A parent company's ability and cross-border M&A performance: an empirical analysis

Lu, Liu; Tan, Hock; Sanderson, Michael; Fascia, Michael

Abstract

Drawing from Berry’s nine-dimension-theory, the institutional distance discussed within this study was divided into four dimensions that include the regulation distance (including political distance and legal distance), economic distance, cultural distance and knowledge distance.
Empirical data, showed reverse conditional influence around the effects of “Liability of Foreignness”. We combine both the macro and micro level factors i.e. institutional distance and parent company’s core competency (ability).
Analysis was based on 60 samples of companies that completed cross-border
Results indicate that cultural distance has a negative relationship with cross-border M&A performance, while the parent company's absorptive capacity has a strong positive relationship with cross-border M&A performance. Furthermore, both play a mediate role in institutional distance, which has a measurable effect on cross-border M&A performance.

• Journal Article Type: Article
• Acceptance Date: Feb 1, 2018
• Online Publication Date: Feb 21, 2019
• Publication Date: Feb 21, 2019
• Deposit Date: Feb 21, 2019
• Publicly Available Date: Feb 21, 2019
• Journal: The journal of strategy, operations & economics
• Print ISSN: 2396-8826
• Peer Reviewed: Peer Reviewed
• Volume: 6
• Issue: 2
• Article Number: 1
• Series Title: Investigations with institutional distance.
• Series ISSN: 2396-8826
• DOI: https://doi.org/10.13140/RG.2.2.15397.14565
• Keywords: Institutional distance; internationalization; absorptive capacity; cross-border merger and acquisition; performance
• Public URL: http://researchrepository.napier.ac.uk/Output/1605852
• Contract Date: Feb 21, 2019