Research Output

Institutional Distance, Parent Company's Ability and Cross-Border M & A Performance: an empirical analysis based on Chinese Companies.

  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, especially based on developing countries samples, showed reverse conditional influence around the effects of “Liability of Foreignness”. Thus, institutional distance from macro level alone cannot completely explain organisational problems at micro level. We combine both the macro and micro level factors i.e. institutional distance and parent company’s core competency (ability). Suggesting that institutional distance can affect the performance directly and indirectly through parent company’s ability.
Analysis was based on 60 samples of companies that completed cross-border M&A in 2012, we analyzed the parent company's performance from 2010-2015, ascertained the regulation distance, economical distance, cultural distance, knowledge distance and characteristics.
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 affect on cross-border M&A performance.

  • Type:

    Article

  • Date:

    04 June 2018

  • Publication Status:

    Submitted

  • ISSN:

    1059-9231

  • Library of Congress:

    HD28 Management. Industrial Management

  • Dewey Decimal Classification:

    658 General management

  • Funders:

    Edinburgh Napier Funded

Citation

Fascia, M., Tan, H., & Sanderson, M. Institutional Distance, Parent Company's Ability and Cross-Border M & A Performance: an empirical analysis based on Chinese Companies. Manuscript submitted for publication

Authors

Keywords

institutional distance; internationalization; absorptive capacity; cross-border merger and acquisition; performance

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