Impact of the Financial Crisis on the Performance of European Acquisitions

This study looks at the impact of the recent financial crisis on the short-term performance of European acquisitions. We use institutional theory and transaction cost economic theory to study whether bidders derive lower or higher returns from acquisitions announced after 2008. We investigate shareholders’ stock price reaction to 2245 deals which occurred during 2004–12 across 22 European Union countries. Our results from both univariate and multivariate analysis show that the deals announced in the post-crisis period, corresponding to the period of economic recession, generate higher returns to shareholders as compared to acquisitions announced in the pre-crisis period. We also test the relevance of the Economic and Monetary Union (EMU), that is, the Eurozone, to this value accrual during the recessionary period. We observe that non-EMU transactions obtain significantly higher gains vis-à-vis EMU transactions in the post-crisis years. Overall, announcement returns of European acquisitions have been affected by the financial crisis and the global recession; and companies that target countries with different currency regimes are likely to generate better returns from their acquisitions

Impact of the Financial Crisis on Cross-Border Mergers and Acquisitions and Concentration in the Global Banking Industry

© 2015 Wiley Periodicals, Inc. The global banking industry has seen dramatic changes in the past 40 years. Most recently, the financial liberalization of emerging markets and the global financial crisis have significantly impacted the market share of banks worldwide. This article investigates the impact of the 2007-2008 financial crisis on cross-border mergers and acquisitions (M&As) in the banking sector and emphasizes the role of emerging-market banks in the postcrisis consolidation trend. Using M&A data and concentration data over the period 2000-2013, our analysis indicates that the financial crisis had a significant impact on worldwide M&As, especially on the direction of the transactions. Emerging-market banks appear to be major acquirers in the postcrisis period, targeting both neighboring countries and developed economies in Europe. We also observe an increase in bank concentration in developed markets most hit by the financial crisis, especially in the United States and the United Kingdom, whereas bank concentration decreased in emerging markets

The motives and performance of cross-border acquirers from emerging economies: Comparison between Chinese and Indian firms

During the recent decade, the world has witnessed the rapid growth of MNEs from emerging economies. Their increasing participation in cross-border mergers and acquisitions has raised great attention in the extant literature. This study evaluates the value creation from these cross-border transactions from two representative emerging countries, namely China and India, and determines factors that result in the different performance of these international acquisition activities. Cross-border acquisitions conducted by these countries' companies indeed lead to significant shareholder wealth creation. Furthermore, Indian shareholders are more likely to benefit from deals in small cultural distance countries, while Chinese investors gain from the cross-border expansion of manufacturing companies. Location also affects the performance of cross-border acquisitions, with acquisitions into developed countries generating higher returns to shareholders. Our sample consists of 203 Indian and 63 Chinese cross-border deals over the period 2000-2010 and our results hold after controlling for various deal-level and firm-level characteristics. © 2013 Elsevier Ltd

The effects of ownership identity on corporate diversification strategy of Chinese companies in foreign markets

In this paper, we examine the impact of acquirer’s ownership identity on corporate diversification decisions of Chinese companies in their cross-border acquisitions. Few studies to date have looked at the effect of ownership on corporate decisions to diversify abroad, particularly in the emerging market context. We find that certain characteristics of acquirer’s ownership identity such as the government ownership, business group membership and being publicly traded will be negatively linked with industry diversification in international markets. Also, the effects of ownership identities are contingent upon the host country selection, and acquisitions into developed host countries are likely to be in unrelated industries. We observe that Chinese companies that buy in developed markets engage in global consolidation. These results support our arguments on domestic market protection strategies adopted by the Chinese companies for mitigating competition from their developed market rivals

Nature of technology and location effects on firm performance in the US medical device industry

This paper examines the location effects on firm performance (sales, employment and market value) by analyzing geographical and technological proximities in the US medical device industry. The nature of technology is introduced as a new way to scrutinize the impact of various proximities, and the findings indicate that the geographical and technological proximity in itself does not affect performance, whereas the spatially-mediated technological proximity, characterized by the technological proximity within a cluster, positively influences the performance of medical device firms. The paper addresses an important theoretical question. It consequently contributes to the effects of different proximities and nature of technology on firm performance and provides relative managerial implications interlocked with insights obtained from the medical industry

Multinational Enterprises and Sustainable Development Goals: A Foreign Subsidiary Perspective on Tackling Wicked Problems

To address the unique challenge facing Multinational Enterprises (MNEs) in managing their foreign subsidiaries’ implementation of Sustainability Development Goals (SDGs), we propose a framework based on the foreign subsidiary identity transitions driven by the competing demands of parent and local stakeholders. Our work provides policymakers with a framework to better understand the links between the changes in the institutional level and the MNE's strategy to attain SDG goals. The separate local identity driven by local stakeholder demands is conducive to the localized implementation of SDGs in the host country, while the subsidiary’s identification with its parent MNEs plays a critical role in achieving SDGs that impact the operations of the company and their business networks like suppliers and customers. By linking subsidiary identity with SDGs, we identify mechanisms that can be adopted by the parent firms and subsidiaries to engage with SDGs in the host country as well as how parent firms can transfer better practices to their subsidiaries. As such, policymakers can identify SDG gaps in the local environment, and as MNEs establish processes engaging with local SDGs, policymakers can encourage MNEs in the policy uptake. Similarly, policymakers can support MNEs align their local context strategies with SDG gaps

Assessing the role of host country human rights protection on multinational enterprises' choice of investment strategy

Although international business studies have examined the role of non-market factors in multinational enterprises’ (MNEs) foreign ownership, there is a limited focus on the role of host country human rights records on MNEs’ ownership decisions. Further, there is little understanding of the differences in ownership decisions between the developed country multinational enterprises (DMNEs) and emerging-market multinational enterprises (EMNEs) as influenced by the non-market context of their host countries. This study, therefore, explores the links between the host country’s human rights governance and MNEs’ ownership strategy in cross-border acquisitions. We argue that clarity in human rights governance in the host country will encourage MNEs to establish higher stakes in local targets and that this relationship will be stronger for DMNEs than for EMNEs. Our findings, which support these hypotheses, offer insights into the relationship between MNE investment strategy and human rights governance, and inform the debate on the differences between internationalization strategies of EMNEs and DMNEs

Cross-Cultural Leadership Adjustment: A Strategic Analysis of Expatriate Leadership at a British Multinational Enterprise

The current study examines the determinants of cross-cultural leadership adjustment (CLA) and explores any potential linkage with performance. CLA adaptions are observed using a sample of leaders from two cultural regions, the United Kingdom and Germanic-Europe, with expatriate experience at a British multinational enterprise (MNE) in seven different countries, including non-European nations. Using data from a single company in multiple regions helps to isolate the firm, industry and regional effects. We adopted mixed method approach to address the question on what mode of adjustment leads to better performance and the antecedents of CLA which leads to better work-performance. The results indicated that most expatriate leaders used the exploration mode of adjustment, under which both they and subordinates made substantial behavioral adaptations. This mode of adjustment addressing cultural differences had a positive impact on work-performance along with replication mode. Additional antecedents here, such as differences relating to hierarchy, decision-making and language/ communication, also impacted CLA

Social innovation in emerging economies: A National Systems of Innovation based approach

Drawing insights from the national systems of innovation and social entrepreneurship literature, this article examines how national systems of innovation (NSI) and social entrepreneurship interact to generate social innovation in emerging economies. Through the examination of a case study of the Emergency and Management Research Institute (EMRI), a public private partnership (PPP), social innovation is found to be an interactive bottom-up collective learning process where EMRI has developed a new model of social innovation. It also highlights the complex context in which social innovation occurs. As a boundary-spanning activity across the public and private sectors, the interactive learning process and associated capability building for social innovation has provided a catalyst for wider social reform and for the development and redesigning of NSI for social innovation-led value creation in emerging economies. Through such an approach, the EMRI has overcome the institutional voids and developed legitimacy through social innovation tailored to the local context; it thereby represents an alternative approach to the often top-down NSI organisations of developed economies

Bridging the gap between domain of research and locus of impact: An examination of the UK's research excellence framework

- Purpose This paper examines the relevance of academic research in business and management studies stream to various stakeholders. Stakeholder theory is used to examine the influence of research on various key beneficiaries and investigate the link between the domain of research and locus of impact. - Design/methodology/approach Research Excellence Framework 2014 (REF 2014) conducted in the UK provides a useful context and data for our research as REF 2014 encouraged universities to submit the information on research activities and their beneficiaries. This information is in the form of impact case studies which details the research, location of research and beneficiaries. - Findings The findings suggest that research with an international focus has a positive impact on industry stakeholders, especially multinational corporations as well as non-governmental organizations. Secondly, it shows how research has made a commercial impact in innovation and small and medium enterprises’ growth while having limited impact on other domains such as social, legal, political and healthcare. More broadly, the findings indicate the degree of regional diversity. Also, the wider results-driven agenda in the UK can overestimate the research contribution to some stakeholders in the society. - Research limitations/implications Self-selection bias as universities might submit only few case studies. - Practical implications For research to generate long-term benefits for the wider society, it needs to engage more deeply with the whole range of stakeholders. - Originality/value This study contributes to understanding how research is consumed by stakeholders. The results indicate that while locally relevant research encourages local consumption; it is not assimilated across various stakeholders