Influence Of Entrepreneur Social Capital On The Merger Decision And Performance Of Small And Medium Enterprises

M&A is an effective approach to achieve strategic restructuring for enterprises,and it’s also an important way to acquire rapid growth. As more and more small andmedium enterprises are listed, SMEs broaden their financing channels. Through M&Ato seek rapid development is becoming a norm strategy for enterprises. However, a lotof studies on M&A performance show that the M&A activity of China’s listedcompanies didn’t bring wealth to acquired companies’ shareholders, namely, the vastmajority of mergers and acquisitions is inefficient. What factors affect thedecision-making and performance of mergers and acquisitions? This problem hasbecome a new strand of research for domestic and foreign scholars. For the abo veproblem, traditional studies focuse on the various factors affecting mergers andacquisitions under formal system, and ignore the "social" which entreprises mergersand acquisitions possess. In other words, economic behaviors will be potentiallyaffected by informal system. From the perspective of embeddedness, this articlereveals the impact of entrepreneurial social capital on SMEs’ M&A decision-makingand performance. Further, this study investigates redundant resources’ moderatingeffect on the relationship of entrepreneurial social capital and SME s’ M&Adecision-making.This paper selects the SMEs board listed companies as the research objects,firstly builds the index system to evaluate entrepreneurial social capital. On the basis,this paper analyzes the effect of entrepreneurial social capital on the possibility ofM&A and the possibility of selecting diversification acquisition strategy type.Furthermore, this study considers the moderating effect of redundant resources on therelationship of entrepreneurial social capital and SMEs’ M&A decision-making.Finally, on the basis of measuring performance of M&A by the cumulative abnormalreturn, this study analyzes the impact of entrepreneurial social capital on M&Aperformance through univariate analysis, multiple regression analysis and othermethods.The results show that entrepreneurial social capital has a significantly positiveimpact on the possibility of SMEs’ M&A. In other words, entrepreneurial socialcapital is an important factor for SMEs’ M&A. Further studies shows that, as internalresources, the organization slack haven’t play a positive or negative moderating role on the relationship between entrepreneurial social capital and the likelihood of SME’smergers and acquisitions. Secondly, entrepreneurial social capital has a significantlypositive impact on the possibility of selecting diversification acquisition strategy type.Through the analysis of different redundant resources, this study finds that restoreredundant resources play a significantly positive role on moderating the effect ofentrepreneurial social capital on the possibility of SMEs selecting diversificationstrategy type in the M&A. However, the available redundant resources and potentiallyredundant resources play a significantly negative role on moderating the relationshipbetween entrepreneurial social capital and diversification strategy type in M&A. Theresult also shows that different redundant resources will play a different role in theenterprise’s diversification mergers and acquisitions. Lastly, entrepreneurial socialcapital has a significantly positive effect on the performance of SMEs’ M&A. In otherwords, relative to firms with low entrepreneurial social capital, those companieswhich have high entrepreneurial social capital will bring more wealth effect to theshareholders in the process of M&A. The conclusions also show that SMEentrepreneurs should strive to increase their social capital, in order to better servingfor the behaviors of enterprises’ acquisition strategy.