Exploring governments' role in mergers and acquisitions using IVIF MULTIMOORA-COPRAS technique

Abstract

Purpose

Existing studies have found that most merger and acquisition (M&A) activities do not create the intended synergy. These studies have mainly investigated how firms' internal factors contribute to M&A successes or failures. The current study differs from the earlier ones by exploring how governments' activities can contribute to the creation of acquisition synergy.

Design/methodology/approach

A novel technique based on multi-objective optimization by ratio analysis and complex proportional assessment method under an interval-valued intuitionistic fuzzy (IVIF) environment is proposed to prioritize these government roles needed during the M&A process focusing on the Chinese M&A market.

Findings

Enactments of regulations and loan guarantees are the most important strategies to help Chinese acquirers overcome acquisition failures. While tax relief ranks third, government training support ranks fourth. Finally, the result shows that government institutional support is the least to help acquirers overcome acquisition failures.

Practical implications

The government has a role to play in the acquisition success. Although this study has prioritized governments' role in relative importance order, the authors recommend that governments capable of providing all these strategies should do so without any specific order. However, if otherwise, governments should not neglect the strategies with less weight completely but rather consider reducing capital allocations to such strategies. Moreover, this study shows how firms with stronger business ties with government officials may enjoy success during acquisition activities. The authors recommend that firms intending to make acquisitions develop stronger ties with governments in order to benefits from governments.

Originality/value

This is the first study to develop a theoretical framework showing how government can contribute to M&A success. The study achieves this by extending Keynesian's arguments and identifies five (5) ways in which governments can ensure acquisition success. Second, within fuzzy multi-criteria decision-making (F-MCDM) research, this study is the first to show the applicability of integrated multi-objective optimization by ratio analysis (MULTIMOORA) and complex proportional assessment (COPRAS) techniques in an IVIF environment. The novel methodology proposed in this study offers an insightful research method to future studies focusing on group decision problems.

Citation

Opoku-Mensah, E., Yin, Y., Asiedu-Ayeh, L.O., Asante, D., Tuffour, P. and Ampofo, S.A. (2023), "Exploring governments' role in mergers and acquisitions using IVIF MULTIMOORA-COPRAS technique", International Journal of Emerging Markets, Vol. 18 No. 4, pp. 908-930. https://doi.org/10.1108/IJOEM-11-2020-1405