In search of strategic assets through cross-border merger and acquisitions: Evidence from Chinese multinational enterprises in developed economies

Abstract

Drawing on multiple cases of cross-border merger and acquisitions (CBMAs) by Chinese multinational enterprises (CMNEs), we investigate their search of strategic assets in developed economies (DEs). It is a received view that CMNEs use CBMAs to access strategic assets in DEs so as to address their latecomer disadvantages and competitive weakness. This paper aims to identify the nature of strategic assets that sought after by CMNEs and the post-CBMA integration approach, a partnering approach, adopted in enabling access to these assets. The findings reveal that CMNEs possess firm-specific assets that give them competitive advantages at home and seek for complementary strategic assets in the similar domain, but at a more advanced level. The partnering approach helps securing these strategic assets through no or limited integration, giving autonomy to target firm management team, retaining talents and creating synergy.

Do cross-border mergers and acquisitions increase short-term market performance? The case of Chinese firms

“…Accompanying the rapid development of the Chinese economy since the open door policy and economic reforms over past decades, Chinese firms are playing an increasingly important role in cross-border M&A activities (Li, Li, & Wang, 2016;Zheng, et al, 2016). However, we have Our findings are consistent with the majority of previous studies (Bhagat, Malhotra, & Zhu, 2011;Boateng, Wang, & Yang, 2008;Wang & Boateng, 2007;Zhou, et al, 2015) on cross-border M&As by EE firms, but are contrary to Aybar and Ficici's study (2009) …”

“…Chinese firms tend to seek high quality knowledge and resources through cross-border M&As, which has been identified as one of the two motivations of Chinese M&A deals alongside knowledge exploitation (Deng, 2007;Wang & Boateng, 2007;Zheng, et al, 2016). Chinese MNEs that lack modern managerial expertise, international market knowledge and advanced technology may be able to acquire valuable knowledge and resources when target firms are from institutionally developed countries because these countries are more likely to possess strategic resources needed by Chinese firms (Nicholson & Salaber, 2013).…”

Knowledge Creation Process and Sustainable Competitive Advantage: the Role of Technological Innovation Capabilities

“…Indeed, as global competition, environmental turbulence, and the knowledge economy continue to grow, knowledge is deemed a strategic asset that enables businesses to develop a competitive edge [1]. To achieve and maintain competitiveness and sustainable growth, companies must constantly absorb existing knowledge, create new knowledge, and pursue practical wisdom [2].…”

An Analysis of Synergies under Strategic Mergers and Acquisitions

“…Vertical integration refers to the business layout of multiple production processes along industrial chain, which can divided into the two categories of backward integration and forward integration [6]. Backward integration mainly refers to the upstream extension of the enterprise and the enterprise's self-supply of raw materials.…”

“…Throughout the development history of mergers and acquisitions, there has been a total of five mergers and acquisitions upsurges in the world, where the "enterprise remolding" was achieved. According to the internet report published by Tsinghua Science and technology research center in 2017, in the past few years, the number of China's merge and acquisition market transactions has been increasing year by year, of which growth amplitude has been also increasing and will continue to increase in the future [3]. In this way, the merge and acquisition has become an effective means to conduct economic structure adjustment and optimize resource under the background of market economy (the concrete data is shown as the following table).…”