Abstract: We explore how within-country diversity influences the structure of foreign acquisitions. While the importance of “within-country diversity” has been commented upon, it has received minimal systematic attention. Our findings, based on a sample of 59,092 foreign acquisitions across 67 acquirer and 69 target countries, indicate that the diversity of languages and religions within the target’s home country are an additional source of internal uncertainty and information asymmetry, beyond those attributable to linguistic and religious distance. In contrast, the diversity of languages and religions within the acquirer’s home country acts as a source of tacit knowledge; firms from more diverse countries are more aware of the difficulties associated with diverse and distant countries, and in response, more strongly seek out remedies, such as lower equity shareholdings.

Abstract: Most studies concerning the choice between foreign greenfields and foreign acquisitions have focused on the determinants of this choice. However, operating through foreign subsidiaries will seldom be the fundamental end-solution, but only a handful of studies have been occupied with what happens after the choice has been made. Hence, this paper addresses two important calls for future studies: (i) identification and measurement of management costs in greenfields and acquisitions; (ii) testing the effects of the entry mode choice on management costs. 145 MNE headquarters-subsidiary relations are studied and significant differences in management costs are observed, which might have important implications on how these subsidiaries should be managed.

Abstract: Prior studies have shown that the relation between acquisition experience and performance is by no means straightforward. In our work, we investigate the effect of prior acquisition experience on the performance of firms that expand abroad by acquiring foreign organizations. Our analyses on a sample of 624 cross-border M&A deals completed between 2000 and 2011 demonstrate that experience with cross-border acquisitions is positively related to deal performance, while prior experience with domestic acquisitions does not significantly influence the economic return of acquirors. We also find that functional diversity and pay dispersion in the top management team (TMT) moderate the relation between domestic acquisition experience and acquisition performance.

Abstract: Global migration has recently been shown to facilitate transnational knowledge flows and thereby influence the location choices of internationalizing firms. We extend this research and argue that migration also influences the entry mode choice. In particular, we argue that knowledge about the host country that that can be gained through migrants leads to a higher likelihood of wholly-owned over jointly-owned entry modes. We further argue that these effects are reduced with increasing cultural and institutional distance since such distance makes it less likely that knowledge and information gained from migrants can replace first-hand knowledge with the potential partner and the country it operate in. We test these predictions using longitudinal data from Fortune Global 500 firms between 2000-2010 and find support for our hypotheses.

Abstract: Through the lens of the social exchange theory, we developed and empirically tested a theoretical framework that contextualizes the effects of two levels of headquarters-subsidiary exchange on quality of headquarters-subsidiary relationship, and how subsidiary manager’s organizational identity, parent’s ownership in subsidiary, and subsidiary’s entry mode interact with these exchanges in shaping the quality of headquarters-subsidiary relationship. Survey data from 305 Chinese MNEs found that managerial and organizational exchanges have positive influences on the quality of headquarters-subsidiary relationship. It also found that the positive influence of managerial exchange is weakened when the subsidiary manager has a stronger organizational identity with subsidiary, and the positive influence of organizational exchange is weakened when subsidiary is wholly owned by parent and the subsidiary is established via greenfield entry mode.

Abstract: This paper studies cross border multiple bidder acquisitions in which multiple bidders compete to acquire a single target firm. We demonstrate that firms cannot win these competitive auctions just by outbidding their competitors. We extend knowledge based view and institutional theory to argue that the relative institutional or industry distances between bidders and target will decrease the victory chances despite high offer prices; whereas the relative bidders’ prior experiences increase the winning probabilities despite slightly lower prices. Our paper is first to introduce cross border auctions in management literature and to empirically demonstrate the applications of institutional theory and KBV in this novel context.