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Chinese MNE acquisition of unrelated foreign businesses: The role of diversified business group affiliation, private ownership and strategic asset seeking

Lookup NU author(s): Dr Xinwei ShiORCiD

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Abstract

While the acquisition by Chinese firms of unrelated foreign businesses has become quite common, it is a highly risky undertaking not fully explained by international business scholars. Using resource-based and institutional theory, we hypothesize that affiliation with a domestically diversified business group confers pre- and post- acquisition advantages and legitimacy, fostering unrelated foreign acquisitions. In addition, we argue that private ownership as well as a motive to seek strategic assets amplify this tendency among Chinese firms affiliated to diversified groups. Ordered logit modelling for 662 Chinese cross-border M&As over a 10-year period provides support for our hypotheses. Our findings shed new light on: the distinctive characteristics of Chinese MNEs; broader conceptual arguments regarding the strategy of emerging market MNEs; the apparent paradox of why Chinese MNEs have used international acquisitions to diversify at a time when many Western diversified conglomerates are divesting non-core businesses.

Publication metadata

Author(s): Shi X, Sutherland D, Williams C, Rong K

Publication type: Article

Publication status: Published

Journal: Journal of Business Research

Year: 2021

Volume: 129

Pages: 145-156

Print publication date: 01/05/2021

Online publication date: 06/03/2021

Acceptance date: 18/02/2021

ISSN (print): 0148-2963

ISSN (electronic): 1873-7978

Publisher: Elsevier

URL: https://doi.org/10.1016/j.jbusres.2021.02.036

DOI: 10.1016/j.jbusres.2021.02.036

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