Abstract
Orientation: The article reports on applied and practical research that focuses on the understanding of the motivation and actions of Multinational Enterprises in Africa as far as mergers and acquisitions (MAs) are concerned.Research purpose: This study examines developments in the freight and logistics industry through MAs in South Africa.Motivation for the study: It is necessary to gain a better understanding of MAs from a firm-level perspective in the South African context. Little research exists on the dynamics of MAs, and even less relating to the logistics industry that plays such a large role in trade in the region. This research adds substantial and significant original work to the scarce body of meaningful literature on foreign direct investment (FDI) in Africa.Research design, approach and method: This study used a case study approach employing structured interviews. The population was freight and logistics companies that were involved in MA activities in South Africa. Quantitative data and other information from various databases, published MA data and financial statements were analysed to obtain background views of the companies’ where after, three companies were eventually selected. Direct unstructured interviews were then conducted with the main decision makers and a qualitative thematic analysis of the companies’ responses. Related themes and patterns were identified through the frequency of occurrence, similarities, differences and general patterns observed. This method yielded the most insight into the processes and company dynamics involved.Main findings: International MAs in the freight and logistics industry provide companies with international scale and effectively link to international markets. Companies benefit from expanded market opportunities across national borders, which generate substantial revenues, geographical growth and business expansion. It renders synergy and additional competitive advantage.Practical/managerial implications: Theoretical and practical aspects of FDI, such as motives for market entry, ownership, location and entry barriers within the context of multinational enterprises, globally, were investigated. Little data exist on the freight and logistics industry in Africa and also on MAs, which presented limitations. Companies are inexperienced and need to involve more expertise in MA processes. The results also found that South African companies need to expand their cultural intelligence and negotiation skills, especially within a diverse cultural realm, before entering into MA deals with foreign companies.Contribution/value-add: Services are determinants of trade volumes and offer distributional effects and patterns of economic growth, development and FDI inflows. Little research exists on the dynamics of MAs in the freight and logistics industry, especially within the African context. This study also makes some contribution in that regard.
Highlights
Mergers and acquisitions (M&As) are driving a large portion of foreign direct investment (FDI) (Erel, Liao & Weisbach 2012)
The objectives of this study were to determine the drivers of inorganic growth through M&As in the freight and logistics industry of South Africa by adopting a process perspective
The research systematically investigated and discovered evidence about the reasons why large multinational enterprises (MNEs) in the services and transport sector are focusing on M&As as their major inorganic growth method and to identify why these MNEs are targeting the African continent
Summary
Mergers and acquisitions (M&As) are driving a large portion of foreign direct investment (FDI) (Erel, Liao & Weisbach 2012). Some questions were set to double check the answers and motives of respondents, which further ensured the trustworthiness of the research results obtained Both the questionnaire and the interviews were formulated in a way that firstly built an overview of each of the companies’ business activities, the size of the company compared to domestic competitors, the geographic reach, and the company’s growth over the last few years; and secondly, to gather more information about the specific mergers or acquisitions that occurred. The following section will provide a deeper understanding as to why a certain sample was chosen and classified as appropriate The objective of this sampling technique was to be able to conduct an in-depth analysis of specific case studies through http://www.actacommercii.co.za detailed explanations and elaborations of interviewees on specific aspects regarding the merger or acquisition transaction. The deal would result in retrenchments, and the personnel were very emotional and biased with regard to their responses to questions about the acquisition at the time of the study
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