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Research summary: Inconclusive findings about the effect of national cultural differences on post-acquisition performance may be created by the failure to distinguish among the different cultural dimensions and the asymmetry of cultural differences. To demonstrate a different approach, this study focuses on one dimension of national cultural values—power distance value (PDV) and develops a framework for the asymmetric effect of PDV differences in creating two types of conflicts. The analysis of 2,115 cross-border acquisitions in the global information technology industry shows that PDV differences undermine the long-term post-acquisition performance of acquirers. This effect is stronger when acquirers are higher than targets in PDV than when the opposite is the case. This asymmetric effect of PDV difference depends on national status difference, business relatedness, and acquisition experience. Managerial summary: National cultural differences can create \"cultural clashes \" to undermine the value creation by cross-border acquisitions. During integration, individuals react to the acquirer-target hierarchy according to their respective power distance value (PDV): the extent to which they value equality (low PDV) or hierarchy (high PDV). PDV divergence results in two types of conflicts, depending on whether acquirers are higher or lower than targets in PDV. The two types of conflicts vary in the magnitude of their harmful effect on post-acquisition performance. Both types of conflicts are more detrimental when acquirers are higher than targets in country status and when individuals need to interact more intensely. Acquisition experience can both help and harm post-acquisition performance. These findings offer important implications for managing cross-border acquisitions.

Empirical research has not consistently identified antecedents for predicting post-acquisition performance. We employ meta-analytic techniques to empirically assess the impact of the most commonly researched antecedent variables on post-acquisition performance. We find robust results indicating that, on average and across the most commonly studied variables, acquiring firms' performance does not positively change as a function of their acquisition activity, and is negatively affected to a modest extent. More importantly, our results indicate that unidentified variables may explain significant variance in post-acquisition performance, suggesting the need for additional theory development and changes to M&A research methods.

Research summary: Scholars and policy-makers have tended to assume that asset sales have a negative effect on stakeholders, but quantitative evidence to inform the debate has been scarce. In our research, we explored one way such sales could be beneficial: by facilitating the transfer of specialized capabilities used for environmental improvement. Employing quantitative data from a longitudinal sample of U.S. manufacturers, we find evidence consistent with the transfer of capabilities to or from acquired assets. Our results inform theories of ownership change and the conditional flow of capabilities among operations. They provide evidence as well of the existence of environmental capabilities. For policy-makers they provide needed evidence and insight on the merits of regulations designed to limit asset sales. Managerial summary: It is often assumed that acquisitions harm environmental performance-acquisition leads to greater emphasis on efficiency, while focusing on environmental performance is driven by managerial discretion. We propose instead that acquisitions might lead to improvement in environmental outcomes; the key is in knowing where to look for improvement. We studied thousands of facility-level acquisitions and find that when a clean firm buys a facility from a dirtier firm, that facility's environmental performance improved. When a dirtier firm buys from a cleaner one, however, it is the dirtier firm's other facilities in the same industry of the target that improved. These results, along with extensions we undertook, suggest that managers and policy-makers should view acquisitions as conduits rather than impediments in transferring environmental capabilities.

We integrate insights from organization design, economic game theory, and social psychology to examine the role of prior resource allocation and communication in alleviating behavioral uncertainty arising in interunit coordination settings. We use the context of post-acquisition coordination, focusing on the extent to which routines created under one organizational architecture (i.e., interorganizational alliances) may transfer to another organizational architecture (i.e., internal divisional structures via acquisition of alliance partners). Using a randomized experimental design, we find that prior resource allocation decisions in the absence of prior communication lowers post-acquisition performance due to the development and transference of pre-acquisition stage routines that may be inappropriate post-acquisition. Post-acquisition performance is aided, however, by the formation of noncompetitive routines in the pre-acquisition stage in the presence of communication.

This paper seeks to identify the social dynamics underlying ″socially driven″ acquisitions and their effect on post-acquisition performance. Drawing on research into social stratification, we formulate hypotheses on how these socially driven acquisitions perform in relation to both the position held by the acquirers’ top managers (CEOs and owners) in the social hierarchy and the extent to which the acquisition context is socially loaded (prestigious). We examine these hypotheses empirically using a sample of 123 Bordeaux châteaux acquired by Chinese companies between 2008 and 2015. Our results show that social dynamics substantially influence post-acquisition performance: socially driven acquisitions can lead to positive performance when their aim is (social) status enhancement, while those that target elite-membership reassertion, defined as conspicuous acquisitions, perform less well. These results encourage the acquisition literature to reconsider the assumed negative post-acquisition performance of self-interest acquisitions. The paper also proposes a broad view of acquisitions, which includes social dynamics.

PurposeEmerging market multinational companies have been vigorous in pursuing inorganic growth through cross-border acquisitions (CBAs). The fundamental studies till now have portrayed that rapid internationalization through CBAs tends to create value for these emerging market firms (EMFs) in the short term. However, there is an ambiguity about whether these firms endure better performance in the long term. The purpose of this study is to assess the long-term (ex-post) financial and operating performance of EMFs involved in overseas acquisitions before the COVID-19 pandemic hit the world economy.Design/methodology/approachCBAs completed by Indian and Chinese companies constitute the sample of the study. The performance has been analysed during the pre-COVID period spanning 17 years from 2001 to 2017. A comprehensive set of 14 financial ratios has been used to represent change (improvement/decline) in enterprises’ post-acquisition operating performance; these ratios have been divided into four broad groups: profitability, efficiency, solvency and liquidity ratios.FindingsThe performance of Indian companies has deteriorated significantly after the acquisition. However, there has been no change (deterioration/improvement), subsequent to CBAs, in the profitability of Chinese firms.Practical implicationsThe findings of the study support that firms from emerging economies exploit CBAs as a “springboard” to obtain strategic assets including intangible resources and brands rather than to achieve synergies through economies of scale and scope. Apparently, outbound acquisitions by emerging economy firms are not driven by cost-reduction or revenue-generation activities.Originality/valueNone of the studies, to the best knowledge of the authors, has carried out performance analysis using a comprehensive set of financial ratios. The comparative study of two emerging economies is another valuable addition to the existing literature. The study holds the potential to serve as the benchmark to assess the performance of CBAs executed after COVID-19.

Purpose This study aims to explore how the absorptive capacity of emerging market multinationals (EMNEs) facilitates increased acquirer performance in industry exploration and technology exploration cross-border acquisitions (CBAs). Design/methodology/approach The research context for this study is Brazilian EMNEs and their CBAs. The final database contains 101 CBAs. Findings The authors find that industry exploration strategies negatively affect financial performance, but technology exploration strategies have a positive effect. The acquirer’s absorptive capacity can exacerbate the negative effects, except in instances of technology exploration strategies, where there is a demonstrable benefit from the acquirer’s absorptive capacity. Originality/value The study contributes first by providing a more nuanced understanding of the effects of absorptive capacity on postacquisition performance, depending on the type of knowledge explored. Second, by drawing on EMNE learning perspectives, the authors demonstrate the versatility of absorptive capacity in emerging markets.

PurposeCultural distance can be a challenge for internationalization. However, in some instances, it is possible that different cultures could represent a benefit for multinational enterprises (MNEs) from emerging contexts. Drawing on the knowledge-based view (KBV), the authors propose that greater cultural distances lead to benefits for multinationals seeking to absorb new knowledge overseas.Design/methodology/approachThe authors performed ordinary least squares regressions with moderation tests over a database containing 101 cross-border acquisitions to test the study’s hypotheses. The acquisitions were performed by Brazilian firms between 1995 and 2015, targeting 24 host countries.FindingsThe study’s results indicate that cultural distance positively affects the firm's post-acquisition performance and that absorptive capacity moderates these results, improving the positive effect. The study suggests that cultural diversity is an asset for the multinationals in question.Practical implicationsWhen deciding to invest in a foreign country, managers should consider this cultural diversity as one more value creation driver, especially if the firm has well-developed innovation capabilities.Originality/valueThe study’s findings contribute to the international business literature providing further evidence that emerging markets multinationals can create value in acquisitions through the firm's abilities to exploit cultural asymmetries. Thus, the authors also emphasize that absorptive capacity plays a strategic role in multinational's international strategies.

Literature has advanced two contrasting theoretical perspectives related to the governance structure of business groups: the ‘value-constraining’ perspective, which focuses on principal–principal agency conflict and organizational inertia theory, and the ‘value-enabling’ perspective, which emphasizes the role of business groups in mitigation of institutional voids. Building on these two competing lenses, we develop hypotheses to examine post-acquisition performance of affiliate firms relative to stand-alone firms. As our empirical context, we study 440 majority-stake, domestic and cross-border merger and acquisition deals closed by Indian firms during the period 2002–2013. The results imply that in emerging markets, despite concerns of organizational inertia and principal–principal agency issues, the value-enabling impact of group affiliation persists. We also examine the contextual impact of intergroup heterogeneity owing to group diversification on post-acquisition performance and find that greater group diversification leads to better performance for affiliate acquirers. 已有文献针对商业群体的治理结构提出了两个相反的理论观点。“价值约束”观点聚焦委托代理冲突和组织惰性理论，“价值赋能”观点则强调商业群体在减少制度空白中的作用。基于两种对立的视角，我们建立了假设检验附属公司相对于独立公司完成并购后的业绩。我们研究了印度公司在2002-2013年间完成的440个国内和跨国的大股东并购案例，结果表明在新兴市场中，尽管存在组织惰性和委托代理方面的顾虑，群体隶属的价值赋能影响依然存在。我们还考察了因群体多样化而产生的群体间的异质性对于并购后业绩所产生的情境影响，发现更大的群体多样化导致附属的并购企业产生更好的业绩。 В научной литературе существуют две противоположные теоретические перспективы, которые связаны со структурой управления в деловых кругах: перспектива «ограничения ценности», которая основана на конфликте «принципал-принципал» и теории организационной инерции, и перспектива «создания ценности», которая подчеркивает роль деловых кругов в ослаблении влияния институционального вакуума. Опираясь на эти две противоположные точки зрения, мы разрабатываем гипотезы для изучения производительности дочерних компаний после приобретения по сравнению с самостоятельными компаниями. В качестве нашего эмпирического контекста, мы изучаем 440 внутренних и международных сделок по слиянию и поглощению с мажоритарным участием, которые заключили индийские компании в период 2002–2013 годов. Результаты показывают, что на развивающихся рынках, несмотря на организационную инерцию и проблему «принципал-принципал», принадлежность деловых кругов способствует созданию ценности. Мы также изучаем контекстуальное влияние межгрупповой неоднородности, основанной на групповой диверсификации, на производительность после приобретения и обнаруживаем, что большая групповая диверсификация ведет к повышению производительности для аффилированных приобретателей. La literatura ha avanzado dos perspectivas teóricas contrastantes relacionadas con la estructura de gobierno de los grupos empresariales: la perspectiva de “limitador de valor” la cual se enfoca en la teoría de inercia organizacional y del conflicto de la agencia principal y la principal, y la perspectiva de “habilitador de valor”, la cual enfatiza el rol de los grupos empresariales en la mitigación de los vacíos institucionales. Sobre la base de estos dos lentes que compiten, desarrollamos hipótesis para examinar el desempeño posterior a la adquisición de las empresas afiliadas en relación con las empresas independientes. En nuestro contexto empírico, estudiamos 440 acuerdos de fusiones y adquisiciones mayoritarios cerrados por empresas indias durante el periodo 2002-2013. Los resultados implican que, en los mercados emergentes, a pesar de las preocupaciones de la inercia organizacional y los asuntos de agencia principal a principal, el impacto habilitador de valor de la afiliación del grupo persiste. También examinamos el impacto del contexto de la heterogeneidad intergrupal debido a la diversificación grupal en el desempeño posterior a la adquisición y encontramos que una mayor diversificación grupal lleva a un mejor desempeño para los adquirientes afiliados.

The primary studies on emerging market multinational firms (EMFs) thus far have depicted a picture of accelerated internationalization in which EMFs conduct a series of aggressive cross-border acquisitions to further enhance their competitive advantage. However, it is not clear whether the EMFs which conducted the acquisitions at a young age experience better performance. EMFs constrained by their home market development in economic institutions may encounter different challenges in their cross-border acquisitions. Using a sample of South African firms' acquisitions between 1994 and 2012, we find support for the benefit of foreign acquisitions at a young age as well as the moderation effects of economic distance and economic freedom. While early inorganic growth provides an excellent opportunity to propel South African firms' growth, the country level factors present important boundary conditions to examine the benefit of early internationalization. While facing a significant economic distance, older firms are better at utilizing their experience and experience better post-acquisition operating performance. By contrast, the younger firms benefit more from the post-acquisition when the home country has weaker economic freedom.