Not All Returnees Make a Difference: The Impact of Returnees from Target Country on EMNE CBAs

Abstract

The existing literature has posited that returnees, as a scarce resource in the past, can provide an advantage for emerging market multinational enterprises (EMNEs) as they expand internationally by providing the much-needed knowledge of and connections to foreign markets. As returnees increasingly tend to become a commodity in emerging markets (e.g., China), however, their value risks being diminished, as evidenced by the mixed empirical results on the performance implication of returnees. Our study of cross-border acquisitions (CBAs) by Chinese MNEs (2008-2017) revealed that only returnees from the same country in which a Chinese acquisition is targeted facilitate the completion of such an acquisition, whereas returnees from other countries fail to make any difference. The positive effect of returnees from target country is weaker when the firm has accumulated international capability while it is stronger for the firm investing in a target country with a weak institutional framework. The findings suggest that as returnees become a commodity, their value to EMNEs can no longer be taken for granted. To make the best use of returnees as a key resource, EMNEs should be careful to deploy this resource where it is most needed.