The Relationship Of Motivation, Control And Performance For Cross-border M&As Of Chinese Enterprises

With the increasing pace of overseas expansion of Chinese enterprises, cross-bordermergers and acquisitions has gradually become one of the most major and important ways forthe main enterprises to enter overseas markets and develop corporate competitive advantage,which has received sustained attention from academia. More and more studies have found thatthe key to the successful mergers and acquisitions lies in the effective organizationalarrangements during the process of integration. Organizational arrangement is the stickingpoint for enterprise to achieve mergers and acquisitions strategic objectives, and among whichacquiring control power is the most important. Over the past decade, through the domesticand foreign cases, we have found that cross-border mergers and acquisitions integration ispretty important, but it does not start from the mergers and acquisitions, and it should be takeninto consideration in the merger talks. The purpose of integration is to realize acquisitiontargets through appropriate control, and actively-merging enterprises will choose differentcontrol level due to the different motivations. The study explores the logical relationshipbetween motivation, control power and performance of mergers and acquisitions，and furtherdiscusses that different motivation how to affect the choice of control level and then affectperformance of Chinese enterprises’ mergers and acqusitions. The study constructs atheoretical framework between mergers and acquisitions motivation, control power andperformance, and it conducts empirical research, trying to provide theoretical and practicalguidance to mergers and acquisitions decisions and actions of Chinese enterprises.The study follows the logic thinking of Mergers and acquisitions motivation (strategy)-Control power (behavior)-Performance (performance) and selects Chinese enterprises thathave been involved in cross-border mergers and acquisitions as objects of study. On the basisof reviewing the relevant literature and theoretical basis, the study formulates hypotheses andconducts empirical tests, and reaches to the following conclusions: the mergers andacquisitions motivation and control power of Chinese enterprises are positively correlatedwith each other, which means compared with market-oriented, resource-oriented mergers andacquisitions tends to high level of control; Shareholding ratio has positive modulation on therelationship between mergers and acquisitions motivation and control power; Bargainingpower shows no moderating effects on the relationship between mergers and acquisitionsmotivation and control power; Enterprise ownership negatively regulates the relationshipbetween motivation and control power, namely: Compared with state-owned enterprises,private enterprises have higher level of control power while conducting cross-border resource-oriented mergers and acquisitions; Control power and performance have asignificant positive correlation; Three dimensions of nation institutional distance show nosignificant moderating effects on mergers and acquisitions control power and performance.The study’s contribution reflects in the following aspects:(1)The study integrates theresource-based view and institution-based theory. It deeply studies the source of advantage ofChinese enterprises based on resource-dependence model and how resource dependenceaffects the choice of target enterprise’s control level. This study also attempts to build bridgesbetween LLL model and OLI paradigm, exploring realizing internalization advantage throughhigh level of control power, which contributes to international academic discussion betweenthe OLI paradigm and LLL model.(2)This study highlights differences in motivations andlocation choices of different Chinese enterprises in cross-border mergers and acquisitions. Inaddition, it also explores Chinese enterprises’ diverse performance under different mergersand acquisitions control power, motivations and institution factors, which contributes to the‘context’ research.(3)This study sets up a process mechanism from cross-border mergers andacquisitions to formulation of international competitiveness. The study further exploresrelationship between mergers and acquisitions motivation, control power and performance,and how institution factors play a regulatory role. The paper takes a deep look at therelationship between these variables and the internal mechanism, which gives some importantrevelations for Chinese enterprise to conduct post-merger integration and improveinternational competitiveness.(4)In this study, large sample of empirical research methods areadopt for the first time to study the behavior of the cross-border mergers and acquisitions ofChinese enterprises, which makes some persuasive conclusions towards various phenomenain the corporate practice and enhances the effectiveness of the recommendations on the policyand enterprise group management on the foundation of theoretical research.This thesis attempts to integrate resource-based view and institutional-based theory andmainly explores the relationship between motivation, control power and performance, startingfrom the early stage of cross-border mergers and acquisitions and negotiation process. Thestudy expands the perspective on cross-border mergers and acquisitions and foreign directinvestment theory. This study enriches and develops internationalization process of emergingcountries for the traditional theory of international academic discussion. Finally, the thesispoints out the existing inadequacies of the study as well as future research direction.