A Perspective Of Liability Of Foreignness On The Institutional Distance And The Performance Of The International Merger

Along with the rapid development of science and technology,Chinese enterprises pay more and more attention to its level of technology,technology mergers and acquisitions(M&A)become significant shortcut for them to acquire technology resources,and promote the innovation ability.Economic globalization provides a good environment for enterprise to make overseas technology M&A,more and more Chinese enterprises make overseas technology M&A in order to achieve the ultimate purpose of obtaining benefits,however,performance after overseas technology M&A are not very well.This paper argues that institutional distance between home country and host country is an important factor which may influence the performance of international M&A,and during the process of M&A,the absorptive capacity and the degree of internationalization of enterprises,will affect the institutional distance's effect on the performance of international M&A.Because the liability of foreignness(LOF)which enterprises have to face when they operate overseas,this paper will explore the relationship of institutional distance and the performance of international M&A with the perspective of LOF,at the same time,wewill introduce the absorptive capacity and the degree of internationalization asregulating variables into our theoretical model.In view of the institutional distance hasthree dimensions,this paper will propose the corresponding research hypothesisseparately with the absorptive capacity and the degree of internationalization.Accordingto the needs of this study,this paper selects 50 M&A cases for technology of Chinese-III-listed enterprises from 2006-2012,and come from 23 different countries.With reference to related research,this paper determines the measurement method of all the research variables.And then,this paper uses SPSS 19.0 to make an empirical analysis with the sample data by stepwise regression method.In this paper,the results show that the three dimensions of institutional distance which including the regulative distance,normative distance and cognitive distance have significant negative effect on the international M&A performance,which indicates that the greater is the institutional distance,the lower is the performance of enterprise's international M&A.The absorptive capacity of enterprise has significant moderating effect on the relationship between the regulative distance and the normative distance and the performance of the international M&A.When the absorbing capacity of enterprise is stronger,the negative influence of the regulative distance and the normative distance to the performance of the international M&A will become weaken.And this result is as the same as the degree of internationalization.At last,this paper will make a discussion on the result of the empirical analysis,and we will provide countermeasures and suggestions for Chinese enterprises according to the research conclusion of this paper to help promote the performance of international M&A when they make technology M&A.