Ownership strategies in knowledge-intensive cross-border acquisitions: Comparing Chinese and Indian MNEs

The establishment mode of Chinese MNEs abroad and the Belt and Road Initiative: insights from a strategy tripod perspective

Purpose

Emerging-market multinational enterprises (MNEs) have pushed institutional factors to the cutting-edge of international business research. As for Chinese MNEs, the importance of institutions has been strengthened since the Chinese government launched the Belt and Road Initiative (BRI), which seeks to promote a comprehensive platform for cooperation among countries. This study aims to investigate the role played by the BRI as an institutional factor moderating the influence of other institution-, industry- and firm-specific factors on establishment mode choice by Chinese MNEs.

Design/methodology/approach

Drawing on the strategy tripod, a perspective claiming that a firm's strategies are the result of internal, industrial and institutional conditions, this study develops a number of hypotheses that are tested with data on 1,076 outward foreign direct investments (OFDIs) of Chinese MNEs between 2013 and 2021.

Findings

The results show that the BRI moderates the influence of both the firm's prior international acquisition experience and Chinese government's OFDI restrictions on the establishment by means of an acquisition. They also report that this moderating effect does not apply for acquisition experience in the host country nor institutional distance.

Originality/value

This study contributes to reinforce the importance of institutions as the third leg of a strategy tripod when explaining international behavior of Chinese MNEs. It also suggests that the BRI is a diplomatic tool that may act as a substitute for the firm's resources and may mitigate the negative influence of other external factors.

Exploring the longitudinal effects of emotional intelligence and cultural intelligence on knowledge management processes

Managing knowledge has become a new reality for multinational corporations (MNCs). Previous studies in the management field have closely examined personality traits as stable dispositional constructs over time, but they oversighted the possibilities that seemingly stable traits are likely to have different effects on outcomes in varying time waves. Combining horizontal and longitudinal surveys, this study collected two-wave datasets of 216 employees from MNCs, and built Fixed, Continuous and Interacting Models to investigate the effects of individual emotional intelligence (EI) and cultural intelligence (CI) as key traits on the processes of organizational knowledge management (KM) over time. This study discovered the fixed, continuous and interacting roles of EI and CI in KM processes at different times, and it also concluded that the traditional assumption of conceptualizing the effects of dispositional variables as fixed should be re-examined. The findings provided empirical and statistical evidence for future research as well as management suggestions for MNCs implementing KM practices.

Performance impact of behavioural factors in alliances by SMEs: an empirical analysis

Purpose

This paper aims to fill a gap in the authors’ understanding of alliance-level and the partner-level alliance performance by analysing the influence of behavioural factors for alliances formed by SMEs. Prior studies on the topic have arrived at inconclusive results. This study plugs gaps in prior studies' approach such as deployment of inconsistent performance measures, and omission of contingent factors.

Design/methodology/approach

The survey method was used to collect responses about 86 alliances of Indian SMEs. The data were analysed using PLS-SEM technique.

Findings

Two relationship capital variables – Trust and Commitment – were found to have differential influence on the two levels of SME alliance performance, and their influence was mediated by the presence of two exchange climate variables – Communication and Conflict.

Research limitations/implications

Since the study employs perceptual measures of performance, it is subject to the limitations of these measures. Similarly, given the relatively small sample size on which analyses were based, the results may need to be replicated in order to generalize the findings.

Practical implications

The study tested a comprehensive model for alliance and partner performance in the context of SMEs. The study's results may be particularly useful to managers of SMEs for focusing on the key factors that influence alliance performance as well as their performance.

Originality/value

The model tested in the study is comprehensive and also accounts for the subtleties about the impact of the two key types of behavioural factors – Relationship capital and Exchange climate – on alliance and partner performance.

Internationalization motives, location advantages and performance: the case of Indian firms from knowledge-intensive industries

Purpose

Recent empirical findings on the relationship between internationalization and firm performance (I–P) suggest a significant role of firm's context. Extending this line of argument, the authors study the effect of internationalization on firm's performance for emerging market firms from knowledge-intensive industries, taking into account the firm's motive of internationalization and host country’s location-based advantages.

Design/methodology/approach

The authors link host country-specific advantages (CSAs) with firm-specific advantages (FSAs) to identify three distinct settings of internationalization for emerging economy firms – (1) asset-exploitative internationalization in developing or least developed countries, (2) asset-exploitative internationalization in developed countries and (3) strategic asset-seeking internationalization. The authors test this study’s hypotheses on a sample of 415 Indian firms from knowledge-intensive industries.

Findings

The authors find that firm's performance upon internationalization is non-linear in each of the three different settings. The nature of the non-linear relationship depends upon location-based advantages of the host country and the motive of internationalization.

Originality/value

The motive of internationalization and the location-based advantages sought during internationalization are unique for emerging economy firms. Hence, the study extends understanding of the I–P linkage in an emerging economy context.

Social Environment and Healthy Investment Behavior: Joint Influence of Culture and Institution on China

The influence of the social environment on healthy investment behavior is a vital research topic. This paper focuses on foreign direct investment (FDI) as an important part of its broad impact in improving the level of capital circulation and diversifying the non-systemic risk of a single country portfolio. Using data from 35 countries on direct investment in China, we find that the impact of the social environment on healthy investment behavior is mainly reflected in investors’ resistance to cultural distance and their benefit compensation across institutional distance. In addition, their joint influence is still negative, dominated by cultural distance, which can still verify that institutional distance mitigates the negative effect of cultural distance on FDI. Therefore, in order to promote international healthy investment behavior, it is feasible to improve both the mitigation effect of the institution in the short term and promote the level of cultural exchange in the long term, according to the research results of this paper.

Cross Cultural and Strategic Management: a retrospective overview using bibliometric analysis

Purpose

Cross Cultural and Strategic Management (CCSM) began publication in 1994 and completed its 27th year in 2020. The purpose of this study is to provide a bibliometric analysis of CCSM during the period between 1994 and 2020.

Design/methodology/approach

The study uses a variety of bibliometric tools including performance analysis, authorship analysis, bibliographic coupling, keyword co-occurrence and regression analysis to present the retrospect of CCSM.

Findings

CCSM's publication and citations continue to enjoy consistent growth throughout the years. While most contributions originate in the United States, the diversity of both research and the researchers themselves continues to grow. Over the period, the emphasis has been on quantitative research design. Archival data have been the most preferred data source, and content analysis the most used data analysis method, although its use has somewhat declined over the years. Major recurring themes in the journal include cultural barriers, concept of culture, national culture, culture and organizational practices, and expatriate employees. Important drivers of citations are also identified.

Research limitations/implications

The study’s contributions are twofold. First, the authors’ comprehensive bibliometric analysis of published research in CCSM helps uncover its underlying intellectual structure and the evolution of its research themes over time. Awareness of these patterns and major themes should help future CCSM scholars to better situate their studies within the extant body of knowledge. Second, the authors’ analysis should also aid in shaping future editorial strategies for CCSM as it continues to compete with other similar journals in the fields of international business, international management and strategy.

Originality/value

CCSM earned its reputation for quality, and as a result is currently one of the leading journals in its field. Therefore, by closely examining its underlying knowledge structure, the authors provide a more complete understanding of the intellectual progress made to date in CCSM, while also shedding light on its future.

Determinants of EMNEs’ Entry Mode Decision with Environmental Volatility Issues: A Review and Research Agenda

Emerging market multinational enterprises (EMNEs) play a vital role in global economic development and usually adopt aggressive internationalization strategies. However, the volatile global environment has caused EMNEs to face various risks in their overseas expansion. To maximize the competitive advantages and achieve successful expansion, EMNEs should choose the most suitable foreign entry mode. Therefore, EMNEs need to understand what environmental factors affect their decision-making and how they influence the choice of entry modes, especially in a volatile environment. This review examines 44 selected journal articles from 1996 to June 2021 on the environmental volatility determinants of EMNEs’ entry mode choice. The entry mode choice we examined is mainly wholly-owned subsidiary versus international joint venture. We categorized the environmental volatility determinants investigated in the literature we reviewed into country-level factors (such as cross-national distance) and industry-level factors (such as industry condition). The main contributions are: (1) the review reveals three research gaps in extant studies, which are lack of research on external environmental factors, lack of research on multinationals from less concerning emerging economies, and lack of research on small-to-medium (SMEs) enterprises. (2) Practically, the study highlights the importance of understanding external environmental factors for EMNEs to make the most suitable entry mode decisions.

Research Published in Management International Review from 2006 to 2020: A Bibliometric Analysis and Future Directions

The Management International Review (MIR) celebrated its 60th anniversary in 2020. In commemoration of this event, we use a bibliometric analysis to present a retrospective on the journal by analyzing its content for the years between 2006 and 2020. We find that the collaboration culture in MIR has risen over time with the increase in the median size of author teams. Moreover, the collaboration network has become more global over time. The methodology used in the journal is predominantly empirical and quantitative with archival data sources most commonly used. The bibliographic coupling of the MIR corpus reveals that the major themes in the journal revolve around "culture," "emerging economies," "innovation, knowledge transfer, and absorptive capacity," "internationalization process," "culture and entry modes," and "internationalization and performance." A comparison with other leading international business journals provides distinct pathways in which MIR may continue to grow. Finally, it is important to note that while the share of conceptual studies has decreased significantly in the last 15 years, the MIR editors want to see more novel and theoretically grounded conceptual articles in the journal.

Cross-Border M&A Motives and Home Country Institutions: Role of Regulatory Quality and Dynamics in the Asia-Pacific Region

The purpose of this paper is to analyze the relationship between home country institutions and cross-border merger and acquisition (M&A) motives of MNEs from the Asia-Pacific region, with a focus on the role of regulatory quality and dynamics. We empirically examine how M&A motives are affected by elements related to risk of the institutional environment of the acquiring firm’s home country regulatory quality over time. The study is grounded in the general theory of springboard MNEs, and the institutional views of cross-border operations, namely the institutional escapism and institutional fostering perspectives. Using data on over 700 cross-border M&As of European firms by Asia-Pacific MNEs in 2007–2017, we analyze the rationales for these deals and their relationship to the institutional characteristics of the buyers’ home countries including regulatory quality and voice and accountability. We found that the quality of home country regulatory environment is significantly related to domestic firms’ motivation for international M&As. However, the significance and sign of the effects differ for different types of motives and over time. Our findings contribute to the literature on general versus emerging MNE-specific internationalization theories (particularly the theory of springboard MNEs) by expounding on the types and dynamics of cross-border M&A motives.

Linking ownership acquired in Chinese firms to post-acquisition innovation performance: role of institutional distance

Purpose

The primary purpose of this study is to explore the impact of acquired ownership in Chinese target firm on the innovation performance of developed economies (DE) acquiring firms. Furthermore, the study aims to empirically investigate the moderating influence of institutional distance between two parties’ home countries.

Design/methodology/approach

For the empirical investigation of the hypotheses, the authors identified cross-border technological acquisitions from the Securities Data Company between 1995 and 2015. A hierarchical negative binomial regression technique was used to analyze 177 technological acquisitions completed by DE acquiring firms in China.

Findings

Analysis of technological acquisition deals confirmed that acquired ownership undertaken in the Chinese target firms increases the DE acquiring firms’ post-acquisition innovation performance. The authors found that DE acquiring firms underperform in innovation in institutionally distant host countries.

Originality/value

This study contributes to the international business literature by explaining the importance of acquired ownership undertaken in the Chinese target firms for the DE acquiring firm’s innovation performance. Second, institutional theory defines how institutional uncertainty in terms of distance modifies the positive impact of acquired ownership on acquiring firm’s innovation performance.

Family firms and their participation in cross-border acquisition waves: evidence from India

Purpose

From the socioemotional wealth (SEW) perspective, family firms prioritize non-financial goals and show risk averse behaviour towards conducting acquisitions. In this paper, we study family firms' acquisitive behaviour while participating in CBA waves. Scholars have largely treated the cross border acquisition (CBA) wave and non-wave environments as homogeneous. We theorize that these two environments differ in their uncertainty and risk profiles on account of temporal clustering of acquisition deals. Accordingly, based on the SEW perspective, we examine the preference of family firms to participate in CBA waves.

Design/methodology/approach

The paper is based on CBAs conducted by Indian family firms between 2000 and 2018. These waves are identified by conducting a simulation based methodology.

Findings

Our findings suggest that foreign institutional ownership, firm age and acquisition relatedness moderate the relationship between family control and participation in CBA waves.

Originality/value

Our paper contributes towards the acquisitive behavior of family firms and their participation in CBA waves.

Sourcing Technological Knowledge Through Foreign Inward Licensing to Boost the Performance of Indian Firms: The Contingent Effects of Internal R&D and Business Group Affiliation

Sourcing technological knowledge from abroad is becoming a popular strategy among emerging market firms (EMFs). Combining the Knowledge-Based View and the Resource Dependence Theory, we argue that augmenting technological knowledge through foreign licensing enables EMFs to access state-of-the-art technological knowledge, reduce operational costs and risks associated to the innovation process, and develop a knowledge-based competitive advantage, ultimately boosting their financial performance. Using data about Indian firms observed from 2001 to 2013, we find that firms with a higher share of foreign inward technology licenses report better financial performance. However, the positive impact of technological knowledge accessed through inward licensing on firm performance is contingent upon: (1) the internal knowledge developed through R&D activity, and (2) the affiliation with business groups. While Indian firms with higher level of internal R&D are able to better leverage the value of foreign technological knowledge, thus reaching higher performance, firms affiliated to business groups gain fewer benefits from licensed foreign technological knowledge than non-business-group affiliated firms.