Cross-border mergers and acquisitions (CBMAs) from emerging economies (EEs) to developed economies (DEs) have recently experienced a phenomenal growth. CBMA is a fast and direct way to acquire advanced strategic assets from DEs by multinational enterprises from EEs (EMNEs) in order to improve their competitive advantages. What factors explain this strategic decision and what is the performance consequence? Using the institution-based view (IBV) as a theoretical lens, this thesis consists of three empirical research studies.
The first one analyses the institutional distance (ID) between the home and the host countries influencing EMNEs’ CBMAs in the OECD countries. Based on the comprehensive eight dimensions of ID framework developed by Berry et al. (2010), this study develops various hypotheses of positive and negative relationships between institutional distance and EMNEs’ CBMAs in the OECD countries. Empirical results confirm the impact of political, economic, knowledge, global-connectedness, administrative and cultural distance. Financial, demographic and geographic distances are insignificant.
The second study examines the role of political institutions in the host and home countries of EMNEs’ CBMAs, the two groups of variables that are often treated separately in the existing literature. Hypotheses are developed based on the concepts of six political institutions by Kaufmann et al. (1999). Empirical results show that in general host country political institutions positively affect EMNEs’ CBMAs in the OECD countries while home country political institutions play a negative role. Not all political institutional factors are of equal importance. Firms are concerned about government effectiveness, regulatory quality, rule of law and corruption of host countries, and political stability and lack of violence, regulatory quality, rule of law and corruption of home countries.
The third project looks into the acquired firm performance. Using accounting measures for firm performance, this empirical study analyses the impact of ID on acquired firm performance. Results suggest that formal institutional distance (political, economic and administrative) positively affect acquired firm performance, while informal institutional distance (cultural and knowledge) negatively affect acquired firm performance.
