Divergent Learning Effects from Alliance Experience and Cross-border M&A Entries

Abstract

Drawing on a learning perspective, we argue that prior alliance experience may have divergent learning effects on subsequent M&A entries into a host country depending on whether the alliances were made as an institutionally embedded choice when regulations restrict foreign M&As or as a strategic choice when regulations encourage foreign M&As. While in the former case, MNCs that had M&A in mind might stretch themselves and learn beyond what alliance relationship offers, whereas in the latter case, MNCs just focus on learning about the particularities of managing alliances. Thus, alliance experience before the change in regulations from restricting to encouraging cross-border M&As in the host country may also change from a positive effect on subsequent M&As to a negative effect. Additionally, we argue that this effect is moderated by economic distance. Analyses based on a sample of 1,561 MNCs from 40 different home countries entering China through M&As over an 11-year period (2003–2013) provide considerable...