Resource availability, international acquisition experience, and cross-border M&A target search: A behavioral approach

Abstract

Purpose

The purpose of this study is to explain how factors relating to resource availability affect managerial risk-taking with regard to the geographic and institutional proximity of cross-border merger and acquisition (M&A) targets. The paper further considers the impact of organizational learning by testing the moderating effect of the acquiring firms’ prior international M&A experience.

Design/methodology/approach

This study uses linear regression with robust standard errors to account for dependence among clustered observations at the firm level. The authors used country and industry fixed-effects specifications to account for unobserved heterogeneity.

Findings

The results suggest that when internal and external resources are more abundant, firms pursue cross-border M&As that are more geographically and institutionally distant. The findings further indicate that a firm’s prior international M&A experience positively moderates the aforementioned relationships..

Research limitations/implications

Extending the behavioral theory of the firm beyond organizational slack resources, the results highlight the importance of taking a multi-level, open-systems perspective of the strategic impact of resource availability. The authors’ theory and findings also provide a more nuanced view of the critical role organizational learning plays in the relationship between resource availability and organizational outcomes.

Originality/value

This is the first study to the authors’ knowledge that develops and tests a theoretical model exploring the impact of both internal (organizational slack) and external (environmental munificence at both the industry and home-country levels) resource availability, as well as prior organizational experience on an important multinational business practice.

Citation

Zakaria, R., Fernandez, W.D. and Schneper, W.D. (2017), "Resource availability, international acquisition experience, and cross-border M&A target search: A behavioral approach", Multinational Business Review, Vol. 25 No. 3, pp. 185-205. https://doi.org/10.1108/MBR-03-2017-0016