scholarly journals Direct and Indirect International Experience of Shareholders, Ownership Structure and Cross-border M&A

2015 ◽  
Vol 55 ◽  
pp. 1069-1078 ◽  
Author(s):  
Chenxi Guo ◽  
Ping Lv
Keyword(s):  
Ownership Structure ◽  
International Experience ◽  
Cross Border

scholarly journals Inward internationalisation and cross-border acquisitions by EMNEs: The moderating role of ownership heterogeneity

2021 ◽  
Author(s):  
◽  
Sharmistha Chowdhury
Keyword(s):  
Boundary Condition ◽  
Agency Theory ◽  
Ownership Structure ◽  
Multinational Enterprises ◽  
Entry Mode ◽  
Institutional Ownership ◽  
Organisational Learning ◽  
Experiential Knowledge ◽  
Cross Border ◽  
The Impact

<p>Unlike Advanced Economy Multinational Enterprises (AMNEs), Emerging Economy Multinational Enterprises’ (EMNEs) dominant participation in international trade and investment is a recent phenomenon. Still, EMNEs are found to adopt bold strategies in the early stages of their internationalization and show path departure in the selection of their entry mode, such as cross border acquisition (CBA). CBA is not only a widely adopted EMNE internationalisation strategy but also distinguished EMNA internationalisation behaviour from that of AMNEs. CBA, entailing a high level of risk, requires considerable experiential knowledge that EMNEs lack. This knowledge deficit increases the perceived cost and risk associated with internationalisation and decreases the likelihood of engaging in foreign investment. There is a gap in the knowledge around how EMNEs compensate for their lack of experiential knowledge and how this experiential knowledge influences EMNEs’ adoption of CBA. Drawing from organisational learning as a theoretical lens, this study proposes that learning from inward internationalisation facilitates EMNEs’ CBA decisions. From an organisational perspective, experiential knowledge, especially externally sourced, is valuable when the acquired knowledge fits the recipient organisations’ existing dominant logic and values. Therefore ownership structure, such as family, institutional or corporate ownership, acts as a boundary condition and may influence the impact of inward internationalisation on CBA decisions. This idea is grounded in agency theory. This study argues that EMNEs compensate for their lack of internationalisation experiential knowledge through inward internationalisation (externally sourced experiential knowledge) which serves as a resource based antecedent leading EMNEs to make risky CBA decisions. Further, from an agency theory perspective, the study proposes that inward internationalisation – CBA relationships are likely to vary for different types of ownership categories.  The study uses a quantitative approach to test the hypotheses in an Indian context. India, being a large emerging economy, provides an appropriate backdrop to test the study’s conceptual model. For this study, a sample of 369 CBAs conducted by 205 public listed companies from 2009 to 2017 was collected from the SDC platinum database. The sample generated a panel of 1845 firm-year observations. Through a negative binomial regression analysis, it is found that inward internationalisation has a positive impact on the likelihood of Indian MNEs’ CBA decision. Regarding the moderating effect of ownership, it is found that family ownership reduces the impact of inward internationalisation, whereas foreign institutional ownership increases the impact of inward internationalisation. No moderating effects are found for domestic institutional ownership, nor are they found for domestic or foreign corporate ownerships.  This research contributes to the understanding of the EMNEs’ risky internationalisation behaviour through CBA. The present study adds to this stream of research by focusing on inward internationalisation and ownership structure influencing risky CBA decisions. In doing so, it contributes to organisational learning literature by suggesting that the impact of experiential knowledge may not necessarily be the same across the firms. This heterogeneity is attributable to EMNEs (knowledge acquiring organisation) who show varying motives, objectives and governance structure depending on their ownership structure. By examining the boundary condition of ownership heterogeneity, this study also contributes to Principal–Principal (PP) agency theory that ownership concentration along with owner’s identity is not only confined to strategy formulation but also extends to entry mode (CBA) decisions. Goal incongruence due to PP conflict between owners also decides whether experiential knowledge acquired from inward internationalisation fits with the firms or not in the resulting CBA decision. Finally, this study provides deep insights on different owners’ attitudes and their supporting or confining roles in moderating the impact of inward internationalisation on Indian EMNEs’ risk-taking behaviour during internationalisation.</p>

The performance of cross-border acquirers from emerging economies

2016 ◽  
Vol 7 (1) ◽  
pp. 21-38 ◽  
Author(s):  
Xiaobai Ma ◽  
Yiying Zhu ◽  
Wenyuan Cai
Keyword(s):  
Emerging Economies ◽  
Ownership Structure ◽  
Value Creation ◽  
Multinational Enterprises ◽  
Design Methodology ◽  
Business Community ◽  
Short Term ◽  
Content Type ◽  
Cross Border ◽  
Traditional Understanding

Purpose – This paper aims to evaluate the value creation of cross-border acquisitions conducted by Chinese firms and determinants that result in the different performance. During the recent decades, the world has witnessed multinational enterprises (MNEs) from emerging economies undertaking aggressive cross-border mergers and acquisitions (M & As). This phenomenon raises great attention in the international business community, and also challenges the traditional understanding in the extant literature. Design/methodology/approach – The authors examine 272 cross-border M & As associated with 48 target countries during the period 1996-2012. Findings – Evidences show that cross-border expansions on average point to negative performance in the short term. The authors also find that prior cross-border M & A experiences, ownership structure of the acquirer (state-owned vs private) and acquirer size positively affect the performance of the acquiring firm. Originality/value – In addition to contributing to cross-border M & A literature, the findings also provide useful guidance to outward foreign direct investment by firms from emerging economies.

scholarly journals Inward internationalisation and cross-border acquisitions by EMNEs: The moderating role of ownership heterogeneity

2021 ◽  
Author(s):  
◽  
Sharmistha Chowdhury
Keyword(s):  
Boundary Condition ◽  
Agency Theory ◽  
Ownership Structure ◽  
Multinational Enterprises ◽  
Entry Mode ◽  
Institutional Ownership ◽  
Organisational Learning ◽  
Experiential Knowledge ◽  
Cross Border ◽  
The Impact

<p>Unlike Advanced Economy Multinational Enterprises (AMNEs), Emerging Economy Multinational Enterprises’ (EMNEs) dominant participation in international trade and investment is a recent phenomenon. Still, EMNEs are found to adopt bold strategies in the early stages of their internationalization and show path departure in the selection of their entry mode, such as cross border acquisition (CBA). CBA is not only a widely adopted EMNE internationalisation strategy but also distinguished EMNA internationalisation behaviour from that of AMNEs. CBA, entailing a high level of risk, requires considerable experiential knowledge that EMNEs lack. This knowledge deficit increases the perceived cost and risk associated with internationalisation and decreases the likelihood of engaging in foreign investment. There is a gap in the knowledge around how EMNEs compensate for their lack of experiential knowledge and how this experiential knowledge influences EMNEs’ adoption of CBA. Drawing from organisational learning as a theoretical lens, this study proposes that learning from inward internationalisation facilitates EMNEs’ CBA decisions. From an organisational perspective, experiential knowledge, especially externally sourced, is valuable when the acquired knowledge fits the recipient organisations’ existing dominant logic and values. Therefore ownership structure, such as family, institutional or corporate ownership, acts as a boundary condition and may influence the impact of inward internationalisation on CBA decisions. This idea is grounded in agency theory. This study argues that EMNEs compensate for their lack of internationalisation experiential knowledge through inward internationalisation (externally sourced experiential knowledge) which serves as a resource based antecedent leading EMNEs to make risky CBA decisions. Further, from an agency theory perspective, the study proposes that inward internationalisation – CBA relationships are likely to vary for different types of ownership categories.  The study uses a quantitative approach to test the hypotheses in an Indian context. India, being a large emerging economy, provides an appropriate backdrop to test the study’s conceptual model. For this study, a sample of 369 CBAs conducted by 205 public listed companies from 2009 to 2017 was collected from the SDC platinum database. The sample generated a panel of 1845 firm-year observations. Through a negative binomial regression analysis, it is found that inward internationalisation has a positive impact on the likelihood of Indian MNEs’ CBA decision. Regarding the moderating effect of ownership, it is found that family ownership reduces the impact of inward internationalisation, whereas foreign institutional ownership increases the impact of inward internationalisation. No moderating effects are found for domestic institutional ownership, nor are they found for domestic or foreign corporate ownerships.  This research contributes to the understanding of the EMNEs’ risky internationalisation behaviour through CBA. The present study adds to this stream of research by focusing on inward internationalisation and ownership structure influencing risky CBA decisions. In doing so, it contributes to organisational learning literature by suggesting that the impact of experiential knowledge may not necessarily be the same across the firms. This heterogeneity is attributable to EMNEs (knowledge acquiring organisation) who show varying motives, objectives and governance structure depending on their ownership structure. By examining the boundary condition of ownership heterogeneity, this study also contributes to Principal–Principal (PP) agency theory that ownership concentration along with owner’s identity is not only confined to strategy formulation but also extends to entry mode (CBA) decisions. Goal incongruence due to PP conflict between owners also decides whether experiential knowledge acquired from inward internationalisation fits with the firms or not in the resulting CBA decision. Finally, this study provides deep insights on different owners’ attitudes and their supporting or confining roles in moderating the impact of inward internationalisation on Indian EMNEs’ risk-taking behaviour during internationalisation.</p>

Branding and Consolidation in the Global Beer Market

2020 ◽  
pp. 192-215
Author(s):  
Erik Strøjer Madsen
Keyword(s):  
Ownership Structure ◽  
Rapid Change ◽  
Turn Of The Century ◽  
High Price ◽  
Price Premium ◽  
Corporate Ownership ◽  
High Quality ◽  
Cross Border ◽  
Lager Beer

The liberalization of trade turned on a wave of cross-border M&A after the turn of the century that dramatically increased the concentration of ownership in the global beer market, where the four largest breweries now serve close to 60 percent of the market. The chapter looks at the motivation behind these changes in corporate ownership and the pay-off to the breweries and their owners. The breweries spend a large amount of money promoting some of their lager beer as premium beer, and as consumers perceive it as high-quality beer, they are willing to pay a high price premium for the branded beer. We estimate the price premium for branded beer and relate it to the rapid change in the ownership structure in the beer market.

Acquirer-to-target relatedness and target country unfamiliarity in acquisitions

2017 ◽  
Vol 55 (5) ◽  
pp. 892-914 ◽  
Author(s):  
Ilaria Galavotti ◽  
Donatella Depperu ◽  
Daniele Cerrato
Keyword(s):  
Design Methodology ◽  
International Experience ◽  
Product Diversification ◽  
Moderating Effects ◽  
Content Type ◽  
Sources Of Uncertainty ◽  
Cross Border ◽  
Ordered Logistic Regression ◽  
The Relationship ◽  
Target Country

Purpose The purpose of this paper is to analyze corporate scope decisions in acquisitions with a focus on the relationship between target country unfamiliarity and acquirer-to-target relatedness and on the moderating effects played by product diversification and international experience. Design/methodology/approach Using a dataset of 689 acquisitions completed in the period 2007-2013 by acquirers located in 60 countries, this paper utilizes an ordered logistic regression analysis. Findings With greater target country unfamiliarity, acquirers are encouraged to pursue greater acquirer-to-target relatedness. This finding suggests that acquirers tend to seek a balance between product and international diversification to reduce the sources of uncertainty in their acquisition moves. While past international experience strengthens this relationship, diversification experience has a negative moderating effect and hence encourages acquirers to reduce relatedness at increasing market unfamiliarity. Originality/value The originality of this paper is twofold. First, the authors extend the traditional internationalization-diversification framework to an unfamiliarity-relatedness relationship in the context of acquisitions. Second, the authors propose a construct of target country unfamiliarity in acquisitions that goes beyond the traditional domestic vs cross-border dichotomy by including previous experience in the target country.

Ownership structure and OFDI by EMNES: the moderating effects of international experience and migrant networks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Changjun Yi ◽  
Yun Zhan ◽  
Jipeng Zhang ◽  
Xiaoyang Zhao
Keyword(s):  
Ownership Structure ◽  
Emerging Market ◽  
International Experience ◽  
State Ownership ◽  
Ownership Concentration ◽  
Moderating Effects ◽  
Content Type ◽  
Migrant Networks ◽  
Positive Effect ◽  
Heterogeneous Resources

PurposeThis study investigates the effect of ownership structure – ownership concentration and firm ownership – on outward foreign direct investment (OFDI) by emerging market multinational enterprises (EMNEs), and further explores the moderating effects of international experience and migrant networks on this relationship.Design/methodology/approachData of Chinese MNEs listed on Shenzhen and Shanghai stock exchanges between 2005 and 2016 are used. The empirical analysis is based on the negative binomial regression model.FindingsThe empirical results reveal a significant inverted-U relationship between ownership concentration and OFDI by EMNEs. State ownership is found to have a positive effect on OFDI by EMNEs. Both international experience and migrant networks strengthen the inverted-U relationship between ownership concentration and OFDI as well as the positive effect of state ownership on OFDI by EMNEs.Practical implicationsEMNEs need to maintain a moderate ownership concentration when conducting OFDI, and they are supposed to make full use of their own international experience and focus on migrant networks of the host country. Policy-makers in emerging economies need to better create a fair business environment for enterprises.Originality/valueCombining agency theory and the resource-based view, this study integrates ownership structure, firm-level heterogeneous resources – international experience and country-level heterogeneous resources – migration networks into a framework to study OFDI by EMNEs, which expands the scope of research in international business.

Promoting organizational diversity and preserving socioemotional wealth: can family businesses balance the two?

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Arindam Das
Keyword(s):  
Financial Performance ◽  
Ownership Structure ◽  
Business Group ◽  
Family Businesses ◽  
Growth Strategies ◽  
Organizational Diversity ◽  
Socioemotional Wealth ◽  
Export Intensity ◽  
Content Type ◽  
Cross Border

PurposeA key characteristic for a family firm, preservation of socioemotional wealth, may appear to be at conflict with the concept of organizational diversity. The authors investigate how organizational diversity, captured through heterogeneity in ownership structure, diversity in the senior management team, interfaces with the concept of the socioemotional wealth of family businesses in an emerging economy, when these firms pursue inorganic growth strategies.Design/methodology/approachDrawing on the concepts of socioemotional wealth, behavioral agency theory and bifurcation bias, the authors develop perspectives on how ownership structure, family influence in executive management and institutional shareholding influence a family firm's internationalization strategies captured through propensity to pursue cross-border M&A – an activity that may threaten the preservation of socioemotional wealth. The authors also explore the role of business group affiliation, another organizational diversity construct, and contingent parameters like past financial performance and export intensity in this study. The authors take pooled data over 15 years, involving 346 large firms from India, which are family-controlled, to carry out the study.FindingsThe authors’ empirical analysis shows that family stake in the company and family members' presence in the executive team negatively influence the propensity to pursue cross-border M&A activities. A firm's affiliation to a business group moderates these negative relationships. On the other hand, the presence of institutional shareholders, positive past financial performance and export intensity positively influence cross-border M&A propensity.Originality/valueThe results establish that family businesses' attempts to preserve socioemotional wealth may come at the cost of promoting organizational diversity.

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