Antecedents of cross-border acquisition performance: Implementation issues

Abstract

Numerous waves of mergers and acquisitions (M&As) have led to substantial industrial restructuring in different parts of the world (DePamphilis 2012: 18). Since the beginning of the 1990s, an increasing share of M&As has taken the form of cross-border acquisitions (CBAs) (Bertrand and Betschinger 2012). Paralleling with their popularity and practical importance, in both monetary and strategic terms, however, a majority of research findings show that the performance of M&A deals has not significantly improved over these decades (King et al. 2004; Martynova and Renneboog 2008). Other studies (Larimo and Pynnönen 2008; Kallunki et al. 2001), on the other hand, have concluded that, on average, foreign direct investment has significant value creating effects for investing firm shareholders. The researchers continue to be bewildered by the unpredictable nature of M&As, concluding their studies with: “a huge portion of variance remains unexplained” (Stahl and Voight 2004). According to Meglio and Risberg (2010), “one has not learnt very much about how the M&A process unfolds over time, how to measure M&A performance, and what makes an acquisition succeed." Based on their experience with 70 M&As, Marks and Mirvis (2001) argue that the process through which the deal is conceived and executed is at the core of many failed combinations. Hence, an important question is not simply what to acquire, but also how to acquire. In order to develop a deeper understanding of the consequences of acquisitions, greater attention must be paid to the process that acquirers use to seize value from acquisitions (Hapeslagh and Jemison 1991; Haleblian et al. 2009).