Impact of enterprise ambidexterity capability and experience learning on cross-border M&A performance: evidence from China

• Authors: Junshu Du , Yichen Peng , Yuansong Tong , Yuriy Bilan

Abstracts

EN

Research background: Through cross-border mergers and acquisitions (M&A), enterprises in China can improve their technological innovation and organizational management capabilities to make up for the disadvantages of outsiders and enhance their international competitiveness. However, due to the lack of experience, the success rate of cross-border M&A of China enterprises is low, and the performance changes after M&A differ. How to maximize the advantages of cross-border M&A in obtaining technical resources and how to improve the performance of cross-border M&A are important issues that China's cross-border M&A enterprises and academic circles need to solve. Purpose of the research: The aim of this study is to analyze the mechanism and boundary conditions of firms' capability to exploit resources (RTC) and capability to explore resources (REC) with regard to cross-border M&A performance from the perspective of experience learning based on organizational learning theory and resource-based theory. Methods: With 173 China A-share listed companies with cross-border M&A events from 2010 to 2020 as samples, this study uses hierarchical regression analysis to test the impact of REC and RTC on cross-border M&A performance and its mechanism. In the robustness test, this study adopts the measures of changing dependent and independent variables lagged for one year for analysis. In the mechanism test, this study uses intermediary and mediation effect models. Findings & value added: The results show that RTC and REC have positive effects on the performance of cross-border M&A. Prior experience learning (PE) and vicarious experience learning (VE) increase the probability of companies making cross-border M&A decisions and have positive effects on cross-border M&A performance. Moreover, PE and VE play a partial mediating role in the positive impact of REC and RTC on cross-border M&A performance, respectively. Formal and informal institutional distance weaken the positive effects of REC and RTC on the performance of cross-border M&A. Enterprises in emerging economies should adapt to the institutional environment of the host country to reduce the negative impact of institutional distance while taking advantage of experience learning when carrying out cross-border M&A.  

Keywords

EN

ambidexterity capability; experience learning; cross-border M&A; institutional distance; M&A performance

• Publisher: Instytut Badań Gospodarczych
• Journal: Oeconomia Copernicana
• Year: 2022
• Volume: 13
• Issue: 4
• Pages: 1177-1214

Dates

published

2022

Contributors

author

Junshu Du

• Changzhou College of Information Technology

• https://orcid.org/0000000213102976

author

Yichen Peng

• Nanjing University of Finance and Economics

• https://orcid.org/0000000235163825

author

Yuansong Tong

• Changzhou College of Information Technology

• https://orcid.org/0000000291355311

author

Yuriy Bilan

• Czech University of Life Sciences Prague

• https://orcid.org/000000030268009X

References

• Ahammad, M. F., Tarba, S. Y., Liu, Y., & Glaister, K. W. (2016). Knowledge trans-fer and cross-border acquisition performance: the impact of cultural distance and employee retention. International Business Review, 25(1), 66?75. doi: 10.1016/j.ibusrev.2014.06.015.
• Anand, J., Mulotte, L., & Ren, C. R. (2016). Does experience imply learning? Strategic Management Journal, 37(7), 1395?1412. doi:10.1002/smj.2401.
• Andriopoulos, C., & Lewis, M. W. (2009). Exploitation-exploration tensions and organizational ambidexterity: managing paradoxes of innovation. Organiza-tion Science, 20(4), 696?717. doi: 10.1287/orsc.1080.0406.
• Aybar, B., & Ficici A. (2009). Cross-border acquisitions and firm value: an analy-sis of emerging-market multinationals. Journal of International Business Studies, 40(8),1317?1338. doi: 10.1057/jibs.2009.15.
• Bhaumik, S. K., Owolabi, O., & Pal, S. (2018). Private information, institutional distance, and the failure of cross-border acquisitions: evidence from the bank-ing sector in Central and Eastern Europe. Journal of World Business, 53(4), 504?513. doi: 10.1016/j.jwb.2018.02.00.
• Barney, J. B. (1991). Firm resource and sustained competitive advantage. Journal of Management, 17(1), 99?120. doi: 10.1177/014920639101700108.
• Benner, M. J., & Tushman, M. L. (2003). Exploitation, exploration, and process management: the productivity dilemma revisited. Academy of Management Review, 28(2), 238?256. doi: 10.5465/amr.2003.9416096 .
• Boateng, A., Du, M., Bi, X., & Lodorfos, G. (2019). Cultural distance and value creation of cross-border M&A: the moderating role of acquirer characteristics. International Review of Financial Analysis, 63, 285?295. doi: 10.1016/j.irfa.2 018.12.009.
• Bruneel, J., Yli-Renko, H., & Clarysse, B. (2010). Learning from experience and learning from others: how congenital and inter-organizational learning substi-tute for experiential learning in young firm internationalization. Strategic Entrepreneurship Journal, 4(2), 164?182. doi: 10.1002/sej.89.
• Brouthers, K. D., & Hennart, J. F. (2007). Boundaries of the firm: insights from international entry mode research. Journal of Management, 33(3), 395?425. doi: 10.1177/0149206307300817.
• Blau, P. M. (1977). A macrosociological theory of social structure. American Journal of Sociology, 83(1), 26?54. doi: 10.2307/2777762.
• Baron, R. M., & Kenny, D. A. (1986). The moderator?mediator variable distinc-tion in social psychological research: conceptual, strategic, and statistical con-siderations. Journal of Personality and Social Psychology, 51(6), 1173?1182. doi: 10.1037/0022-3514.51.6.1173.
• Basuil, D. A., & Datta, D. K. (2019). Effects of firm-specific and country-specific advantages on relative acquisition size in service sector cross-border acquisi-tions: An empirical examination. Journal of International Management, 25(1), 66?80. doi: 10.1016/j.intman.2018.07.001.
• Carnes, C. M., Xu, K., Sirmon, D. G., & Karadag, R. (2019). How competitive action mediates the resource slack-performance relationship: a meta-analytic approach. Journal of Management Studies, 56(1), 57?90. doi: 10.1111/jom s.12391.
• Castellani, D., Jimenez, A., & Zanfei, A. (2013). How remote are R&D labs? Distance factors and international innovative activities. Journal of Interna-tional Business Studies, 44(7), 649?675. doi: 10.1057/jibs.2013.30.
• Chen, F., Liu, H., & Ge, Y. (2021). How does integration affect industrial innova-tion through networks in technology-sourcing overseas M&A? A comparison between China and the US. Journal of Business Research, 122, 281?292. doi: 10.1016/j.jbusres.2020.08.040.
• Child, J., & Suzana, B. R. (2005). The internationalization of Chinese firms: a case for theoretical extension? Management and Organization Review 1(3), 381?410. doi: 10.1111/j.1740-8784.2005.00020.x.
• Cuervo C. A., & Genc, M. E. (2011). Obligating, pressuring, and supporting di-mensions of the environment and the non-market advantages of developing-country multinational companies. Journal of Management Studies, 48(2), 441?455. doi: 10.1111/j.1467-6486.2010.00964.x.
• Cui, L., & Jiang, F. (2012). State ownership effect on firms FDI ownership deci-sions under institutional pressure: a study of Chinese outward in vesting firms. Journal of International Business Studies, 43(3), 264?284. doi: 10.2307/41 472787.
• Dakessian., L., C., & Paulo, R. F. (2013). Multilatinas and value creation from cross-border acquisitions: an event study approach. BAR-Brazilian Administration Review, 10, 462?489. doi: 10.1590/S1807-769220130004000 06.
• Dikova, D., Panibratov, A., & Veselova, A. (2019). Investment motives, ownership advantages and institutional distance: an examination of Russian cross-border acquisitions. International Business Review, 28(4), 625?637. doi: 10.1016/j.ib usrev.2018.12.007.
• Dikova, D., & Sahib, P. R. (2013). Is cultural distance a bane or a boon for cross-border acquisition performance? Journal of World Business, 48(1), 77?86. doi: 10.1016/j.jwb.2012.06.009.
• Du, M., & Boateng, A. (2015). State ownership, institutional effects and value creation in cross-border mergers & acquisitions by Chinese firms. Interna-tional Business Review, 24(3), 430?442. doi: 10.1016/j.ibusrev.2014.10.002.
• Dunning, J. H., & Lundan, S. M. (2008). Multinational enterprises and the global economy. MA: Edward Elgar Publishing.
• Galavotti., Ilaria., Daniele, C., & Donatella, D. (2017). Experience and cross-border acquisitions: an organizational learning perspective. European Management Review,14(2), 119?131. doi: 10.1111/emre.12094.
• Gallego A., I., Rodríguez D, L., & Martín, V. J. (2020). An analysis of business ethics in the cultural contexts of different religions. Business Ethics: A European Review, 29(3), 1?17. doi: 10.1111/beer.12277.
• Golubov, A., Yawson, A., & Zhang, H. (2015). Extraordinary acquirers. Journal of Financial Economics, 116(2), 314?330. doi: 10.1016/j.jfineco.2015.02.005.
• Gu, Y. J., Filatotchev, I., Bell, R. G., & Rasheed, A. A. (2019). Liability of for-eignness in capital markets: institutional distance and the cost of debt. Journal of Corporate Finance, 57, 142?160. doi: 10.1016/j.jcorpfin.2017.10.014.
• Haleblian, J., & Finkelstein, S. (1999). The influence of organization acquisition experience on acquisition performance: a behavioral learning theory perspec-tive. Administrative Science Quarterly, 44, 29?56. doi: 10.2307/2667030.
• Haleblian, J., Kim, J. Y., & Rajagopalan, N. (2006). The influence of acquisition experience and performance on acquisition behavior: evidence from the US commercial banking industry. Academy of Management Journal, 49(2), 357?370. doi: 10.5465/AMJ.2006.20786083.
• Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: the organization as a reflection of its top managers. Academy of Management Review, 9(2), 193-206. doi: 10.5465/amr.1984.4277628.
• He, X., Brouthers, K. D., & Filatotchev, I. (2018). Market orientation and export performance: the moderation of channel and institutional distance. International Marketing Review, 35(2), 258?279. doi: 10.1108/IMR-09-2015-0194.
• Hilmersson, M., & Johanson, M. (2020). Knowledge acquisition strategy, speed of capability development and speed of SME internationalisation. International Small Business Journal, 38(6), 536?556. doi: 10.1177/026624262090902.
• Irwin, K., Gilstrap, C., McDowell, W., Drnevich, P., & Gorbett, A. (2022). How knowledge and uncertainty affect strategic international business investment decisions: implications for cross-border mergers and acquisitions. Journal of Business Research, 139, 831?842. doi: 10.1016/j.jbusres.2021.10.001.
• Johanson, J., & Vahlne, J. E. (1977). The internationalization process of the firm: a model of knowledge development and increasing foreign market commit-ments. Journal of International Business Studies, 8(1), 23?32. doi: 10.1057/pa lgrave.jibs.849067.
• Jonsson, A., & Foss, N. (2011). International expansion through flexible replica-tion: learning from the internationalization experience of IKEA. Journal of International Business Studies, 42(9),1079?1102. doi: 10.1057/jibs.2011.32.
• Kafouros, M. I., & Forsans, N. (2012). The role of open innovation in emerging economies: do companies profit from the scientific knowledge of others? Journal of World Business, 47(3), 362?370. doi: 10.1016/j.jwb.2011.05.004.
• Kogut, B., & Singh, H. (1988). The effect of national culture on the choice of entry mode. Journal of International Business Studies, 19(3), 411?432. doi: 10.1057 /palgrave.jibs.8490394.
• Kostova, T., Beugelsdijk, S., Scott, W. R., Kunst, V. E., Chua, C. H., & van Essen, M. (2020). The construct of institutional distance through the lens of different institutional perspectives: review, analysis, and recommendations. Journal of International Business Studies, 51(4), 467?497. doi: 10.1057/s41267-019-0029 4-w.
• Kowalik, I., & Pleśniak, A. (2022). Marketing determinants of innovation ambi-dexterity in small and mediumsized manufacturers. A comparative study. Entrepreneurial Business and Economics Review, 10(2), 163?185. doi: 10.15678/EBER.2022.100210.
• Lamotte, O., Chalençon, L., Mayrhofer, U., & Colovic, A. (2021). Intangible re-sources and cross-border acquisition decisions: the impact of reputation and the moderating effect of experiential knowledge. Journal of Business Re-search, 131, 297?310. doi: 10.1016/j.jbusres.2021.03.044.
• Levitt, B., & March, J. G. (1988). Organizational learning. Annual Review of Sociology, 319?340. doi: 10.1146/annurev.so.14.080188.001535.
• Li, J. (2022). Can technology-driven cross-border mergers and acquisitions pro-mote green innovation in emerging market firms? evidence from China. Environmental Science and Pollution Research, 29(19), 27954?27976. doi: 10.1007/s11356-021-18154-2.
• Luger, J., Raisch, S., & Schimmer, M. (2018). Dynamic balancing of exploration and exploitation: the contingent benefits of ambidexterity. Organization Science, 29(3), 449?470. doi: 10.1287/orsc.2017.1189.
• Madsen, P. M., & Desai, V. (2010). Failing to Learn? the effects of failure and success on organizational learning in the global orbital launch vehicle indus-try. Academy of Management Journal, 53(3), 451?476. doi: 10.5465/AMJ.2010.514 67631.
• March, J. (1991). Exploration and exploitation in organizational learning. Organization Science, 2, 71?87. doi: 10.1287/orsc.2.1.71.
• Mehreen, H., Rammal, H. G., Pereira, V., & Del Giudice, M. (2021). Investigating the influence of absorptive capacity of recipients within cross-border transfer of knowledge: evidence from emerging markets. International Marketing Re-view, 39(3), 734?754. doi: 10.1108/IMR-11-2020-0264.
• Mohr, A., & Batsakis, G. (2019). The contingent effect of TMT international ex-perience on firms? internationalization speed. British Journal of Management, 30(4), 869?887. doi: 10.1111/1467-8551.12293.
• Nicholson, R. R., & Salaber, J. (2013). The motives and performance of cross-border acquirers from emerging economies: comparison between Chinese and Indian firms. International Business Review, 22, 963?980. doi: 10.1016/j.ibusre v.2013.02.003.
• Noordin, B. A. A., Kamarudin, F., & Anwar, N. A. M. (2015). Wealth effect and macroeconomics factors of a firm?s international merger and acquisition exer-cise: empirical evidence from multinational firms. Engineering Economics, 26(5), 469?477. doi: 10.5755/j01.ee.26.5.11418.
• O'Reilly III, C. A., & Tushman, M. L. (2011). Organizational ambidexterity in action: how managers explore and exploit. California Management Review, 53(4), 5?22. doi: 10.1525/cmr.2011.53.4.5.
• Osiyevskyy, O., Shirokova, G., & Ritala, P. (2020). Exploration and exploitation in crisis environment: implications for level and variability of firm perfor-mance. Journal of Business Research, 114, 227?239. doi: 10.1016/j.jbusres.2020.0 4.015.
• Park, H., Han, K., & Joon, W. (2018). The impact of cultural distance on the per-formance of foreign subsidiaries: evidence from the Korean market. Organizations and Markets in Emerging Economies, 9(1), 123?134. doi: 10.15388/omee.2018.10.00007.
• Peng, M. W. (2000). Business strategies in transition economies. Administrative Science Quarterly, 46(1), 157?159. doi: 10.2307/259125.
• Riaz, H., Saeed, A., Liedong, T. A., & Rajwani, T. (2022). Environmental man-agement, nonmarket strategy, and firm performance in emerging markets: the case of ISO 14001. Business Ethics, the Environment & Responsibility, 31(1), 139?163. doi: 10.1111/beer.12402.
• Scalera, V. G., Mukherjee, D., & Piscitello, L. (2020). Ownership strategies in knowledge intensive cross-border acquisitions: comparing Chinese and Indian MNEs. Asia Pacific Journal of Management, 37(1), 155?185. doi: 10.1007/s10 490-018-9616-6.
• Schweizer, D., Walker, T., & Zhang, A. (2019). Cross-border acquisitions by Chi-nese enterprises: the benefits and disadvantages of political connections. Journal of Corporate Finance, 57, 63?85. doi: 10.2139/ssrn.3049696.
• Seo, E., Kang, H., & Song, J. (2020). Blending talents for innovation: team com-position for cross-border R&D collaboration within multinational corpora-tions. Journal of International Business Studies, 51(5), 851?885. doi: 10.1057/s412 67-020-00331-z.
• Sharma, D. S., & Jonathan, H. (2002). The impact of acquisitions on operating performance: some Australian evidence. Journal of Business Finance & Accounting, 29(1?2), 155?200. doi: 10.1111/1468-5957.00428.
• Shenkar, O. (2001). Cultural distance revisited: towards a more rigorous concep-tualization and measurement of cultural differences. Journal of International Business Studies, 32(3), 519?535. doi: 10.1057/palgrave.jibs.8490982.
• Solís-Molina, M., Hernández-Espallardo, M., & Rodríguez-Orejuela, A. (2018). Performance implications of organizational ambidexterity versus specializa-tion in exploitation or exploration: the role of absorptive capacity. Journal of Business Research, 91, 181?194. doi: 10.1016/j.jbusres.2018.06.001.
• Storch-De Gracia, M., Madaziego, L., Llamas-Moya, B., Cruz-Perez, N., Rodri-guez-Martin, J., & Santamarta-Cerezal, J. (2022). Studying the relationship between teamwork competences and successful innovative projects. Dyna, 97(2), 140?144. doi: 10.6036/10362.
• Trąpczyński, P., & Halaszovich, T. (2021). Exploitation-exploration balance and its performance outcomes: a study of FDI portfolio decisions of new multina-tional. Entrepreneurial Business and Economics Review, 9(4), 115?129. doi: 10.15678/EBER.2021.090408.
• Uddin, M., & Boateng, A. (2009). An analysis of short-run performance of cross-border mergers and acquisitions: evidence from the UK acquiring firms. Re-view of Accounting and Finance, 8(4), 431?453. doi: 10.1108/14757700911006967.
• Uribe E., R., Igartua L., J. I., & Lizarralde, R. (2020). Open innovation in research and technology organisations: an exploration of the phenomenon. DYNA, 95(1), 74?80. doi: 10.6036/9166.
• Uyan?k, G. K., & Güler, N. (2013). A study on multiple linear regression analysis. Procedia-Social and Behavioral Sciences, 106, 234?240. doi: 10.1016/j.sbspro. 2013.12.027.
• Van, H. A., & Maseland, R. (2016). How institutions matter for international business: institutional distance effects vs institutional profile effects. Journal of International Business Studies, 47(3), 374?381. doi: 10.1057/jibs.2016.2.
• Venugopal, A., Krishnan, T. N., Upadhyayula, R. S., & Kumar, M. (2020). Finding the microfoundations of organizational ambidexterity-demystifying the role of top management behavioural integration. Journal of Business Research, 106, 1?11. doi: 10.1016/j.jbusres.2019.08.049.
• Wach, K. (2020). A typology of small business growth modelling: a critical lit-erature review. Entrepreneurial Business and Economics Review, 8(1), 159?184. doi: 10.15678/EBER.2020.080109.
• Wang, C. L., & Chung, H. F. (2020). Business networking and innovation of Asian enterprises in western countries: the moderation of institutional distance. Industrial Marketing Management, 88, 152?162. doi: 10.1016/j.indmarman.2 020.05.002.
• Wang, L., Schweizer, L., & Michaelis, B. (2020). Experiential learning for Chi-nese companies to complete cross-border acquisitions: the case of Chinese ac-quirers. International Journal of Emerging Markets, 16(4), 674?695. doi: 10.1108/IJO EM-12-2018-0663.
• Wu, C. W., & Reuer, J. J. (2021). Acquirers? reception of signals in M&A markets: effects of acquirer experiences on target selection. Journal of Management Studies, 58(5), 1237?1266. doi: 10.1111/joms.12637.
• Yoon, H., Peillex, J., & Buckley, P. J. (2021). Friends or foes? bilateral relation-ships and ownership choice in cross-border acquisitions by emerging market firms. British Journal of Management, 32(3), 852?871. doi: 10.1111/1467-8551.12442.
• Yue, Q., Deng, P., Cao, Y., & Hua, X. (2021). Post-acquisition control strategy and cross-border acquisition performance of Chinese MNEs: A fsQCA approach. Management Decision, 59(12), 2970?2991. doi: 10.1108/MD-08-2020-0986.
• Zhao, X., Ma, H., & Hao, T. (2019). Acquirer size, political connections and mer-gers and acquisitions performance: evidence from China. Studies in Econom-ics and Finance, 36(2), 311?332. doi: 10.1108/SEF-05-2017-0112.
• Zhang, H., & Yang, H. (2021). Cross-border M&As and technological innovation: the moderating roles of formal and informal institutional distance. Journal of Knowledge Management,26(5), 1280?1305. doi: 10.1108/JKM-12-2020-0905.
• Zhang, W., Wang, K., Li, L., Chen, Y., & Wang, X. (2018). The impact of firms' mergers and acquisitions on their performance in emerging economies. Technological Forecasting and Social Change, 135, 208?216. doi: 10.1016 /j.techfore.2018.05.015.

Identifiers

DOI

10.24136/oc.2022.034

Biblioteka Nauki

19322664