Light-Touch Integration, Institutional Distance and the Acquirer's Innovation Performance : Evidence from Chinese Reverse M&A
Article Sidebar
Main Article Content
Abstract
This study aims to investigate how light-touch integration affects the acquirers' post-M&A innovation performance in the setting of reverse cross-border M&As (RCBMAs) and the possible moderating effect of institutional distance.
This study used a sample of 93 RCBMAs involving Chinese A-share listed high-tech companies as the acquirers and completed between 2011 to 2017. The sample was constructed by using data from the Wind Economic Database. In addition, other relevant information was collected from various sources including China Research Data Service Platform, WGI Database, Hofstede official website, Thomson ONE Database, and the acquiring firm's announcements on the focal event, annual reports and news reports as well. The negative binomial regression model is applied to the quantitative data to test the research hypotheses.
Empirical findings support that the light-touch integration is positively associated with the acquirer’s innovation performance and the association is strengthened as the regulative and normative distances between the host country and China increase. The results also suggest that the cognitive distance has a subtle, profound and self-sustaining implication for post-M&A performance. Overall, the findings reveal the benefits of light-touch integration for the acquirer's innovation which may vary according to the institutional distance between the host and home countries. Implications in theoretical development and future research are also discussed.
Article Details
References
Ahuja, G., & Katila, R. (2001). Technological acquisitions and the innovation performance of acquiring firms: A longitudinal study. Strategic Management Journal, 22, 197–220.
Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99-120.
Bauer, F., Matzler, K., & Wolf, S. (2016). M&A and innovation: The role of integration and cultural differences—a central European targets perspective. International Business Review, 25, 76–86.
Björkman, I., Barner-Rasmussen, W., & Li, L. (2004). Managing knowledge transfer in MNCs: The impact of headquarters control mechanisms. Journal of International Business Studies, 35(5), 443–455.
Björkman, I., Stahl, G., & Vaara, E. (2007). Cultural differences and capability transfer in cross-border acquisitions: The mediating roles of capability complementarity, absorptive capacity, and social integration. Journal of International Business Studies, 38 (4), 658–672.
De Oliveira, R.T., & Rottig, D. (2018). Chinese acquisitions of developed market firms: Home semi-formal institutions and a supportive partnering approach. Journal of Business Research, 93, 230-241.
Dikova, D., Sahib, P.R., & Witteloostuijn, A.V. (2010). Cross-border acquisition abandonment and completion: The effect of institutional differences and organizational learning in the international business service industry, 1981–2001. Journal of International Business Studies, 41, 223–245.
DiMaggio, P. J., & Powell, W.W. (1983). The Iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147-160.
Empson, L. 2001. Fear of exploitation and fear of contamination: Impediments to knowledge transfer in mergers between professional service firms. Human Relations, 54(7), 839–862.
Graebner, M.E., Heimeriks, K.H., Huy, Q.N., & Vaara, E. (2017). The process of postemerger integration: a review and agenda for future research. Academy of Management Annals, 11 (1), 1–32.
Haleblian, J., & Finkelstein, S. (1999). The influence of organization acquisition experience on acquisition performance: A behavioral perspective. Administrative Science Quarterly, 44, 29–57.
Haspeslagh, P. C., & Jemison, D. B. (1991). Managing acquisitions: Creating value through corporate renewal. New York: The Free Press.
Johanson, J., & Vahlne, J-E. (1977). The internationalization process of the firm - A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8 (1),23-32.
Kale, P., & Singh, H. (2017). Management of overseas acquisitions by developing country multinationals and its performance implications: The Indian example. Thunderbird international business review, 59 (2), 153－172．
Kogut, B., & Singh, H. (1988). The effect of national culture on the choice of entry mode. Journal of International Business Studies, Fall, 411-432.
Kostova, T., & Zaheer, S. (1999). Organizational legitimacy under conditions of complexity: The case of the multinational enterprise. Academy of Management Review, 24 (1), 64-81.
Li, H., Ye, G., & Zhao, W. (2019). Knowledge distance and innovation performance of Chinese cross-border acquisitions. Chinese Journal of Management, 16 (9), 1366-1374. (in Chinese)
Li, Z., Li, Y., & Chen, D. (2010). Internationalization experience and going global: An empirical research on listed companies in China's electronic information technology industry. China Soft Science, 8, 126-137. (in Chinese)
Liu, Y., & Meyer, K.E. (2020). Boundary spanners, HRM practices, and reverse knowledge transfer: The case of Chinese cross-border acquisitions. Journal of World Business, 55 (2), 1-14.
Liu, Y., & Woywode, M. (2013). Light-touch integration of Chinese cross-border M&A: The influences of culture and absorptive capacity. Thunderbird International Business Review, 55 (4), 469-483.
Lubatkin, M. H. (1983). Mergers and the performance of the acquiring firm. Academy of Management Review, 8, 218-225.
Makri, M., Hitt, M. A., & Lane, P. J. (2010). Complementary Technologies, Knowledge Relatedness, and Invention Outcomes in High Technology Mergers and Acquisitions. Strategic Management Journal, 31, 602-628.
Milgrom, P., & Roberts, J. (1995). Complementarities and fit: Strategy, structure, and organizational change in manufacturing. Journal of Accounting and Economics, 19: 179-208.
Muralidharan, E., Wei, W., & Liu, X. (2017). Integration by Emerging Economy Multinationals: Perspectives from Chinese Mergers and Acquisitions. Thunderbird International Business Review, 59 (4), 503-518.
Pant, A., & Ramachandran, J. (2012). Legitimacy beyond borders: Indian software services firms in the United States, 1984 to 2004. Global Strategy Journal, 2 (3), 224-243.
Puranam, P., Singh, H., & Zollo, M. (2006: 1233–1256). Organizing for innovation: Managing the coordination-autonomy dilemma in technology acquisitions. Academy of Management Journal, 49 (2), 263–280.
Puranam, P., & Srikanth, K. (2007). What they know vs. what they do: How acquirers leverage technology acquisitions. Strategic Management Journal, 28, 805–825.
Qiao, L., & Wu, J. (2019). Pay for being responsible: The effect of target firm’s corporate social responsibility on cross-border acquisition premiums. Sustainability, 11, 1291-1311.
Ranft, A. L., & Lord, M. D. (2002). Acquiring new technologies and capabilities: a grounded model of acquisition implementation. Organization Science, 13, 420–441.
Sarala, R.M., & Vaara, E. (2010). Cultural differences, convergence, and cross-vergence as explanations of knowledge transfer in international acquisitions. Journal of International Business Studies, 41, 1365–1390.
Scott, W.R. (1995). Institutions and organizations. Thousand Oaks, CA: SAGE Publications.
Suchman, M. C. (1995). Managing legitimacy: strategic and institutional approaches. Academy of Management Review, 20 (3), 571-610.
Sun, Z. (2018). Chinese reverse M&A: The Wu Wei paradigm of post-M&A integration process．Chinese Management Studies，12 (4), 774-794.
Vaara, E., Sarala, R., Stahl, G.K., & Björkman, I. (2012). The impact of organizational and national cultural differences on social conflict and knowledge transfer in international acquisitions. Journal of Management Studies, 49, 1-27.
Wei, J., & Yang, Y. (2018). Bridging the chasm between identities: Identity asymmetry and post-acquisition integration strategy. Journal of Management World, 6, 140-156. (in Chinese)
Wei, J., Wang, D., & Liu, Y. (2020). Liabilities of country-of-origin and legitimacy strategies: A multiple case Study on EMNEs' cross-border M&A. Journal of Management World, 3, 101-119. (in Chinese)
Wu, X. (2016). Knowledge-seeking overseas acquisition and innovation performance: Evidence from Chinese enterprises. Journal of Industrial Engineering and Engineering Management, 30 (3), 56-62. (in Chinese)
Xu, D., & Shenkar, O. (2002). Institutional distance and the multinational enterprise. Academy of Management Review, 27(4), 608-618.
Yang, B., & Liu, J. (2020). Liability of origin: The “born disadvantages” faced by EMNEs during internationalization: A literature review. Foreign Economics & Management, 42 (1), 113-125. (in Chinese)
Yang, B., Qi, X., & Zhang, N. (2020). Liability of origin and the internationalization of EMNEs: An organizational identity perspective. Research on Economics and Management, 41 (4), 74-85. (in Chinese)
Zaheer, A., Castañer, X., & Souder, D. (2013). Synergy sources, target autonomy, and integration in acquisitions. Journal of Management, 39 (3), 604-632.
Zheng, N., Wei, Y., Zhang, Y., & Yang, J. (2016). In search of strategic assets through cross-border merger and acquisitions: Evidence from Chinese multinational enterprises in developed economies. International Business Review, 25 (1), 177-186.
Zollo, M., & Singh, H. (2004). Deliberate learning in corporate acquisitions: Post-acquisition strategies and integration capability in U.S. bank mergers. Strategic Management Journal, 25, 1233–1256.