Building trust is critical in reverse mergers and acquisitions (M&As), attributed to the divergence of governance and culture between the East and the West. This paper aims to explore the barriers and trust-building practices of Chinese managers in reverse M&As in developed countries.
The primary data set of this research contains case studies of two Chinese M&A deals and in-depth interviews with managers and advisories in the Netherlands.
This research finds that the divergences of decision-making structure, communication style and trust orientation generate barriers to the trust building in Chinese reverse M&As. The third-party advisory participation helps to build cognition-based trust of acquired company managers on Chinese acquiring company managers through providing information and explanation, fitting Chinese buyers in the Western M&A procedure and offering communication. It also helps to build affect-based trust through bridging the divergence of trust orientation and filling the cultural voids. Meanwhile, the invisible integration helps to build cognition-based trust through maintaining the core business, offering great help to acquired companies for their business expansion and selecting the business collaboration areas in the long term. It also helps to build affect-based trust through granting a high degree of governance independence and enabling a balanced status in acquired companies.
This research unveils the “black box” of Chinese reverse M&As from an inter-personal trust perspective and advances the nuanced understanding of trust and trust-building practices in Chinese reverse M&As. It also provides practical tools for both Chinese companies and acquired companies in developed countries.
This paper would like to acknowledge the financial support by the Humanities and Social Sciences of the Ministry of Education of China (Grant No. 16JJD790017; Grant No. 18YJC630157), the China Postdoctoral Science Foundation (Grant No. 2019M651221), the Research Project of Jilin University on Clean-Government Construction (Grant No. 2017LZY012), and the Ministry of Education Project of Key Research Institute of Humanities and Social Sciences in Universities.
Sun, Z. and Zhao, L. (2019), "Chinese reverse M&As in the Netherlands: Chinese managers’ trust building practices", Chinese Management Studies, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/CMS-11-2018-0748Download as .RIS
Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited