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

doi:10.1111/1467-8551.12023

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

Marketing and Entrepreneurship

University Hospital Southampton
Henley Business School
Mays Business School
Radboud Universiteit Nijmegen

Research output: Contribution to journal › Article › peer-review

39 Citations (Scopus)

125 Downloads (Pure)

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 language	English
Pages (from-to)	S116-S132
Journal	British Journal of Management
Volume	25
Issue number	SUPPL.1
Early online date	17 Jul 2013
DOIs	https://doi.org/10.1111/1467-8551.12023
Publication status	Published - 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.

Access to Document

10.1111/1467-8551.12023

The Effects of Cross-border and Cross-industry MergersAccepted author manuscript, 679 KB

Cite this

@article{d251e6a30c3a4c288781076124eecb70,

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

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'.",

author = "Gerhard Kling and Abby Ghobadian and Hitt, \{Michael A.\} and Utz Weitzel and Nicholas O'Regan",

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. ",

year = "2014",

month = jan,

day = "1",

doi = "10.1111/1467-8551.12023",

language = "English",

volume = "25",

pages = "S116--S132",

journal = "British Journal of Management",

issn = "1045-3172",

publisher = "Wiley-Blackwell",

number = "SUPPL.1",

}

TY - JOUR

T1 - The Effects of Cross-border and Cross-industry Mergers and Acquisitions on Home-region and Global Multinational Enterprises

AU - Kling, Gerhard

AU - Ghobadian, Abby

AU - Hitt, Michael A.

AU - Weitzel, Utz

AU - O'Regan, Nicholas

N1 - 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.

PY - 2014/1/1

Y1 - 2014/1/1

N2 - 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'.

AB - 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'.

UR - https://www.scopus.com/pages/publications/84891521562

UR - https://onlinelibrary.wiley.com/doi/full/10.1111/1467-8551.12023

U2 - 10.1111/1467-8551.12023

DO - 10.1111/1467-8551.12023

M3 - Article

AN - SCOPUS:84891521562

SN - 1045-3172

VL - 25

SP - S116-S132

JO - British Journal of Management

JF - British Journal of Management

IS - SUPPL.1

ER -

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

Abstract

Bibliographical note

Access to Document

Other files and links

Fingerprint

Cite this