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Chinese cross‐border mergers and acquisitions: strategic types, organizational factors and enterprise growth

Xiaojun Du (Professor based in the School of Business Administration, Northeastern University, Liaoning, China)
He Liu (PhD Student based in the School of Business Administration, Northeastern University, Liaoning, China)
Lingjing Bao (MA Student and Instructor in the Department of Communication and Journalism, University of New Mexico, Albuquerque, New Mexico, USA)
Peng Huang (AE Engineer at ANALOG DEVICES, Beijing, China)

Journal of Asia Business Studies

ISSN: 1558-7894

Article publication date: 26 April 2013

Abstract

Purpose

This paper aims to investigate the relationships between the strategic type of cross‐border mergers and acquisitions (M&As) and enterprise growth, and the moderating role of Chinese companies' organizational factors, including organizational structure, organizational experience, cultural distance and relative size.

Design/methodology/approach

The authors, as researchers, have mixed the strategic choice and post‐M&As integration into a comprehensive framework while building the theoretical model of “Strategic Type of Cross‐border M&As‐Organizational Factors‐Enterprise Growth” (ST‐OF‐EG). In this paper, they have empirically examined the model using hierarchical regression by analyzing 76 cross‐borders M&A events of overseas‐listed Chinese companies over the 2000‐2007 period.

Findings

The analysis shows that: related cross‐border M&As are better for enterprise growth than unrelated diversification cross‐border M&As; and among the organizational factors, studied organizational structure and organizational experience show a positive significance in terms of the relationship between the strategic type of cross‐border M&As and enterprise growth. The moderating role of cultural distance and relative size is non‐significant.

Research limitations/implications

In this paper, the moderating effect of cultural distance was found to be insignificant. However, further research is encouraged.

Practical implications

Chinese companies should pay attention to strategic choices before cross‐border M&As. They should expand abroad to markets step by step. They should merge the companies that have the higher relevance on a product, industry or market first. On the basis of specialization, Chinese companies should make themselves stronger and then develop from specialization to proper diversification, which is a robust path to achieve enterprise growth. Besides, Chinese companies should accumulate international experience as soon as possible and organizational structure should match the strategic choice.

Originality/value

This paper would be immensely helpful to Chinese companies to plan their cross‐border M&As strategy in a way that would enhance growth and core‐competence.

Keywords

Citation

Du, X., Liu, H., Bao, L. and Huang, P. (2013), "Chinese cross‐border mergers and acquisitions: strategic types, organizational factors and enterprise growth", Journal of Asia Business Studies, Vol. 7 No. 2, pp. 171-184. https://doi.org/10.1108/15587891311319459

Publisher

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Emerald Group Publishing Limited

Copyright © 2013, Emerald Group Publishing Limited