Exploring Impacts of the Role of Governments on Cross Border M&A of State-owned Enterprises (SOEs) in Emerging Market Based on the Different Industry

Abstract

We demonstrate the different role of the government has various effects on the state-owned enterprises of emerging market’s internationalization. We further show that the government indeed plays a different role (constraint or encourage) based on the different industry, rather than merely inspecting international behavior as the result of cross border merger and acquisition performance and the role of government separately. Although the role of government has a profound influence on international expansion, these effects depend on three sides: whether the enterprises is the state-owned firms; different types and levels of enterprises with different objectives; different institutional pressures on SOEs. These effects will have impacts on willingness and ability of SOEs to internationalize differently. The role of the government indeed influences the outcome of overseas investment in both developed countries and under-developed countries based on the different type of cross border M&A activities (resource- vs technological-seeking). These effects are from the firms’ own capabilities and the different attitudes from the host countries, suggesting that not all firms could use international government-related advantages appropriately and respond to institutional pressures efficiently. As for research method, we combine the resource-based and institutional theory together, because these two constructs highly dependent on each other, and therefore will enable us to have a deep understanding of why SOEs sometimes succeed but sometimes failed during the period of expanding overseas, and how governments matter