The Effects of Cross-border and Cross-industry Mergers and Acquisitions on Home-region and Global Multinational Enterprises

Gerhard Kling*, Abby Ghobadian, Michael A. Hitt, Utz Weitzel, Nicholas O'Regan

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

We examine the effects of international and product diversification through mergers and acquisitions (M&As) on the firm's risk-return profile. We identify the rewards from different types of M&As and investigate whether becoming a global firm is a value-enhancing strategy. Drawing on the theoretical work of Vachani (Journal of International Business Studies, 22 (1991), pp. 307-222) and on Rugman and Verbeke's (Journal of International Business Studies, 35 (2004), pp. 3-18) metrics, we classify firms according to their degree of international and product diversification. To account for the endogeneity of M&As, we develop a panel vector autoregression. We find that global and host-region multinational enterprises benefit from cross-border M&As that reinforce their geographical footprint. Cross-industry M&As enhance the risk-return profile of home-region firms. This effect depends on the degree of product diversification. Hence there is no value-enhancing M&A strategy for home-region and bi-regional firms to become 'truly global'.

Original languageEnglish
Pages (from-to)S116-S132
JournalBritish Journal of Management
Volume25
Issue numberSUPPL.1
Early online date17 Jul 2013
DOIs
Publication statusPublished - 1 Jan 2014

Bibliographical note

This is the peer reviewed version of the following article: Kling, G. , Ghobadian, A. , Hitt, M. A., Weitzel, U. and O'Regan, N. (2014), Cross‐border and Cross‐industry Mergers and Acquisitions. Brit J Manage, 25: S116-S132, which has been published in final form at https://doi.org/10.1111/1467-8551.12023.  This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.

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