Light‐Touch Integration of Chinese Cross‐Border M&A: The Influences of Culture and Absorptive Capacity

Abstract

As a major entry mode of global strategy of Chinese MNCs, Chinese cross‐border merger and acquisition (M&A) is still a less understood phenomenon, in particular the post acquisition phase. This study contributes to this rising, important and interesting phenomenon utilizing an explorative research method. By integrating synergy potential, culture influences and the learning perspective, we suggest a multilevel perspective in understanding Chinese cross‐border M&A. A novel post acquisition integration approach, namely light‐touch integration, is investigated, and supported by newly assembled empirical evidence in the context of Chinese M&A in Germany. Light‐touch integration essentially synthesizes the preservation and symbiosis integration approaches due to the contextual characteristics of Chinese cross‐border M&A, such as cultural influences and the learning perspective. Understanding the cultural and learning influences can facilitate and smooth the activities involved in the post acquisition phase. The light‐touch integration approach offers ample opportunities for joint collaborations between and mutual benefits for acquiring firms, acquired targets and third party organizations. © 2013 Wiley Periodicals, Inc.

An event study of home and host country patent generation in Chinese MNEs undertaking strategic asset acquisitions in developed markets

“…The innovative activity in the acquired DM firms, however, does not significantly change. We critically explore how these findings are best explained in light of recent research, noting the relevance of explanations that emphasize the domestic market exploitation of acquired strategic assets (Hennart, 2012), 'light-touch' post-acquisition integration strategies in knowledge rich target firms (Liu & Woywode, 2013;Schüler-Zhou & Schüller, 2013), as well as knowledge accessing FDI strategies (Awate, Larsen, & Mudambi, 2014).…”

“…One response, it is argued, is that Chinese MNEs often give acquired firms considerable autonomy in the post-acquisition stage (Estrin & Meyer, 2011;Liu & Woywode, 2013;Rui & Yip, 2008). Recent empirical work has shown, for example, that Chinese MNEs generally take a 'light-touch' approach to the post-merger integration management of their foreign strategic-asset related acquisitions.…”

Post-Acquisition Integration Strategies– Some illustrative evidence from Chinese acquisitions of Italian luxury firms

“…However, the relative degree of lighttouch approach adopted is significantly different. While in the case of Benelli, the light-touch approach is clearly an integration of preservation and symbiotic approach (Liu and Woywode, 2013), in the case of Meneghetti a partial absorption strategy was implemented (Haspeslagh and Jemison, 1991). In both instances by considering the national culture of the acquirers characterized by relatively lower levels of uncertainty avoidance (i.e.…”

“…The partnering integration mode, which is close to a strategic alliance, would be, if not completely distinctive, at least a recurring feature of Chinese firms and manifests itself through several features: structural separation of the acquired entity, selective coordination of activities between the two entities, few replacements of the target's resources (management team, brands), high organizational autonomy left to the target, and a gradual integration speed. Liu and Woywode (2013) propose a post-acquisition integration framework that identifies synergy potential (strategic intent and industry complementarity), cultural influences (cultural differences and cultural specific dimensions) and absorptive capacity (individual and organizational) as explanatory antecedents to the chosen integration approach. By blending several theoretical lenses, they extend the revised model of integration mode (Weber et al, 2009) and add one important element, which is learning perspective.…”

“…Chinese companies are attractive bidders because they are often rich in cash either from profits made in the lucrative Chinese market or as a result of state support. The attractiveness of these deals to target firms is often further enhanced by the maintenance of a strong separation between them and the acquiring firms, following a "light-touch" post-acquisition integration strategy (Liu & Woywode, 2013). Under this approach, target firms are able to keep their identity and organizational structure and to continue business at their original locations, with most decisions still made by their own management.…”