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

Agyenim Boateng (Glasgow Caledonian University, Glasgow, UK)
Min Du (Leeds Business School, Leeds Beckett University, Leeds, UK)
Yan Wang (University of Huddersfield, Huddersfield, UK)
Chengqi Wang (University of Nottingham, Nottingham, UK)
Mohammad F. Ahammad (Nottingham Trent University, Nottingham, UK)

International Marketing Review

ISSN: 0265-1335

Article publication date: 13 February 2017

2565

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.

Keywords

Acknowledgements

The authors are grateful to the Guest Editors, particularly Dr Shlomo Tarba and the three anonymous reviewers for providing detailed and constructive feedback throughout the review process.

Citation

Boateng, A., Du, M., Wang, Y., Wang, C. and Ahammad, M.F. (2017), "Explaining the surge in M&A as an entry mode: home country and cultural influences", International Marketing Review, Vol. 34 No. 1, pp. 87-108. https://doi.org/10.1108/IMR-10-2014-0330

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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