Chinese cross‐border mergers and acquisitions: strategic types, organizational factors and enterprise growth

Abstract

PurposeThis paper aims to investigate the relationships between the strategic type of cross‐border mergers and acquisitions (M&As) and enterprise growth, and the moderating role of Chinese companies' organizational factors, including organizational structure, organizational experience, cultural distance and relative size.Design/methodology/approachThe authors, as researchers, have mixed the strategic choice and post‐M&As integration into a comprehensive framework while building the theoretical model of “Strategic Type of Cross‐border M&As‐Organizational Factors‐Enterprise Growth” (ST‐OF‐EG). In this paper, they have empirically examined the model using hierarchical regression by analyzing 76 cross‐borders M&A events of overseas‐listed Chinese companies over the 2000‐2007 period.FindingsThe analysis shows that: related cross‐border M&As are better for enterprise growth than unrelated diversification cross‐border M&As; and among the organizational factors, studied organizational structure and organizational experience show a positive significance in terms of the relationship between the strategic type of cross‐border M&As and enterprise growth. The moderating role of cultural distance and relative size is non‐significant.Research limitations/implicationsIn this paper, the moderating effect of cultural distance was found to be insignificant. However, further research is encouraged.Practical implicationsChinese companies should pay attention to strategic choices before cross‐border M&As. They should expand abroad to markets step by step. They should merge the companies that have the higher relevance on a product, industry or market first. On the basis of specialization, Chinese companies should make themselves stronger and then develop from specialization to proper diversification, which is a robust path to achieve enterprise growth. Besides, Chinese companies should accumulate international experience as soon as possible and organizational structure should match the strategic choice.Originality/valueThis paper would be immensely helpful to Chinese companies to plan their cross‐border M&As strategy in a way that would enhance growth and core‐competence.