Theoretical foundations of cross-border mergers and acquisitions: A review of current research and recommendations for the future

Cross-border mergers and acquisitions (M&As) have gained in popularity over the last decade. However, research on this type of diversification strategy has not kept pace with this trend. While there is considerable research in the area, it is unfortunately fragmented, leaving gaps that need to be addressed. Herein, we examine the theoretical perspectives and research findings on cross-border M&As from three perspectives: cross-border M&As as a (1) mode of entry in a foreign market, (2) dynamic learning process from a foreign culture, and (3) value-creating strategy. Current empirical research on this topic is also tabulated and grouped by theoretical stream to indicate major findings. Most importantly, we identify gaps in the literature and highlight five important research issues that provide directions for future research.     

Customer knowledge sharing in cross-border mergers and acquisitions: The role of customer motivation and promise management

Knowledge is a vital source of competitive advantage and renewal for contemporary organizations. However, to date, few studies have scrutinized how mergers and acquisitions (M&As)—processes dependent on knowledge sharing—offer a valuable inter-organizational context through which to understand the attainment of customer knowledge sharing following M&As. Applying an integrated theoretical perspective from customer relationship management and M&A performance research, we study a Chinese–Finnish acquisition and customer firms of the acquired party across four advanced Western countries. We find that customer knowledge sharing is an active relationship management process that relies on the factors of customer dedication-based motivation vs. customer concerns about M&As to maintain relationships after acquisitions. In addition, and more importantly, we find that the promise management mechanisms—making promises, enabling promises, and keeping promises—of the M&A parties reinforce the motivational factors to maintain customer knowledge sharing in cross-border M&As. We propose a conceptual framework of customer knowledge sharing in cross-border M&As.     

The role of emotions during mergers and acquisitions: A review of the past and a glimpse into the future

Research on emotions during different phases of the merger and acquisition (M&A) process (i.e., pre-M&A, during M&A and post-M&A) has increased exponentially over the past three decades. However, few attempts have been made to integrate the findings. By systematically reviewing research on emotions during M&As published over the past 30 years, this paper aims to contribute to filling this gap. We organized our findings using a process framework, addressing emotional triggers, the nature of emotions and their dynamics, effects and management. Our review reveals several oversights in research on emotions during M&As, such as the emotional dynamics between the different M&A phases and the role of positive emotions. To address these oversights, future research is encouraged to (a) study emotions following a process-oriented perspective on M&As and include the (interrelationships between) different M&A phases, (b) address the emergence of emotional heterogeneity and homogeneity among organizational members during these phases, (c) investigate the widespread effects of positive emotions and take into account various levels of emotion and (d) explore how emotions can be successfully managed. The paper concludes with a discussion of how these research directions can advance research on emotions during the M&A process.     

Genetic distance,international experience and the performance of cross-border R&D for EMNEs

Cross-border R&D can contribute to the enhancement of independent innovation capabilities of emerging markets multinational enterprises (EMNEs) by benefiting from knowledge management. However, scant research exists examining the location impact of cross-border R&D for EMNEs on performance implications. This paper fills this important theoretical gap by building upon the literature of genetic distance in connection with knowledge management. We use a panel data of Chinese high-tech listed companies to empirically examine the impact of genetic distance on the performance of cross-border R&D and the role played by international experience. Our results reveal a positive relationship between genetic distance and the performance of cross-border R&D. Importantly, we highlight the motivation for cross-border R&D of EMNEs to acquire technical knowledge magnifies the positive effects of genetic distance and performance. Furthermore, our analysis indicates that international experience significantly enhanced the positive effect of genetic distance on cross-border R&D performance. We conclude this paper by discussing theoretical contributions to genetic distance, international management and knowledge management, as well as practical implications for cross-border R&D of EMNEs.     

Understanding knowledge transfer in M&As: An integration of resource orchestration and social capital theories and evidence from UK acquiring firms

Whileknowledge transfer is one of the key components in determining Mergers and Acquisitions (M&A) success, the current M&A literature has produced inconsistent findings regarding its antecedents and consequences. To address this research gap, this study explores the roles of functional integration and shared goals in facilitating knowledge transfer, which will in turn determine M&A success. To provide a more nuanced understanding of knowledge transfer, this study examines bilateral knowledge flows (e.g., knowledge transfer to a target firm from the UK acquiring firm and knowledge transfer from a target firm to the UK acquiring firm). Our research framework is built upon two different theoretical perspectives, namely resource orchestration and social capital theories. Our propositions were tested empirically across a sample of 131 UK cross-border M&A firms. Our results reveal that the affirmative roles of functional integration and shared goals in increasing knowledge transfer both to and from a target firm are confirmed and that knowledge transfer to the target firm is deemed decisive for M&A success. Based on the findings, we discuss theoretical and practical implications, followed by limitations and future study consideration.     

3 Merger and Acquisition Transactions and Executive Compensation: A Review of the Empirical Evidence

Abstract

The purpose of this paper is to review the existing empirical evidence and provide an integrative framework for the growing body of literature that is situated at the intersection of two highly debated topics: merger and acquisition (M&A) activities and executive compensation. The proposed framework structures the literature along two dimensions, such as M&A phases and firm's role in a M&A deal, allowing us to identify three main streams of research and five different conceptualizations of causal relationships between M&A transactions and executive compensation. Making a comprehensive review of empirical studies conducted to date we aim at shedding more light on the current and emerging knowledge in this field of investigation, discussing the inconsistencies encountered within each stream of research and suggesting promising directions for further exploration.     

Cross-border M&As: The impact of cultural friction and CEO change on the performance of acquired companies

This study analyzes the impact of cross-border mergers and acquisitions (M&As) on the performance of target firms. Based on institutional theory, we hypothesize that performance deteriorates because of a lack of legitimacy, particularly when there is friction between the two national cultures and a higher risk of clashes between organizational cultures. We test our assumptions using an original dataset to compare the performance of Italian firms involved in inward cross-border M&As with that of continuing local firms that have a similar ex-ante likelihood of being merged or acquired. We apply coarsened exact matching (CEM) to establish the control group and a difference-in-differences (DID) approach to account for the possibility that target companies produce superior results simply because foreign investors “cherry-pick” the best-performing firms. Contrary to predictions, we find that foreign ownership does not deteriorate growth but enhances the profitability of target firms compared to purely domestic companies. In addition, we illustrate that the latter result remains applicable when cultural frictions between national cultures are high and when the CEO of the target company is replaced or joined by a new CEO after the deal.     

来源国劣势与合法化战略——新兴经济企业跨国并购的案例研究

新兴经济体企业在跨国并购中如何根据不同类型来源国劣势来做出合法化战略选择?通过对吉利和万向六次跨国并购的多案例分析,本文打破现有文献关于"来自相同国家的企业面临相似来源国劣势"这一"同质化假定",把来源国劣势构念化为制度维和产品维。通过归纳式案例研究,本文发现,对于产品维的来源国劣势,新兴经济体企业倾向于通过组织制度设计、资源协同和声誉重构等合法性修复战略进行应对。对于制度维的来源国劣势,新兴经济体企业倾向于采用制度遵从、组织制度设计、资源协同等合法性获取战略来应对。当面临产品维和制度维双重劣势时,新兴经济体企业综合运用制度遵从、组织制度设计、资源协同、声誉重构等合法性获取和合法性修复战略,重点强调沟通协调这一合法性维持战略来应对。这些发现贡献于新兴经济体企业在跨国并购,乃至于更广意义国际化的文献,并对中国企业跨国并购过程有一定的启示意义。     

Identity Work and Emotions: A Review

This paper reviews the empirical literature on identity work and identifies two distinct approaches to incorporating emotion. The majority of empirical studies use emotion to describe the experiences of identity work. In doing so, the authors (a) mention the emotions that people feel in situations that trigger identity work, (b) illustrate identity work as an emotional endeavour, and (c) describe the emotional impact of successful and unsuccessful identity work. There is also an emerging literature that examines the mutual constitution of emotions and identity work. These authors address emotional labour, affective social identification, emotional attachment and detachment, and humour when studying identity work. This paper suggests that, to understand better the relation between emotions and identity work, future research should examine the role of emotions in problematizing identity, the emotional constitution of the identity work experience, the intersection of emotions and other ways of knowing the self, and the links between emotions and power in identity work.     

Employee performance management across borders: A review of relevant academic literature

The purpose of this paper is to survey the emerging academic literature on employee performance management (PM) from an international perspective. The primary information source was a search of electronic databases. Two criteria were used to determine which studies to include in the literature survey: (1) those published in an English-language blind refereed academic journal, and (2) those focused on employee PM or performance appraisal (PA) from an international/global perspective. Sixty-four articles, published between 1985 and 2005, met the criteria. A preliminary scheme was developed for classifying the existing academic research into conceptual and empirical articles. The empirical articles were further classified by their foci and themes. In addition to classifying the articles, the paper presents a summary of what can be learned from the major findings of the empirical studies. The major conclusion is that the academic literature on cross-border PM is relatively atheoretical and exploratory in nature and that the design and substance of the research studies are weak. With regard to themes, there are a number of foci in the literature with only scant attention paid to the central concern with the PM of expatriates as expressed by firms. The empirical articles look at the disparate components of PA and are interested mainly in cultural differences as an intervening variable. Several recommendations are presented for researchers to help focus future research on cross-border PM.     

Leading via the heart and mind: The roles of leader and follower emotions,attributions and interdependence

How do followers react to their leaders' emotional expressions, and how do these reactions influence followers' perceptions of their leaders' effectiveness? This research examines cognitive and emotional reactions to leaders' expressions of positive and negative emotions, and demonstrates how these reactions affect perceptions of leadership effectiveness. We show that follower interdependence (dispositional or manipulated) plays an important moderating role in understanding reactions to leaders' emotions. Results of three studies demonstrate that followers not only share their leaders' emotions, but also make attributions about the sincerity of their leaders' intentions, and these attributions affect their perceptions of their leader's effectiveness. Results also demonstrate that interdependent followers are sensitive to leader emotional valence and react more positively to leader positivity; non-interdependent followers do not differentiate positive from negative emotions in their leader. We discuss the implications of our research for the literature on leadership.     

Emotionality and leadership: Taking stock of the past decade of research

As scholars continue in their quest to find factors that are related to leadership style, leadership behavior, and leadership effectiveness, we observe a revival in interest with regards to emotionality. As recent research suggests the rising importance of emotional reasoning over intelligence in leadership, the complex phenomena surrounding emotions in the workplace spur studies with contradictory, albeit important, results. The purpose of this review is to unify and integrate research conducted in the past decade that links emotionality with leadership style, behavior, and effectiveness. In conducting this review, we observed four running themes: emotional competencies of leaders (e.g. emotional expressiveness and emotional intelligence), stress in leadership, contagion of positive and negative affect, and the effects of leaders' emotions on outcomes like burnout and performance. On top of taking stock of studies that theoretically and empirically test these relationships, we also summarize literature on potential mechanisms that link emotionality with leadership and highlight directions for future research.     

The dynamic impacts of M&A on employment in Japan

This paper provides empirical evidence on the dynamic effects of merger and acquisition (M&A) on employment in Japan. The main contributions to the gaps in existing literature are: targeting employment effects of M&A, examining them by the deal type (merger and acquisition) and by the sector (manufacturing and non-manufacturing), tracing the effects in the long term, using large dataset with 9,880 sample firms and 2,530 M&A cases for the period from 1995 to 2008, and focusing on the case of Japan. Our main findings are: the “acquisition” with the key role of “extension and growth” proved to have positive effects in the dynamic terms on target firms’ employment, mainly in manufacturing sector with high labor productivity. On the other hand, the “merger” with key function of “consolidation” turned out to have negative impacts dynamically on post-merger firms’ employment, mainly in non-manufacturing sector with low labor productivity. The strategic implication might to be that the different employment responses to M&A events between manufacturing and non-manufacturing reflect the difference in labor productivity between them, i.e. the dual structure of Japanese economy.     

Path-related empirical research on M&A-outcome: review and research agenda

This article attempts to reflect the current state and progress of contemporary research on financial and non-financial M&A outcome. Based on a review of 183 empirical M&A studies an integrative framework is developed, in which impact factors are classified into four major dimensions to explore the impact on M&A outcome: antecedents, transaction content characteristics, transaction process characteristics, and the transaction itself. The review reveals that M&A research is dominated by studies focusing on state variables at the expense of path-related variables. The review also shows that, to date, neither state-related research nor path-related research on financial and non-financial M&A outcome categories have reached maturity. Although there is still room for clarifying the impact of various state-related variables, the most valuable new insights are expected to emerge from researching path-related variables. Building on these insights, an extensive future research agenda is presented, which focuses on path-related research questions and methodological issues.     

Ethical leadership and employee success: Examining the roles of psychological empowerment and emotional exhaustion

The current study aims to advance ethical leadership theory and research in two ways. First, we propose that psychological empowerment is a comprehensive motivational mechanism linking ethical leadership with employee current in-role success and future success potential. Second, we propose that employee emotional exhaustion is a disruptive psychological state that dampens the empowering effects of ethical leaders. Findings from two field studies illustrate that emotional exhaustion impairs the motivational efforts of ethical leaders by attenuating the direct effects on psychological empowerment and the indirect effects on employees' current success and success potential. Theoretical and practical implications are discussed.     

Does job complexity mitigate the negative effect of emotion-rule dissonance on employee burnout?

In interactions with clients or patients, human service workers are at risk of experiencing discrepancies between felt and organizationally mandated emotions (i.e. emotion-rule dissonance). Given the documented detrimental effects of such discrepancies on employee strain, the present study investigated whether job complexity mitigates the relation between emotion-rule dissonance and employee burnout using data from a two-wave panel study of eldercare workers (N?=?583, 16-month time lag). Structural equation modelling revealed that emotion-rule dissonance at Time 1 preceded emotional exhaustion and depersonalization at Time 2. Beyond that, employees whose work offered job complexity were found to suffer less from emotional exhaustion and depersonalization when encountering discrepancies between felt and stipulated emotions compared to employees who conducted noncomplex work. Thus, designing complex tasks appears to be a crucial starting point for alleviating employee burnout in jobs that provoke emotion-rule dissonance.     

Looking into the ‘black box’ – unlocking the effect of integration on acquisition performance

Extending research on the performance of Mergers and Acquisitions (M&As), this paper seeks to explain how the post-acquisition integration phase affects acquisition performance. Despite extensive research efforts, there remains a scant understanding of how acquisition implementation, particularly in the post-acquisition integration phase, impacts the performance of M&As. Based on an extensive study of eight acquisitions, in this paper, a grounded model detailing the mechanisms by which the post-acquisition integration phase affects acquisition performance is developed. The model posits that integration-related factors do not bear directly upon acquisition performance. Instead, their effect is mediated by functional organizations in both firms. When focusing into these functional mediating dynamics, we observe that integration-related processual, behavioral and cultural factors affect the identified functional mediators in different ways. Going forward, we echo calls for integrated perspectives to the study of M&A and M&A performance in particular.     

How does decision-making involvement affect perceptions of speed during post-merger integration?

This article offers an empirical demonstration of how different employees perceive the speed of change during the post-merger integration (PMI) process. As such, it adds to the growing body of literature on the speed of integration in the aftermath of a merger or acquisition (M&A). It broadens our understanding of the M&A integration process as it goes beyond binary recommendations of ‘fast’ or ‘slow’ integration by highlighting the relationship between an employee's involvement in the decision-making process and their perception of the speed of change.We conducted a multi-level longitudinal study over a two-and-a-half-year period. Our qualitative research on two not-for-profit, higher education institutions, employed multiple sources of process data. Building from this, our article thus provides not only novel theoretical insights into the PMI process, but equally offers valuable managerial advice on how staff morale, turnover and change resistance might be more efficiently managed during PMI.     

Emotional labour and emotional exhaustion: Interpersonal and intrapersonal mechanisms

Abstract

In some occupations, particularly in the service sector, dealing with patients or clients may require an employee to pretend to have emotions that they do not really have, or to actually experience required emotions. The regulation of emotion can be either automatic or controlled. This study extends research on the consequences and processes of emotional labour in two ways. First, it examines how the use of different emotion regulation strategies with patients relates to doctors’ emotional exhaustion. Second, it tests two mechanisms that may explain those relationships. A survey of 345 general practitioners (GPs) working in a large urban community in Spain was conducted for the study. Based on Côté's (2005) social interaction model, GP satisfaction with the responses of their patients was tested as a potential interpersonal mediator between their use of automatic, surface, and deep emotion regulation strategies and their emotional exhaustion. Psychological effort was tested as a potential intrapersonal mediator in the same pathway. Regression analysis indicated that emotion regulation was associated with GP emotional exhaustion when it was performed automatically, but that it had a positive and a neutral association when it was performed using surface and deep acting respectively. The mediating role of interpersonal and intrapersonal factors helped explain the differential associations between the GPs’ emotion regulation strategies and their emotional exhaustion.     

Mergers and acquisitions research — A bibliometric analysis

Mergers and acquisitions (M&A) remain a popular vehicle for organizational development to ensure future competitiveness. However, despite the extensive body of research in recent decades, significant gaps can be observed between the understanding of the phenomenon M&A in the literature and the importance of M&A activities in practice. Heterogeneous perspectives from different schools of thought, contradictory findings and controversies, and changing economic environments make M&A research a complex endeavor and highlight the need for integrative approaches and holistic perspectives. This paper takes a holistic view of M&A research to map interrelationships among key documents, authors, institutions, and countries; trace the evolution of M&A research over time; and suggest avenues for future research to expand the boundaries of M&A scholarship. For this purpose, a sample of 580 articles from 9 leading management science journals was examined bibliometrically, including 42,630 citations and 18,734 unique references for the years 1963–2019.