Synergistic Gains and National Cultural Distance

This paper adopts a multi-level approach to investigate what factors shape the content of emerging market firms’ foreign market entry decisions, particularly the ownership participation in cross-border mergers and acquisitions (CBMAs). In addition, we would like to know if companies from emerging markets that possess higher (or lower) ownership in CBMA receive higher valuation in the market. Using panel data of CBMAs by nine EMNCs from 2000 to 2012, we found that industry-level factor (industry unrelatedness) and firm-level factor (board concentration) have significant impact on ownership participation in CBMA. We also found that investors do give high valuation to those emerging market firms that chose high ownership participation in CBMA. However, we did not find evidence to support the relationship between ownership participation in CBMA and cultural distance. Neither did we find the support for the relationship between ownership participation in CBMA and board independence.

Managers as the bridge: How cultural friction influences the integration of cross-border mergers and acquisitions

PurposeCultural friction (CF) was introduced by researchers to overcome the issues and challenges of cultural distance measurement in the context of cross-border mergers and acquisitions (CBMAs). However, this construct has proved itself to be problematic to operationalize. To address this challenge, this paper aims to elaborate on a CF measurement instrument based on individual perceptions in CBMAs. This study used a microfoundation approach to measure CF, relying on managers’ interactions in CBMA settings.Design/methodology/approachTo develop and validate a CF measurement in the context of CBMAs, this study followed a classical procedure including items development, lab tests and one field-study and an assessment of the construct validity.FindingsThe final instrument developed for measuring CF is composed of six critical incidents with three associated items each. The factor analysis revealed that the scale used in the field-test measures two factors of CF: internal and external. Reliability and discriminant validity are tested, demonstrating a good discriminant validity of “external” CF. The final measurement can be used as a valid and reliable scale in further studies to assess CF in the context of CBMAs.Originality/valueThis paper’s originality lies in developing and validating a CF measurement instrument that does not rely on cultural distance frameworks. The resulting scale shows the interest in considering micro-individual perceptions – the microfoundation level – for analyzing an organizational phenomenon as culture in CBMA contexts. Using a micro-founded approach, this study offers promising avenues for researchers who wish to study cultural interactions in international settings.

An analysis of firm level data from 393 completed Chinese firm cross-border mergers and acquisitions (CMA) from 2002 to 2019 revealed that there was a herd effect in Chinese CMA activities. The heterogeneity factors in the host country effects on the herd index found that the political environment was a significant positive herd effect determinant and exchange rate volatility, openness degree, and cultural distances were negative determinants. This research sheds light on Chinese firm CMA decision-making, which could assist in the development of appropriate policies to assist firms achieve better performances.

With or without metamorphosis of learning Orientation: Post-Cross-Border mergers and acquisitions performance of emerging multinational enterprises

This study reviews 191 empirical articles published from 1990 to 2020 in A* and A category journals recognized by the Australian Business Deans Council (ABDC). We adopt the theories-contexts-characters-methods (TCCM) protocol to review and present the consolidated findings and set future research agendas in cross-border mergers and acquisitions (CBA) activities. Our review findings suggest that scholars have used institutional theory consisting of the formal and informal institutional framework, resource-based view, macro economic theory, information asymmetry, agency theory, ownership, location, and internalization (OLI) framework, and multi-theoretical framework covering transaction cost economics, information cost, real options theory, knowledge-based view, organization learning theory, and likewise related antecedents in the CBA research. Most of the existing knowledge is either from developed markets or global markets, and at a rapid pace, scholars are investigating emerging markets’ outbound CBA activities.

Multidimensional cultural distance and self-employment of internal migrants in China

Cross-national distances between national cultures and national institutions have been studied extensively in the last two decades, particularly with respect to their effects on the conduct of international business. Yet varying levels of analysis, inconsistent definitions, and different operationalizations of cross-national distances inhibit theoretical and empirical advances. Three approaches to non-geographic cross-national distance permeate the literature: psychic distance, national cultural distance, and institutional distance. The meaning of psychic distance has become muddied by evolving operationalizations, from objective indicators to individual perceptions. National cultural distance has been confused with both psychic distance and institutional distance. Various and inconsistent institutional arrangements and business practices are used as measures of institutional distance. This article reviews overlaps, inconsistencies, and ambiguities in the definitions and measurements of psychic, national cultural and institutional distance; suggests a way to rationalize the three constructs; and offers two competing models to explain the role of all three distances in international business decisions.

National cultural distance, organizational culture, and adaptation of management innovations in foreign subsidiaries: A fuzzy set analysis of TQM implementation in Saudi Arabia

Curvilinear relationship between cultural distance and equity participation: An empirical analysis of cross-border acquisitions

Recent years have witnessed a phenomenal growth in the number of Chinese enterprises “going global.” Drawing on three leading theoretical perspectives including the transaction cost theory, organizational capability theory and eclectic theory, this paper develops hypotheses to test how country risk and cultural distance are associated with entry mode choices of enterprises from China. Based on a sample of 167 Chinese companies, an empirical investigation has been conducted employing logistic regression and hierarchical regression analyses. Our results show that country risk and cultural distance have significant impact on entry mode choice. With the increase of country risk or cultural distance, businesses prefer non-ownership-based entry modes such as trade and licensing. However, entry mode choice is also noticeably influenced by the interaction between country risk and cultural distance, which is a new finding of international entry mode research. Furthermore, private enterprises are more likely to adopt high-involvement entry mode than the state-owned enterprises, and service enterprises are less likely to use high-involvement entry mode, which suggests that different approaches are used to deal with country risk and cultural distance by various types of enterprises.

The asymmetric relationship between national cultural distance and target premiums in cross-border M&A

Cultural distance and expatriate job satisfaction

The influence of market and cultural environmental factors on technology transfer between foreign MNCs and local subsidiaries: A Croatian illustration

The recent growth in diplomatic, civil and military conflicts presents evolving challenges for internationalbusiness. These risks create new sources of country risk. Country risk, in this sense, is commonly associated withthe risk faced by enterprises in developed countries while conducting their business operations in developing orpolitically volatile countries. Few studies, however, have been carried out on the impact of country risk onenterprises from developing countries operating in other developing countries.This research investigates the role of the risk manager in country risk assessment (CRA) within Jordanianmultinational enterprises (MNEs) by adopting a survey strategy. The methodology included questionnaires whichdistributed to the entire Jordanian multinational enterprises.The main finding of this research was the role of risk managers is still not being maximised, and enterprises maynot be achieving optimum benefits from their risk management system.