Skip to main content

Research Repository

Advanced Search

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

Boateng, Agyenim; Du, Min; Wang, Yan; Wang, Chengqi; Ahammad, Mohammad F.

Authors

Agyenim Boateng

Yan Wang

Chengqi Wang

Mohammad F. Ahammad



Abstract

Purpose
The purpose of this paper is to examine 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 1998-2011.

Design/methodology/approach
Using three regression models, namely, ordinary least squares, 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. The authors check the robustness of the results using system GMM.

Findings
The findings suggest that CBM&A as a preferred mode of market entry provides 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 gross domestic product (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/implications
The results imply that government support to emerging market multinational enterprises (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/value
The 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.

Journal Article Type Article
Online Publication Date Feb 13, 2017
Publication Date 2017
Deposit Date Dec 10, 2021
Journal International Marketing Review
Print ISSN 0265-1335
Publisher Emerald
Peer Reviewed Peer Reviewed
Volume 34
Issue 1
Pages 87-108
DOI https://doi.org/10.1108/imr-10-2014-0330
Public URL http://researchrepository.napier.ac.uk/Output/2828606