The effect of change readiness of economies on international M&A flows

Abstract

Purpose The purpose of this paper is to examine how a country’s change readiness impacts international mergers and acquisitions (M&A) capital flows on a national level toward host countries. The authors unpack the construct of change readiness and identify how its different dimensions impact international M&As (IMA). The authors provide a theoretical framework based on the resource-based view to facilitate an understanding of this concept. Design/methodology/approach The authors used a fixed-effect analysis to study a sample of 2,970 IMAs announced by publicly traded US companies during 2013–2017. Findings The authors propose that higher levels of change readiness would help foreign firms to cope with risks and uncertainties generated by the changes and shocks in the environment of a host country. The authors find support for their hypotheses showing that higher levels of change readiness increase the number of IMAs that a country receives every year. This characteristic of the host country shows a significant influence, especially in technology-intensive IMA flows. Practical implications This study provides implications for business executives and policymakers both in terms of risk mitigation strategies and investment attraction. Understanding the fact that when it comes to foreign investment in the form of IMAs business executives are aware of the importance of change readiness in host countries might lead to motivate the governments and host country officials to provide better infrastructure to boost the change readiness in their economy. Originality/value Overall, this study improves our knowledge about mechanisms through which change readiness of host countries might impact firms' strategies for international expansion. As we are indeed living in the era of global disruptions and strong shocks caused by political turmoil, climate change and the spread of new diseases, this study contributes to the literature on risk mitigation in international business and is one of the first to look closely at the role of host countries' change readiness and the effect it might have on attracting international M&As.

Incumbent defense strategies and new entrants market exit: the moderating role of relational market-based assets

“…This study also provides helpful insights for policymakers who are responsible for promoting a fair competitive environment for the benefit of consumers (Gharagozloo et al , 2021). By enacting antitrust laws, policymakers prevent anticompetitive strategies and protect firms from predatory behavior (Dixit et al , 2006; Guiltinan and Gundlach, 1996).…”

The Impact of Financial Development on Inflation: Empirical Evidence from Kenya using the ARDL Approach

“…The general worst-case effect of inflation would be the failure of a country to meet its financial requirements as and when they fall due, thus exposing the country to harsh financial position in the global economy. This would ultimately make a country less attractive to the desirable international market investments (Gharagozloo, Chen, & Pour, 2022).The effects of inflation on financial sector development has been put at the core of research, particularly after the global economic crises and market crash in 2007, as well as the Covid-19 pandemic (Dumitrescu, Kagitci, & Cepoi, 2022 Ukraine, which affected the price of crude oil and therefore raised the cost of other goods. As for the internal factors: the Kenyan Treasury printed billions of shillings in the early 1990s, just before the country held its first multiparty elections, and this led to an illusory explosion of wealth.…”

Does environmental, social and governance performance affect acquisition premium?

“…Mergers and acquisitions (M&A) are fundamental strategies for companies aiming to increase their capital and adapt to market changes (Tampakoudis and Anagnostopoulou, 2020). They play a pivotal role in the growth, competitiveness and transformation of companies, generating significant capital flows globally each year (Moeini Gharagozloo et al, 2022). These transactions, driven by various factors ranging from seeking synergy to fulfilling financial objectives (Seth et al, 2000;Kuriakose and Paul, 2016), at times present lucrative opportunities for the owners of target companies (Chen and Gavious, 2015;Xie et al, 2017;Gomes and Marsat, 2018;Krishnamurti et al, 2019;Hussaini et al, 2022).…”

“…Mergers and acquisitions (M&A) are fundamental strategies for companies aiming to increase their capital and adapt to market changes (Tampakoudis and Anagnostopoulou, 2020). They play a pivotal role in the growth, competitiveness and transformation of companies, generating significant capital flows globally each year (Moeini Gharagozloo et al. , 2022).…”