As a global platform for cultural exchange, the Confucius Institute (CI) has effectively promoted sustainable development among countries and regions. However, existing literature has mostly drawn insights from the national macro-level to study the roles played by CIs, whereas the potential of CIs to influence corporate behaviors has not received extensive attention. This study expands the research on CIs from the national macro-level to the enterprise micro-level by exploring the effect of CIs on the likelihood of acquisition completion. Using data from 1695 Chinese cross-border acquisitions from 2006 to 2017, we find that establishment of CIs can significantly increase acquisition completion likelihood. Furthermore, the level of influence of CIs on acquisition completion depends on country- and firm- level factors. At the country level, the positive effect of CIs on completion likelihood intensifies when cultural distance between host countries and China is great. At the firm level, the acquirer’s past cross-border acquisition experience moderates the effects of CIs, which are more beneficial to firms with no previous successes. In addition, we have made some further analyses, and find that the presence of CIs not only helps to increase the likelihood of acquisitions completion, but also helps to shorten the acquisition durations. The role of CIs in cross-border acquisition completion likelihood do not depend on the types of Chinse enterprises, which indicates that CIs, unlike government agencies, do not offer additional help for SOEs.
Cultural distance and value creation of cross-border M&A: The moderating role of acquirer characteristics
