What drives cross-border mergers and acquisitions? A study of Indian multinational enterprises
Abstract
Purpose
The purpose of this paper is to determine the motives of cross-border mergers and acquisitions (M & A) by Indian companies for the period 1998 through 2009. The study has also attempted to ascertain the post-merger paybacks realized by the sample acquirer companies. It also identifies the motives which help in improving the post-merger performance. The preference of the motives and post-merger paybacks realized across the development status of the host economy, age and industry of the company has also been found.
Design/methodology/approach
This paper uses a survey approach to collect the responses over the motives and post-merger paybacks. Statistical tools, namely, Likert scale, factor analysis, independent samples t-test and binary logistic regression have been used.
Findings
The study found that there are five motives of cross-border M & A – value creation, improvement in efficiency, market leadership, marketing and strategic motives and synergistic gains. The results also indicated that the acquirer firms expect cost and financial efficiency, stakeholders’ benefits and employee welfare post acquisition. The motive of value creation significantly improves the post-merger financial performance.
Research limitations/implications
The study has only considered the cross-border M & A but not domestic M & A.
Practical implications
The research is an attempt to understand the dynamics which are responsible for motivating Indian companies to go abroad for acquisitions. Thus, it would help the prospective Indian acquirer companies to focus on the motives which help in improving the post-merger financial performance.
Originality/value
This research paper is original as it explores the motivation of Indian companies for entering into cross-border M & A. It adds to the extant literature of cross-border M & A by emerging economies multinational enterprises.
Keywords
Acknowledgements
The authors truthfully thank the Guest Editors, K.S. Reddy and four anonymous reviewers for giving fruitful suggestions that significantly improved the manuscript. Ashu Lamba was a Doctoral Candidate (availing UGC Research Fellowship) and she is grateful to her research guide Vanita Tripathi for her excellent guidance and support throughout the research period. The paper is under the scope of Ashu Lamba ' s doctoral research (November 2011-August 2014). The authors declare that they have no conflict of interest with regard to the text and material used in this paper. The usual disclaimer applies.
Citation
Tripathi, V. and Lamba, A. (2015), "What drives cross-border mergers and acquisitions? A study of Indian multinational enterprises ", Journal of Strategy and Management, Vol. 8 No. 4, pp. 384-414. https://doi.org/10.1108/JSMA-05-2015-0040
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