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Book part
Publication date: 19 September 2014

Yipeng Liu and Ping Deng

This chapter focuses on the Chinese cross-border merger and acquisition (M&A) amid the rising trend of multinational companies from emerging economies. Based on a

Abstract

This chapter focuses on the Chinese cross-border merger and acquisition (M&A) amid the rising trend of multinational companies from emerging economies. Based on a systematic review of published papers in top international business/strategy/organization journals on Chinese overseas M&A, we offer a tentative multilevel framework to consolidate the past achievement, consider contemporary debates, so as to direct future research efforts. We suggest that Chinese overseas M&A research should emphasize on a process perspective ranging from pre-acquisition to post-acquisition. In addition, qualitative research and methodological pluralism should be embraced to achieve this goal due to the nature of this emerging field of Chinese cross-border M&A. By allocating the extant literature into the multilevel framework, we articulate the demand and identify several potential topics for scholarly inquiry in the future in order to gain a nuanced understanding of this important phenomenon of Chinese cross-border M&A for both China and the rest of the world.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-78350-970-6

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Book part
Publication date: 21 December 2010

Hui Tan and Qi Ai

The increasing number of cases of developing country multinational enterprises (MNEs) buying assets from developed countries through merger and acquisition (M&A) calls for…

Abstract

The increasing number of cases of developing country multinational enterprises (MNEs) buying assets from developed countries through merger and acquisition (M&A) calls for more systematic evidences on this area. As a typical and representative developing country, China has already drawn the world's attention with several high-profile cross-border M&As in recent years. By examining the recent evidences of Chinese outward M&A, this chapter reviews the main motivations of outward M&A among state-owned enterprises (SOEs) and non-SOEs, and presents an overall picture of China's outward M&A in the last decade. In doing so, this chapter intends to explore the crucial role played by the Chinese government in orchestrating its internationalization activities and the long-term implications on the competitiveness of Chinese firms in the global marketplace.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-0-85724-465-9

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Article
Publication date: 18 October 2018

Yu Chen, Herbert Werle and Roger Moser

This paper aims to explore the critical success factors (CSFs) in Chinese cross-border Mergers and Acquisitions (M&As) to improve the odds of Chinese overseas acquisition…

Abstract

Purpose

This paper aims to explore the critical success factors (CSFs) in Chinese cross-border Mergers and Acquisitions (M&As) to improve the odds of Chinese overseas acquisition success.

Design/methodology/approach

For the multidisciplinary analysis purpose, a SCOPE model is developed to integrate the five key dimensions of Strategic (S), Cultural (C), Organizational (O), Process (P) and External (E) CSFs. Because of the exploratory nature of the research, a case study approach has been applied.

Findings

Based on the two in-depth case studies of Lenovo’s acquisition of Medion and Sany’s acquisition of Putzmeister in Germany, eight CSFs along the five key dimensions have been identified. Apart from the identified CSFs, the two other factors of robust due diligence and M&A project organizational structure fit are worthy of noting.

Research limitations/implications

The first limitation relates to the weaknesses of case study research method. The findings derived from the two selected M&A cases cannot be generalized to all the contexts of Chinese cross-border M&As. The second limitation relates to the subjective nature of judgments made by the participants in our empirical study. The identified CSFs were based on the perceptions of the interviewed managers.

Practical implications

The research is of high practical importance for Chinese companies doing or considering cross-border M&As. The CSFs identified in this research can direct managerial priorities toward those few areas which should receive careful attention and control to achieve the M&A success.

Originality/value

No much empirical research has addressed Chinese cross-border M&As from a CSF perspective. This research helps to fill this research gap and provides new insights for the Chinese companies to increase the success rate in their cross-border M&A projects.

Details

Nankai Business Review International, vol. 9 no. 4
Type: Research Article
ISSN: 2040-8749

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Article
Publication date: 12 November 2019

Claudio Petti, Francesca Spigarelli, Ping Lv and Mario Biggeri

The purpose of this paper is to analyze the internationalization of Chinese new global players through innovation-oriented Mergers and Acquisitions (M&As).

Abstract

Purpose

The purpose of this paper is to analyze the internationalization of Chinese new global players through innovation-oriented Mergers and Acquisitions (M&As).

Design/methodology/approach

The paper combines the analysis of East-Asian and Chinese multinationals’ international expansion within international business (IB) and innovation domains, with the “latecomer” perspective. It is a conceptual contribution, based on the role of local institutions and firm’s absorptive capacity. A theoretical framework is developed, and further elucidated with two illustrative cases of Chinese M&As abroad in the automotive sector. Implications for theoretical development and practical application are then drawn.

Findings

Chinese firms’ M&As abroad have become one of the preferential modes of developing innovation capabilities. The success of these endeavors is argued to be the result of a combination of a strong push from government industrial policies, along with significant internal knowledge assimilation and transformation capabilities.

Originality/value

The paper extends IB literature integrating the latecomer firms’ perspective within a novel conceptual framework, which adds to the traditional resource-based arguments about incumbent MNEs asset and knowledge-seeking internationalization modes, as well as institutional and multi-dimensional absorptive capacity perspectives.

Details

International Journal of Emerging Markets, vol. 16 no. 2
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 18 June 2010

Ping Deng

Chinese companies are increasingly using cross‐border mergers and acquisitions (M&A) to source knowledge or strategic assets. For many, global acquisitions have proven to…

Abstract

Purpose

Chinese companies are increasingly using cross‐border mergers and acquisitions (M&A) to source knowledge or strategic assets. For many, global acquisitions have proven to be highly problematic and value‐destroying. The purpose of this paper is to address this critical acquisition failure issue from an absorptive capacity perspective.

Design/methodology/approach

Guided by the framework that focuses on how acquiring a firm's weak absorptive capacity damages its ability to assimilate, integrate and apply external new knowledge, one high‐profile Chinese failed acquisition: TCL acquisition of France's Thomson's TV business in 2004 is analyzed empirically.

Findings

Acquisition performance of Chinese overseas M&A is found to be substantially affected by the acquiring firm's absorptive capacity at multiple dimensions. Research limitations/implications – The absorptive capacity construct provides an insightful account for differentials in Chinese overseas M&A performance.

Practical implications

For decision makers interested in formulating and implementing overseas M&A strategy, appropriate evaluation of their own firms’ absorptive capability should be the first step to take. Originality/value –This is the first paper to apply absorptive capacity arguments to Chinese resource‐driven M&A strategy, and will prompt business academicians and practitioners to think about M&A strategy in new and innovative ways.

Details

Management Research Review, vol. 33 no. 7
Type: Research Article
ISSN: 2040-8269

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Article
Publication date: 30 June 2020

Runhui Lin, Fei Li and Adedigba Olawoyin

Overconfidence as an important psychological factor can also affect CEO’s cognitive preferences, while there are few studies about the impact of CEO’ overconfidence on the…

Abstract

Purpose

Overconfidence as an important psychological factor can also affect CEO’s cognitive preferences, while there are few studies about the impact of CEO’ overconfidence on the international expansion of companies. This paper aims to fill this gap and further discuss the moderating role of CEO’s overseas experience, CEO duality and ownership.

Design/methodology/approach

The authors focus on the Chinese context, collect 2008–2016 data from China's manufacturing industry as sample, use fixed effect model to analyse the effect of CEO overconfidence on international expansion strategy of Chinese firms.

Findings

The empirical results show that: CEO overconfidence positively promotes the degree of firm internationalization. CEO foreign experience positively affects the internationalization degree, but can restrain overconfidence thus negatively regulate this impact relationship. When duality is present, both CEO power and managerial discretion are pronounced and they exhibit a stronger effect. Firm’s equity nature will affect the relationship between CEOs' overconfidence and the degree of internationalization. Compared with private enterprises, CEOs in state-owned enterprises have limited power, therefore, this influence relationship is weaker.

Originality/value

This study has emphasized the importance of top executives' psychological characteristics on firm internationalization, which is key application and complement of upper echelons theory and fills the research gap in the literature. In this paper, the authors found the advantages of overconfidence for firms, which helps to understand the complex meaning of overconfidence. The results of moderating effect further explore the application of overconfidence in different context, which has some implications for management practice.

Details

Nankai Business Review International, vol. 11 no. 4
Type: Research Article
ISSN: 2040-8749

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Article
Publication date: 14 November 2016

Yu Chen, Herbert Werle and Roger Moser

The purpose of this paper is to compare the critical success factors (CSFs) between two groups of European mergers and acquisitions (M&As) in China and Chinese M&As in…

Abstract

Purpose

The purpose of this paper is to compare the critical success factors (CSFs) between two groups of European mergers and acquisitions (M&As) in China and Chinese M&As in Europe.

Design/methodology/approach

In the paper, a mixed-method research design which combines primary case study with secondary questionnaire survey is applied.

Findings

The findings from the case study show the main differences with respect to CSFs between the two groups are related to: importance of relationship building in Chinese culture, Chinese culture trait of high power distance, Chinese decision process, complicated Chinese approval process for foreign companies doing M&As in China, integration of acquired Chinese/European company, and relatively new phenomenon of Chinese acquisitions in Europe. The Mann-Whitney-Wilcoxon test from the questionnaire survey provides statistical support for significant difference between the two groups regarding the factor of involvement and commitment of acquiring companies’ entrepreneurial CEO/chairman in the M&A process.

Originality/value

This paper is among the first attempts to conduct a comparative study which provides new insights into the differences between the CSFs in European M&As in China and in Chinese M&As in Europe.

Details

Journal of Organizational Change Management, vol. 29 no. 7
Type: Research Article
ISSN: 0953-4814

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Article
Publication date: 17 October 2019

Zhe Sun and Liang Zhao

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…

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Originality/value

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.

Details

Chinese Management Studies, vol. 14 no. 1
Type: Research Article
ISSN: 1750-614X

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Article
Publication date: 25 September 2018

Zhe Sun

The purpose of this paper is to unpack the black box of post-merger and acquisition (M&A) integration of reverse M&A by Chinese multinational enterprises (MNEs).

Abstract

Purpose

The purpose of this paper is to unpack the black box of post-merger and acquisition (M&A) integration of reverse M&A by Chinese multinational enterprises (MNEs).

Design/methodology/approach

This research adopts multiple cases of Chinese reverse M&A. Data are collected using the approaches of in-depth interviews, storytelling and narratives.

Findings

This research identifies various antecedents underlying Chinese post-M&A integration, such as asymmetries in resources, capabilities, vision and status between Chinese MNEs and acquired firms. The post-M&A integration process of Chinese reverse M&A consists of a top-down effortless integration initiated by Chinese MNEs with both benefits and problems, and a bottom-up reverse integration conducted by acquired firms.

Originality/value

By linking the pre-M&A phase and the post-M&A phase, this research builds a new model of post-M&A integration of Chinese reverse M&A from an indigenous Wu Wei paradigm. The new model counterpoises extant literature, shifting from the task and efficiency-focussed view to the people and harmony-focussed view.

Details

Chinese Management Studies, vol. 12 no. 4
Type: Research Article
ISSN: 1750-614X

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Book part
Publication date: 25 October 2014

Simona Gentile-Lüdecke

The chapter looks at two recent acquisitions by Chinese companies of German firms operating in the automotive sector. In both cases it was the target firm that initiated…

Abstract

Purpose

The chapter looks at two recent acquisitions by Chinese companies of German firms operating in the automotive sector. In both cases it was the target firm that initiated the process, intentionally selling to a Chinese strategic investor. The main purpose of the chapter is to examine the main motivations that induce developed country MNEs to deliberately search for a buyer in China.

Methodology

The chapter uses a case-study approach. Interviews were conducted with the managers that followed the entire process of sale and who were responsible for the search and the selection of a strategic investor in China.

Findings

Empirical findings show that major drivers in opting for Chinese investors are the potential synergies generating from resource redeployment, the ability of the acquired firm to maintain its autonomy and the opportunity to expand into the Chinese market.

Research implications

The cases analysed show that developed country firms may take a proactive role in China in order to address their institutional-based disadvantages and to reduce and eliminate the liability of foreignness they may confront there. What is important is strong core competitiveness on their side, which can ensure their operational autonomy, such as technological leadership and superior quality and solid development. The policy implications are relevant, because in the current particular situation where many companies in Europe turn for sources of capital to emerging market firms, Chinese investors can facilitate target companies’ growth, with a positive impact for the local economy.

Details

Multinational Enterprises, Markets and Institutional Diversity
Type: Book
ISBN: 978-1-78441-421-4

Keywords

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