Explaining the surge in M & A as an entrymode: home country and cultural influences

Agyenim Boateng, Min Du, Wang Wang, Chengqi Wang, Mohammad Ahammad

    Research output: Contribution to journalArticle

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    Abstract

    PurposeThis paper examines the trends, patterns and the impact of cultural and home country macroeconomic influences on Chinese cross-border mergers and acquisitions (CBM&A) as foreign entry strategy for the period of 1998-2011Design/methodology/approach. Using three regression models, namely, ordinary least squares (OLS), the random effects and fixed effects to examine the impact of home country macroeconomic and cultural factors on CBM&A outflows as an entry mode of Chinese firms. We check the robustness of our results using system GMM.FindingsOur findings suggest that CBM&A as a preferred mode of market entry provide a means for obtaining strategic resources to develop competitive advantages for the Chinese emerging market firms. The regression results indicate that home country macroeconomic and cultural variables, including GDP, liquidity, interest rates, inflation, acquisitions in resource seeking sectors and cultural distance play an important role in explaining the trends of CBM&A outflows by the Chinese firms.Research limitations/implicationsThe results imply that government support to EMEs to acquire strategic assets and economic policies in the home country play an important role in shaping international expansion behaviour of EMEs through CBM&A. The study demonstrates that outward investments of EMEs are partly a function of the level of economic policies and government support at home. The limitation is that most of the Chinese CBM&A transactions took place in Asia/Pacific locations. Future studies appear warranted if new data become available.Originality/valueThe study demonstrates how the institutions, strategic asset seeking with government support and economic policies in the home country play important role in shaping international expansion behaviour of emerging market enterprises through CBM&A thereby contributing to the political economy literature and institutional theory. More importantly, the study shows that the level of economic policies and development such as GDP, money supply, interest rates, inflation of the home country are important for EME growth in the international market
    Original languageEnglish
    Pages (from-to)87-108
    Number of pages22
    JournalInternational Marketing Review
    Volume34
    Issue number1
    Early online date9 Jan 2017
    DOIs
    Publication statusPublished - 13 Feb 2017

    Fingerprint

    Cultural influences
    Home country
    Economic policy
    Government support
    Macroeconomics
    Interest rates
    Chinese firms
    Inflation
    Strategic assets
    International expansion
    Macroeconomic factors
    Strategic resources
    Ordinary least squares
    Mode of entry
    Money supply
    Fixed effects
    System-GMM
    Political economy
    Emerging market firms
    Institutional theory

    Keywords

    • mergers and acquisitions
    • Chinese firms

    Cite this

    Boateng, Agyenim ; Du, Min ; Wang, Wang ; Wang, Chengqi ; Ahammad, Mohammad. / Explaining the surge in M & A as an entrymode: home country and cultural influences. In: International Marketing Review. 2017 ; Vol. 34, No. 1. pp. 87-108.
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    Explaining the surge in M & A as an entrymode: home country and cultural influences. / Boateng, Agyenim; Du, Min ; Wang, Wang; Wang, Chengqi; Ahammad, Mohammad.

    In: International Marketing Review, Vol. 34, No. 1, 13.02.2017, p. 87-108.

    Research output: Contribution to journalArticle

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    AB - PurposeThis paper examines the trends, patterns and the impact of cultural and home country macroeconomic influences on Chinese cross-border mergers and acquisitions (CBM&A) as foreign entry strategy for the period of 1998-2011Design/methodology/approach. Using three regression models, namely, ordinary least squares (OLS), the random effects and fixed effects to examine the impact of home country macroeconomic and cultural factors on CBM&A outflows as an entry mode of Chinese firms. We check the robustness of our results using system GMM.FindingsOur findings suggest that CBM&A as a preferred mode of market entry provide a means for obtaining strategic resources to develop competitive advantages for the Chinese emerging market firms. The regression results indicate that home country macroeconomic and cultural variables, including GDP, liquidity, interest rates, inflation, acquisitions in resource seeking sectors and cultural distance play an important role in explaining the trends of CBM&A outflows by the Chinese firms.Research limitations/implicationsThe results imply that government support to EMEs to acquire strategic assets and economic policies in the home country play an important role in shaping international expansion behaviour of EMEs through CBM&A. The study demonstrates that outward investments of EMEs are partly a function of the level of economic policies and government support at home. The limitation is that most of the Chinese CBM&A transactions took place in Asia/Pacific locations. Future studies appear warranted if new data become available.Originality/valueThe study demonstrates how the institutions, strategic asset seeking with government support and economic policies in the home country play important role in shaping international expansion behaviour of emerging market enterprises through CBM&A thereby contributing to the political economy literature and institutional theory. More importantly, the study shows that the level of economic policies and development such as GDP, money supply, interest rates, inflation of the home country are important for EME growth in the international market

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