Intellectual Capital in Cross Border Mergers & Acquisitions: An Exaptation Perspective

Abstract

Exaptation, in internationalization, is defined as the re-use of capabilities that a firm developed through domestic geographical dispersion in the process of cross border mergers and acquisitions (CBMA). This study tests the impacts of exaptation with a firm’s first and subsequent cross border mergers and acquisition engagements. The study is based on the 10 years of data from 2009 to 2019 of 99 manufacturing sector companies of Malaysia to test the relationship between the firm’s domestic geographical dispersion and chances to engage in first-time and subsequent CBMA. We applied pooled regression to estimate hurdle models. The results showed a positive and statistically significant influence of exaptation of control and coordination capabilities on the firm’s probability of engaging first-time cross-border mergers and acquisitions; however, these capabilities become irrelevant in subsequent CBMA involvement. The findings imply that firms operating in geographically dispersed business units can have higher chances of success in cross border mergers and acquisitions.