. The degree of integration is positively related to speed of integration. Copyright © 2013 John Wiley & Sons, Ltd.
This paper investigates the relation between growth forecast errors and planned fiscal consolidation during the crisis. We find that, in advanced economies, stronger planned fiscal consolidation has been associated with lower growth than expected, with the relation being particularly strong, both statistically and economically, early in the crisis. A natural interpretation is that fiscal multipliers were substantially higher than implicitly assumed by forecasters. The weaker relation in more recent years may reflect in part learning by forecasters and in part smaller multipliers than in the early years of the crisis.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
This paper analyzes the consequences for the knowledge transfer and the organization of R&D of pharmaceutical companies after the acquisition of biotech companies. Based on four in-depth case studies, this paper comes to the conclusion that there is no systematic biotechnological know-how transfer from the biotech to the pharmaceutical company after the acquisition. Instead, the biotech companies remain independent and take over the role of centers of excellence for R&D within the pharmaceutical companies because that is the only way of preserving the innovative capabilities of the biotech company.
Historically, acquisition scholars and practitioners have adopted a choice perspective which portrays the corporate executive analyzing acquisition opportunities as a rational decision maker. This paper suggests that the choice perspective be supplemented with a process perspective which recognizes the acquisition process itself as a poten- tially important determinant of activities and outcomes. A series of research propositions is offered suggesting how four impediments present in the process itself might affect acquisition outcomes.
We develop an extended directed technological change model with vertical and horizontal R&D to analyze the economic growth rate, the technological-knowledge bias and the industrial structure, assuming: (i) complementarities between intermediate goods, and (ii) internal costly investment. We find that complementarities directly affect long-run technological-knowledge bias and relative production, both elements influence the economic growth rate and neither affects the skill premium and the relative number of firms. We also verify that the relationship between the relative supply of skills and both economic growth and the industrial structure suggested by our model is qualitatively consistent with recent empirical data for a number of developed countries.
A simple minimization problem yielding the ordinary sample quantiles in the location model is shown to generalize naturally to the linear model generating a new class of statistics we term "regression quantiles." The estimator which minimizes the sum of absolute residuals is an important special case. Some equivariance properties and the joint aymptotic distribution of regression quantiles are established. These results permit a natural generalization to the linear model of certain well-known robust estimators of location. Estimators are suggested, which have comparable efficiency to least squares for Gaussian linear models while substantially out-performing the least-squares estimator over a wide class of non-Gaussian error distributions.
Most traditional research on mergers and acquisitions tends to focus on the role of similarity in explaining acquisition performance. While scholars have recently begun to examine acquisition complementarity, there is still little evidence concerning how complementarity influences acquisition performance. Further, previous research has not drawn the connections between related contexts and the potential benefits from complementarity. In this article, we move the study of acquisition complementarity forward by investigating the effects of strategic and market complementarity on acquisition performance in the context of related horizontal acquisitions. We also propose that two key attributes of acquirers—strategic focus and out-of-market acquisition experience—will moderate this relationship. We investigate our research questions in the context of all 2,204 acquisitions made by publicly traded U.S. commercial banks during the 12-year period from 1989 to 2001. Our findings are generally supportive, suggesting complementarity is an important antecedent of acquisition performance, and raising important issues on the nature of acquisition research in general. Copyright © 2009 John Wiley & Sons, Ltd.
For firms seeking to strategically combine their resources with those of other firms, two popular alternative governance structures emerge: alliance or acquisition. In this paper, we propose a dyadic perspective to examine how and why configurations of two firms' resources and capabilities affect the costs and benefits associated with each governance structure. More specifically, we posit that factors such as (1) the resource similarity and complementarity between a pair of firms, (2) the combined relational capabilities of a pair of firms, and (3) the partner-specific knowledge between a pair of firms will affect the likelihood of observing that pair of firms forming an alliance vs. engaging in an acquisition. We test and find support for our hypotheses using extensive longitudinal data from a sample of the largest firms in the United States from 1991 to 2000. Copyright © 2007 John Wiley & Sons, Ltd.
The paper explores the usefulness of analysing firms from the resource side rather than from the product side. In analogy to entry barriers and growth-share matrices, the concepts of resource position barrier and resource-product matrices are suggested. These tools are then used to highlight the new strategic options which naturally emerge from the resource perspective.
Prior research on M&As and invention outcomes has not systematically examined the influence of two types of knowledge differences. Knowledge relatedness has typically been equated with knowledge similarity and the separate influence of knowledge complementarity has been overlooked. Similarly, studies examining innovation outcomes of M&As have typically focused on the role of technological knowledge and overlooked the influence of scientific knowledge. We develop a model of relatedness and invention performance of high-technology M&As that considers science and technology similarity and complementarity as important drivers of invention. We test the model using a sample of M&As from the drug, chemical, and electronics industries and a fine-grained measure of knowledge relatedness that distinguishes between science and technology relatedness. We find that complementary scientific knowledge and complementary technological knowledge both contribute to post-merger invention performance by stimulating higher quality and more novel inventions. This suggests that high-technology firms seeking acquisitions should search for, identify, and acquire businesses that have scientific and technological knowledge that is complementary to their own. Our results also suggest that similarities in knowledge facilitate incremental renewal, while complementarities would make discontinuous strategic transformations more likely, and that absorptive capacity research should be expanded to consider complementarities as well as similarities. Copyright © 2010 John Wiley & Sons, Ltd.
We define Markov strategy and Markov perfect equilibrium (MPE) for games with observable actions. Informally, a Markov strategy depends only on payoff-relevant past events. More precisely, it is measurable with respect to the coarsest partition of histories for which, if all other players use measurable strategies, each player's decision-problem is also measurable. For many games, this definition is equivalent to a simple affine invariance condition. We also show that an MPE is generically robust: if payoffs of a generic game are perturbed, there exists an almost Markovian equilibrium in the perturbed game near the initial MPE. Journal of Economic Literature Classification Numbers: C72, C73.
This paper analyses the long-run influence of domestic and foreign technological capital on countries’ manufacturing TFP. The calculation of the TFP has been carried out by applying specific unit value ratios, adjusting the value added of each individual (sector-country) in order to take into account the unsynchronized business cycles across countries, using hedonic price indices and estimating labour shares. To measure the technological externalities, we have applied alternative weightings with the aim of considering the influence of the country of origin of the externalities and of the intensity of the relationships maintained.Another aspect to highlight is the application of estimation procedures and tests of unit roots and of cointegration that are adequate for the panel of data and that permit the presentation of non-biased estimations.Finally, empirical evidence is presented about the different patterns of spillovers of the industrial sectors grouped according to their technological intensities.
This paper identifies the unique strategic issues of cross-border mergers in a mixed oligopoly showing that the presence of a welfare maximizing public firm increases the incentive for such mergers. The well-known merger paradox that two-firm mergers are rarely profitable is substantially relaxed in the cases of both linear and convex production costs. The ability to identify profitable two-firm mergers in this context takes on added importance as the recent cross-border merger wave often involved industries with public firms.
This paper proposes an explanation as to why some mergers fail, based on the interaction between the pre- and post-merger processes. We argue that failure may stem from informational asymmetries arising from the pre-merger period, and problems of cooperation and coordination within recently merged firms. We show that a partner may optimally agree to merge and abstain from putting forth any post-merger effort, counting on the other partner to make the necessary efforts. If both follow the same course of action, the merger goes ahead but fails. Our unique equilibrium allows us to make predictions on which mergers are more likely to fail.
Previous theoretical research has argued that national cultural distance hinders cross-border acquisition performance by increasing the costs of integration. This article tests the alternative hypothesis that national cultural distance enhances cross-border acquisition performance by providing access to the target's and/or the acquirer's diverse set of routines and repertoires embedded in national culture. Using a multi-dimensional measure of national cultural distance and controlling for other effects, we examine a sample of 52 cross-border acquisitions that took place between 1987 and 1992, and find a positive association between national cultural distance and cross-border acquisition performance.© 1998 JIBS. Journal of International Business Studies (1998) 29, 137–158
The paper deals with the issue of information sharing in a Cournot duopoly by an innovating firm in the face of a merger with its rival. The innovating firm would share information about the cost realization with its rival provided the market size is relatively small or, the R&D technology is relatively more efficient in a medium market size. However, in a large market, or in a medium market size with less efficient R&D technology, the innovating firm does not share information with its rival. We also show that the social welfare may be higher under incomplete information regime.
In a sample of 326 U.S. acquisitions between 1975 and 1987, three types of acquisitions have systematically lower and predominantly negative announcement period returns to bidding firms. The returns to bidding shareholders are lower when their firm diversifies, when it buys a rapidly growing target, and when its managers performed poorly before the acquisition. These results suggest that managerial objectives may drive acquisitions that reduce bidding firms' values. Copyright 1990 by American Finance Association.
Corporate innovations and mergers and acquisitions
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