Do Cross-border M&As Increase Chinese Enterprises’ Competitive Advantages? A Test Based on the Specific Advantages of Regional and Non-regional Enterprises

Chen Yan; Guo Wenbo

doi:doi:10.16538/j.cnki.fem.2019.04.011

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Do Cross-border M&As Increase Chinese Enterprises’ Competitive Advantages? A Test Based on the Specific Advantages of Regional and Non-regional Enterprises

Chen Yan, Guo Wenbo Correspondence author

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Foreign Economics & Management Vol. 41, Issue 04, pp. 139 - 152 (2019) DOI:10.16538/j.cnki.fem.2019.04.011

First published at:Apr 01, 2019

Summary

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Summary

Under the background of large-scale " going out” of Chinese enterprises, can cross-border M&As become an effective tool for Chinese enterprises to establish competitive advantages? Are cross-border M&As an international " spring-board” for Chinese enterprises? This study starts with analyzing the impact of cross-border M&As on the two types of FSAs, and tests whether cross-border M&As can constitute a " spring-board” for the internationalization of Chinese enterprises.This study takes BVD （Zephyr） global M&A transaction analysis database as the data source, uses the panel stochastic frontier model （SFA） and Malmquist decomposition method to subdivide the enterprise competitive advantage into LB-FSAs and NLB-FSAs, and in turn, analyzes the impact of cross-border M&A on the two types of firms’ FSAs. This study further discusses the mechanism of internationalization experience, enterprise ownership and holding mode on the relationship between cross-border M&As and corporate competitive advantages. The empirical analysis shows that: （1） Cross-border M&As significantly increase the LB-FSAs of enterprises, but the effect on NLB-FSAs is not significant; （2） Cross-border M&As have a continuous driving effect on LB-FSAs, but the effect is gradually weakening; （3） Cross-border M&As promote fixed assets investment, enterprise scale and marketing expenditure, but they have a crowding-out effect on R&D investment and inhibit the promotion of NLB-FSAs; （4） A deeper look into firm heterogeneity and holding mode shows that non-state-owned enterprises with rich international experience that adopt an incomplete holding mode are more effective in using M&As to enhance their competitive advantages.The contributions of this study include: Firstly, we distinguish and quantify LB-FSAs and NLB-FSAs, and establish a mechanism framework for how cross-border M&As enhance enterprises’ competitive advantages. Secondly, we empirically analyze the effect and influence mechanism of cross-border M&As on the two types of competitive advantages, test the theory of " spring-board”, and provide empirical evidence. Thirdly, we combine the PSM and DID approaches to ensure more precise research conclusions. Finally, we analyze the adjustment mechanism of three important factors: internationalisation experience, enterprise ownership and holding mode. The limitations of this paper are as follows: the sample mainly comes from ICT industry and does not consider the resource characteristics of target companies. Future research can carry out more detailed classification for different industry heterogeneity, or use case study methods to analyze the impact of resource complementarity or synergy on competitive advantages.

Keywords

cross-border M&As; specific advantages of regional enterprises; specific advantages of non-regional enterprises; DID

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Cite this article

Chen Yan, Guo Wenbo. Do Cross-border M&As Increase Chinese Enterprises’ Competitive Advantages? A Test Based on the Specific Advantages of Regional and Non-regional Enterprises[J]. Foreign Economics & Management, 2019, 41(4): 139-152.