Psychic Distance And Chinese Enterprises Overseas M&A Equity Configuration Strategy Research

With the increase of Chinese economy quantity and the deepening of internationalization,the international market entry modes gradually shift from indirect investment into indirect and direct foreign investment in hand.In recent 10 years,with the development of international industry and structure change,overseas M&A gradually become China’s multinational company quickly obtain resources,international brand,research and development innovation,management skills,such as a important way of strategic assets,and the industry competitiveness get promoted through overseas M&A.Distance factors influence the international market entry mode and international direct investment choice.This proposition has been caused by the academic circle’s fervent concern and discussion,the culture and the system of latitude has gradually become the hot issues in the theoretical research.Beckerman(1956)first proposed the concept of psychic distance between the study of distance and trade relations,so far psychic distance is still not the concept of a scholar recognized the same on recognition and measurement method.how and what impact psychic distance have on transnational investment activities especially of M&A activity in the end?Some scholars have carried on the exploration research,and has produced the valuable research results.In the study of distance elements,the structure of the psychicl distance dimension is different,the influence of the various dimensions of the symbol is also positive,a negative and the so-called psychic distance of the paradox.Even though cross-border investment is faced with various risks arising from various manufacturing and"outsiders",but at the same time can enjoy a higher foreign income,need to weigh the impact of two aspects.This paper will study the internationalization of traditional theory such as transaction cost theory,eclectic theory,process theory etc.and focuses on developing countries enterprises internationalization mode of arbitrage theory,motivation of transnational operation strategy theory to the theory of combination,transnational M&A of the equity allocation influence distance factors was studied.At present,from the perspective of international direct investment analysis interpretation of market entry mode choice of theory and empirical research results,mainly concentrated in two aspects,one is multinational entry motive was extremely influential factors,and for the host country selection decision;second is to choose what kind of investment patterns into a country,and for the allocation of control rights in the decision-making.This paper reviews the relevant literature on the psychic distance perspective,the impact of the influencing factors of the CBA,S of equity allocation were theoretical and empirical research,in theory,reviews the research status of psychic distance,the difficulty,and puts forward the direction of the research;in practice,provides a train of thought for emerging developing countries such as China,s transnational M&A of equity arrangement.In the course of studying the theoretical basis,we find that the traditional theory of transnational investment in developed countries is also studied,including the research of the characteristics of the developing countries.Based on the comparative analysis of different perspectives,this paper puts forward the research ideas,that is,the key psychic distance factors of the impact of the market entry mode-CBA-the choice of equity level.Through the integration of the various theoretical perspectives and their own understanding,we established a wider and newer distance dimension framework,in order to analyze the complex relationship between the elements of each distance and equity investment,and put forward the corresponding theoretical assumptions and empirical testing.Empirically,the author collects2004-2014 Chinese mainland enterprises to 55 important world economies and regions merger data,build the distance dimension empirical index structure,a certain degree of improvements are made on the measurement formula and measurement method.The empirical results show that,there are different directions and different levels of influence on the proportion of cross border M&A in different latitude.the value is particularly reflected:China is currently in the explosive growth stage of transnational M&A,the enterprise is facing the higher transnational business risks and uncertain conditions,the effect of the psychic distance factor showed more distinctive and complex.Empirical study results show that each latitude of the psychic distance indicators exis the relationship between the equity ratio of transnational M&A in different directions and different level.Specific conclusions:one,the psychic distance perception of Europe and the United States and other developed countries is deeper,but 2012 years later,M&A target number in Europe and the United States and other developed countries is increasing rapidly,that strength of Chinese enterprises and willingness of M&A in the developed countries enhance its capability;Second,compared to Europe,particular the Nordic countries,the United States and our country’s cultural distance and system distance is relatively close,the uncertainty degree of economy,business practices is small,speculative opportunities become more attractive,but the system of the European countries carry more obvious advantages,Chinese enterprise M&A stake is higher;Three is,state-owned large and medium-sized enterprises are still the mainstay of China’s overseas investment,including energy minerals,machinery manufactur Financial,Internet,etc.,these industries overseas M&A to the host country will be reined in its high percentage shareholding;Four,compared with developing countries,developed countries system advantage is helping China more transnational direct investment,at the same time,Chinese enterprises with the support of her home country policy,also caught the relatively favorable investment opportunities in today’s global market,able to carry out high risks and seek the corresponding control of the target company;Five is,International experience and technical level is still the primary constraint in the internationalization,especially transnational investment in developing countries,are more vulnerable to the host country government policy,law,information quality;Six is that,after 2012,the Chinese enterprise market motives of M&A is outstanding,and in the energy industry of high stakes interval,the will of its overall holding company is more strongly.We conclude that the equity stake decisions of M&A may change over time,the accumulation of international experience,motivation plays a regulatory role;Seven,with the increase of transnational operation time,adjust the influence degree of the cultural distance,make the impact effect is not that significant,though cultural distance does not significantly affect the enterprise whether to enter the host country(i.e.,Heckman stage),but negative influence to the scale and the proportion of equity allocation;Language at the same time,the greater the distance,the larger negative impact of its stake in overseas M&A decision,we can’t avoid.Research contents and main points of view:the first chapter is introduction,which introduces the background of the selected topic,the theoretical and practical significance,research ideas and methods,research content and framework,innovation and difficulty.The second chapter is literature review;his paper summarizes the research status and makes a review of the literature from two aspects of domestic and foreign countries.A worth mentioning is that the paper points out the shortcomings of the existing research in the field,the current research hot spots,the problem and the future needs to be further carried out in the direction of research and so on.In the third chapter,constructing the conceptual model,it puts forward the research hypothesis.Focuses on the analysis of the traditional transnational investment of transactioncosttheory,internationalproductioncompromisetheory,Uppsala internationalization theory,through emerging international market arbitrage theory and bargaining theory on CBA for jumping type development path point of view.Through the analysis and comparison of various theoretical views and integration of the theoretical perspectives based on the proposed conceptual model of this paper,proposed the corresponding research hypotheses,the study model both the integration of relevant academic research,also has a new attempt.In which the distance of enterprise level identification,such as the valuation of the M&A,the degree of information disclosure of the relevant theoretical assumptions are not verified by the previous scholars,with a certain degree of forward-looking.The fourth chapter is the key and difficult point of this paper:the design of empirical research.we construct an empirical analysis model for each distance dimension,which is a quantitative definition of cultural distance,institutional distance,business practice,economic and geographical distance,and data preprocessing.On the premise of theoretical analysis,this chapter puts forward the concept of the research index.On the basis of the detailed analysis and description of the selection of each latitude variable,the index system is sorted out,and the adaptive adjustment is made to the sample source and the empirical method used.The fifth chapter is the empirical research,using the corresponding statistical analysis software SPSS to carry out the principle component analysis of the 6 variables,ten years,a total of ten times on the system distance index.The correlation of the 15 variables using the STATA software to carry out a regression test.Validation results excluding the individual indicators,to achieve our expected requirements.The sixth chapter is the conclusion of the analysis and prospect,and points out the limitations of this study.This chapter carries on the further exploration and analysis to the research conclusion,puts forward the measures to prevent the risk of transnational M&A from the two aspects of the enterprise and the government.According to the research conclusions,this study proposes specific strategies to deal with the choice of transnational mergers and acquisitions in China,which provides a reference for the government policy to help Chinese enterprises,_S international investment.The innovation of this paper is that,further enrich the theoretical and empirical studies of the transnational M&A,objectively impede the flow of information and subjective distance recognition including variables of spatial distance and enterprise information difference variables also included psychic distance concept model,in a certain degree of index were classified and expand,distance dimensions is divided into three levels of nation,industry,organization,build a more appropriate distance metrics,in order to truly reflect the impact of distance effect of China’s transnational investment.Use the Hofstede culture 6 latitude indicators to measure the cultural distance for the first time,the time effect is added to the measurement formula.The conclusion of the study shows that considering the time effect(the cultural distance index decreased year by year)culture from its negative influence still exists,but not significant;institutional distance brings positive effect to 2011 years ago M&A;a performance more prominent;the effect of language still can not be ignored;measurement of business practice differences also used for the first time in the quality of corporate governance rating and corporate information disclosure criteria for evaluating the degree of leakage.These two types of indicators and the relationship between investment companies are more closely,but the past scholars have less use,and often use the market size,market policies,business regulations and other indicators to study the differences in business practice environment.In this paper,the limitations of the study is that,only the entry mode of multinational companies in China M&A,recombination of property right and control right conversion process is not studied in the paper.In view of the lack of specific information about the personal experience of transnational corporations’decision,and the background of overseas,decision makers on the distance of the non symmetric sexy knowledge and decision-making risk preference of the merger,there are also difficult to identify the difficulties,so this was not measured;due to the limitation of the sample,only from the perspective of the merging party studied a sample of Chinese enterprises.As Hennart and Park(1993)of the study mentioned,when entering the foreign market,the market with the market leader than the market is more inclined to mergers and acquisitions,need to compare the relationship between the two.Cantwell and Mudambi(2011),believes that ownership and control in the decision-making process,the status of host country enterprises compared with foreign enterprise competition affect knowledge searching behavior and cost.These topics need careful attention.The competitive position is also the factors which influence the decision of CB A,which provide more ideas and directions for my further study in the future.