The role of human resource management in cross-border mergers and acquisitions

Abstract

As an emerging economy undergoing structural reform, employment quantity and quality in China benefit from outward foreign direct investments. Cross-border mergers and acquisitions have been developing rapidly. International human resource integration is one of the determining factors in the success of the outward direct investment. Human resource management risk is more complicated in the situation of cross-border mergers and acquisitions. With case studies from cross-border merger and acquisition practice in China, this paper studies the risks in cross-border mergers and acquisitions, and gives corresponding coping strategies. Human resource management risk has various forms in cross-border mergers and acquisitions, arises from various source, such like labor risk, cultural difference, organizational cultural divergence, incentive system. This paper analyzes strategies for international human resource management, include localization strategy, social responsibility of multinational corporation in host country, communication, incentive reward system and due diligence before merger and acquisition.

The impact of leadership on organizational ambidexterity and employee psychological safety in the global acquisitions of emerging market multinationals

“…In addition to their typical resource-and market-seeking motives, EMMs also undertook cross-border acquisitions to access high-technology and managerial practices and processes (Huang & Khanna, 2003;Purushothaman, 2004;Kumar, 2008;Gubbi et al, 2010;Hattari & Rajan, 2010). Although cross-border acquisitions are typically more complex (Aguilera & Dencker, 2004), the extant narrative on EMMs global acquisitions generally focuses on the performance of such acquisitions without critically examining the underlying processes that can explain the performance peculiarities (Rottig, 2013;Rottig, Reus & Tarba, 2014).…”

Foundations of Responsible Leadership: Asian Versus Western Executive Responsibility Orientations Toward Key Stakeholders

“…In terms of financial systems, LMEs such as Britain, Canada, and the US tend to embrace ''shareholder value,'' with company performance measured by market value, returns evaluated on a shortterm basis and the state rarely intervening in the economy. Employment relations are characterized primarily by open labor-market relationships, firms having the freedom to hire and fire employees almost at will and collective bargaining being uncoordinated and taking place at firm level (Aguilera and Dencker 2004). In contrast, CMEs such as Germany, Japan, and Scandinavian countries are characterized by relatively strong non-market relationships.…”

“…In these ''stakeholder capitalism'' national models, employees, suppliers, customers and financial institutions are part of the context within which business leaders make decisions and firm performance is evaluated. Firms are expected to protect employee rights, collective bargaining tends to be coordinated, and corporate returns tend to be assessed on a long-term basis (Aguilera and Dencker 2004;Aguilera and Jackson 2010;Witt and Redding 2013). In such an environment, senior executives are more likely to adopt a long-term approach to CSR and focus on a broader group of constituents in their decisions and actions.…”

Does National Context Affect Target Firm Employees’ Trust in Acquisitions?

“…Cross-border M&A are particularly difficult to implement due to the embeddedness of the combining organizations in their respective national contexts (e.g., Aguilera & Dencker, 2004;Child, Faulkner & Pitkethly, 2001;Krug & Nigh, 2001). Although research on cross-national variations in M&A is limited, there is some evidence that the way acquiring firms approach integration and the way target firm members respond to a takeover are contingent on their national origin (Goulet & Schweiger, 2006;Stahl & Javidan, 2009).…”

“…The hostile takeover bid of Mannesmann by Vodafone, which we will analyze in more detail later, provides an instructive example. Vodafone not only had to deal with the German system of worker co-determination, but also with an entirely different ownership structure influenced by banks, opaque accounting and disclosure rules, a two-tiered board structure with a strong orientation towards consensus decision-making, different company laws, a German corporate culture with a strong orientation towards production and engineering, and a relatively weak 'equity culture' (Aguilera & Dencker, 2004).…”