Fangfang Zhong’s research while affiliated with China Merchants Bank and other places

Post-merger integration plays a key role in the success of mergers and acquisitions, but how to choose the appropriate integration mode to achieve potential synergies in mergers and acquisitions (M&As) still lacks widely accepted theoretical support and practical experience. Therefore, this article establishes a mathematical model considering the similarity and complementarity of resources in an attempt to explore the optimal integration strategy (including the choices of integration degree and autonomy granted to the target) under different conditions of resources similarity and complementarity, thus building a comprehensive framework that considers pre- and post-merger factors together to jointly explain innovation realization in technology-sourcing cross-border M&As. The results show that the higher the resource similarity, the higher the degree of integration and the lower the degree of target autonomy. Conversely, the higher the resource complementarity, the lower the degree of integration and the higher the degree of target autonomy. Resource similarity and resource complementarity have negative interactions for integration and target autonomy. The higher the resource similarity, the faster the convergence of optimal degree of integration, while the higher the resource complementarity, the slower the convergence. The study results add to our knowledge of M&A integration management, and provide some implication for practitioners.

Outward foreign direct investment can affect developing, technology-receiving host countries mainly through tax revenue, technology spillover and the competition effect. With the consideration of these three effects of the outward foreign direct investment on host country, we develop a dynamic game model of interaction between foreign investors and host country from a dynamic perspective, to reveal the dynamic evolution mechanism of the sovereign risk faced by outward foreign direct investment. The result shows that: host governments usually give a specific tax holiday for outward foreign direct investors, and during the period of tax holiday investment decision of investors would be influenced by technology spillover effect, specifically, the greater the technology spillover the slower the growth of investment stock. Once the system reaches a stable state, the host country will impose a tax on multinational corporations. If the equilibrium tax rate of industries or regions which makes it easy to obtain technology spillover is high, then the equilibrium capital stock would be low.