Selective imitation of compatriot firms: Entry mode decisions of emerging market multinationals in cross-border acquisitions

Under the background of resource dependence, it is of great significance to study the emerging market multinationals’ (EMNEs) entry mode into international market. How do complementary assets and expansion opportunities in a host country market influence the EMNEs executive’s entry mode choice? We adopt policy capture method to designed questionnaire and administered to high-level EMNEs executives in China. The results show that the availability of complementary assets in the host country market have a positive influence on EMNEs executives’ evolutionary and leapfrog entry modes choice, and EMNEs executives’ preferences for leapfrog mode over evolutionary mode is positively related to the host country’s complementary assets. The expansion opportunities in the host country market have a positive influence on EMNEs executives’ evolutionary and leapfrog entry modes choice. This shows that expansion opportunities in the host country market have a similar degree of attraction for executives’ evolutionary and leapfrog modes. Unlike most current studies, which advocate that leapfrog is mainly used to obtain international assets, while evolutionary approach is more suitable for seeking international opportunities. This paper shows that the opportunity factors play the same important role as assets factors in promoting EMNEs executives’ springboard behavior. It also reveals the ambidexterity logic in EMNEs executives’ decision-making process.

Download Full-text

Has Financial Crisis Affected the Announcement Gains of Indian Cross-border Acquisitions?

IIM Kozhikode Society & Management Review ◽

10.1177/2277975216676126 ◽

2017 ◽

Vol 6 (1) ◽

pp. 55-66 ◽

Cited By ~ 2

Author(s):

Neelam Rani ◽

Aman Asija

Keyword(s):

Financial Crisis ◽

Global Financial Crisis ◽

Emerging Market ◽

Abnormal Returns ◽

Market Response ◽

Event Window ◽

Crisis Period ◽

Emerging Market Multinationals ◽

Cross Border ◽

The Global Financial Crisis

The failure of an unparalleled large number of financial institutions during the global financial crisis of 2007–2008 resulted in a freeze of global credit markets. The financial crisis has affected the capital markets around the world. In contrast, the global financial crisis has facilitated the strategic asset-seeking ambitions of emerging market multinationals. The objective of the present article is to examine the market response to cross-border acquisition by Indian companies during 2003– 2015 by conducting event study. We have also compared the acquisition gains before and after the financial crisis. The acquisition gains for the event window (–1, 1) are 2.06 per cent for the entire period 2003–2015 for a sample of 430 announcements. Two-thirds of the acquisitions experienced positive abnormal returns. The abnormal returns are positive and significant for the entire event window of 41 days. The empirical findings also suggest that the CAAR on the event day for pre-crisis period is 4.28 per cent compared to CAAR of 1.70 per cent during post-crisis period. Results are statistically significant. It is evident that market response has muted after the financial crisis.

Download Full-text