A Resource Dependence Perspective On The Liability Of Foreignness And International Merger

Domestic and foreign scholars are keen on studying the key factors of international M&A performance. After the global economic crisis, the total amount of the international M&A has reduced. However, in the last five years (2009-2013), the transaction amount of Chinese enterprises’ overseas M&A has increased by about 5 times. The relative statistic data shows that, the overall success rate of China enterprise international M&A is less than 30% in these years. Therefore, it is important to find key factors influencing the international merger performance of Chinese enterprises, and improve the performance of the international mergers.From resource dependence perspective, this paper analyzed effects of the liability of foreignness on the performance of international M&A. First of all, this paper established a theoretical model on the basis of existing research. The model describes the influence mechanism the LOF impedes M&A enterprises to achieve resources, and endangers the performance of M&A. At the same time, the population density and M&A motives were taken into account as the moderator variables. Then, based on examples of Chinese listed companies, the paper carried out regression analysis on the model using SPSS17.0 software, after defining and measuring the variables in the model. This article examined moderating effect of the population density with the hierarchical regression analysis method, as M&A motives with the method of grouping of observations. In the end, the paper analyzed results of the empirical test based on the existing research, and put forward proposals to overcome LOF with research conclusions.The study proved that there is an obvious negative correlation between the LOF caused by the lack of legitimacy and the international M&A performance. While the M&A motives of enterprises are seeking resources, the obvious negative correlation disappears. In other words, M&A motives can moderate the correlation between the LOF caused by the lack of legitimacy and the international M&A performance.