Study On The Corporate Capabilities Of Mergers And Acquisitions

As an efficient and effective way to resource integration and market integration in market economy, Mergers and Acquisitions are applied for many companies. However, M&A are not perfect risk-free ventures. Many companies failed in their merger activities just because they did not know their capabilities of mergers and acquisitions. Therefore, it becomes a significant issue that develop the theory of capabilities of M&A to support the decision-making process.This article is an interpretive research, so the major objective of this article is to clarify the definition, structure, features and the illustration of the capabilities of M&A. Firstly, after have reviewed the resource-based theory of the firm, this article analyzed the important role of surplus resources and defined the capability of M&A is the ability of making use of surplus resources to accomplish M&A activity.Secondly, this article selected six multiple typical M&A cases to conclude the main factors to capabilities of M&A. These main factors are human resources, financial resources, material resources, intangible resources and management capability. Based on their attributes in M&A activities, the logic relations between these factors and capabilities of M&A are studied. The quantities of the resources and their marginal return are the two factors to capabilities of M&A.Thirdly, on the analysis above, the author developed a function of capabilities of M&A which made reference to Cobb-Douglas Production Function which highlighted the surplus human resources, surplus financial resources or surplus material resources, and surplus management capability are the function of the capabilities of M&A. Furthermore, the marginal return and flexibility of these resources to the capabilities of M&A are studied. The article also argued that the return of scale of the capability function was determinate by the past experience of the company.Fourthly, the author innovatively put forward the capabilities of M&A based on the attributes of surplus resources. This brought the direction attributes (including industry and geography) and procedure attributes (including outsourcing, R&D, manufacture, marketing and service) of surplus resources into the theory frame of capabilities of M&A. This article developed a new M&A capabilities map to illustrate the corporate capabilities of M&A which will make contributions to the further research on decision-making of M&A direction.