A Study On Technology Sourcing Overseas M&A Integration And Target Autonomy

Technology sourcing overseas M&A as a channel to enhance the technological capability of a firm and achieve synergy, is nowadays playing a more and more important role in China’s outward foreign direct investment. For the many Chinese acquiring firms, completing the M&A is just a start; achieving the expected synergy effect still requires the effective recombination and integration of the resources and technologies of the acquiring and acquired firms. M&A failure caused by inappropriate integration is not rare in practice, so how to choose and implement the optimal integration strategy to better achieve post-merger synergy is a realistic question to Chinese acquiring firms, also a research focus to scholars.Existing literature views integration degree and target autonomy as two aspects of post-merger integration strategy, but up to now, how to choose the right integration strategy and how the integration strategy influences post-merger synergy are still two separate research questions; and the inherent mechanism needs to be further illustrated. Further more, one of the most distinguish characteristics of technology sourcing overseas M&A from domestic M&A lies in that there exists great institutional difference between the acquiring firm and the overseas acquired firm which can moderate the integration behavior in post-merger phase. Yet a combination of resource-based view and institution-based view is still missing in previous research.From the perspective of resource similarity and complementarity, this study builds the theory of the integration and target autonomy in technology sourcing overseas M&A, and tests the theoretical hypotheses using a variety of research methods such as mathematical model building, simulation experiment, empirical analyses, and case analyses. Based on resource similarity, resource complementarity, and their interaction effect, we emphasize that integration strategy should be matched with the resource relatedness of the acquiring and acquired firms to optimize post-merger synergy, and we also discuss the influence of institutional distance on the effectiveness of the match pattern, trying to provide some implication for Chinese acquiring firms.In the theoretical part of this paper, we first analyze the influencing mechanism of integration degree and target autonomy on post-merger synergy respectively, and based on this we illustrate how to choose the appropriate integration degree and target autonomy matched with the resource similarity and resource complementarity of the acquiring and acquired firms to optimize post-merger synergy. Then we further examine how institutional distance will affect the effectiveness of the match pattern, thus building a comprehensive framework of how integration strategy and resource relatedness interact to facilitate post-merger synergy under different situations of institutional distance. We then develop the core theoretical hypotheses.In the part of mathematical model building, we establish a mathematical model according to the theoretical mechanism of this paper to depict the integration behavior of a technology sourcing overseas M&A acquirer motivated by synergy optimization. From model analyses, we get the optimal integration degree and target autonomy in technology sourcing overseas M&A matched with resource similarity and complementarity in order to maximize post-merger synergy in the situations of high institutional distance and low institutional distance, supporting the theoretical hypotheses.In the part of simulation experiment, we explore how different integration degree and target autonomy under different conditions of resource similarity and complementarity will influence post-merger synergy dynamically in the situations of high institutional distance and low institutional distance. The simulation experiment works as a supplement for the static model in the previous part, and provides us with experimental supports for the theoretical hypotheses.In the part of empirical analyses, we conduct a comparative study using the samples of Chinese technology sourcing overseas M&As and Korean technology sourcing overseas M&As to examine the match of integration degree and target autonomy with resource similarity and resource complementarity in order to achieve better synergy performance in the situations of high institutional distance and low institutional distance respectively. The results not only confirm the theoretical hypotheses, but also reveal some helpful implication from the comparative study.In the part of case analyses, we select four representative cases of Chinese technology sourcing overseas M&As with different resource characteristics and different institutional distances. By examining and analyzing the resource relatedness, institutional distance, integration strategy, and post-merger synergy of each case, we conclude the optimal match of integration degree and target autonomy with resource similarity and resource complementarity in order to achieve better post-merger synergy in the situations of high institutional distance and low institutional distance. By contrasting the four cases laterally, we sum up the experience of success and failure, providing practical guidance for Chinese firm’s technology sourcing overseas M&A integration activities.