Improving enterprises' cross-border M & A sustainability in the globalization age-Research on acquisition and application of the foreign experience

Abstract

The advancement of globalization has encouraged an increasing number of enterprises to go abroad and take cross-border mergers and acquisitions (M & A) to expand their overseas market and improve core competitiveness, although many acquirers fail to gain value from post-acquisition integration. On the basis of organizational learning theory, this paper explores the effect of executives' foreign experience on cross-border M & A sustainability, and examines how the externally acquired knowledge can be effectively applied to cross-border M & A practice. Taking a sample of Chinese listed companies that have completed cross-border M & As during 2008-2016, our research proposes an integrated framework of foreign experiential knowledge, and discusses the process of acquisition and application of this experiential knowledge into cross-border M & As. Empirical research findings show that, compared with the general foreign experience, the specific foreign experience based on target country significantly improves cross-border M & A sustainability, and executives with host-specific work experience plays a more important role than that of education experience. Further research found that long-tenured executives positively moderate the effect of foreign experiential knowledge on cross-border M & A sustainability, while the pay gap for executives, which hampers internal coherence, plays a negative moderating role. This research provides a new insight into the promotion of the sustainable development of enterprise cross-border M & A in the globalization age.