Feiqiong Chen, Jieru Zhu and Wenjing Wang
The purpose of the paper is to examine the coevolutionary dynamics between multistage overseas mergers and acquisitions (M&A) integration and knowledge network reconfiguration and…
Abstract
Purpose
The purpose of the paper is to examine the coevolutionary dynamics between multistage overseas mergers and acquisitions (M&A) integration and knowledge network reconfiguration and the impact of this coevolution on industrial technology innovation.
Design/methodology/approach
This paper builds a coevolution analysis framework in stages and constructs structural equation models for empirical tests using the Chinese technology-sourcing overseas M&A events that occurred from 2001 to 2012.
Findings
Overseas M&A integration and knowledge network reconfiguration are in a coevolutionary relationship, driving industrial technology innovation. The acquirer adopts initial integration degree that matches the resource relatedness between the acquiring and acquired parties, promoting initial industrial technology innovation through initial knowledge network reconfiguration. Initial knowledge network reconfiguration will feed back to the M&A integration decision in the mid-to-late stage through increasing knowledge similarity and narrowing network position difference. The higher the improvement of mid-to-late integration degree, the more it can drive mid-to-late industrial technology innovation through mid-to-late knowledge network reconfiguration.
Research limitations/implications
Future research can accurately classify overseas M&A integration stages through case tracking and explore other network attributes.
Practical implications
Practical guidelines are provided for managers on how to implement a multistage overseas M&A integration strategy, optimize knowledge network reconfiguration and promote industrial technology innovation. Significant practical implications are presented, especially in academia, society and quality of life.
Originality/value
Different from the previous research considering M&A integration as a single-stage decision, this paper emphasizes the dynamics of the M&A integration process and explores the coevolution mechanism of multistage overseas M&A integration and knowledge network reconfiguration.
Details
Keywords
Feiqiong Chen, Wenjing Wang and Jieru Zhu
Post-merger integration (PMI) is driven by coevolving processes. By integrating the literature on acquisitions with that of knowledge networks, this paper highlights different…
Abstract
Purpose
Post-merger integration (PMI) is driven by coevolving processes. By integrating the literature on acquisitions with that of knowledge networks, this paper highlights different reconstruction mechanisms for dual knowledge networks during PMI – namely, internal knowledge network coupling and external knowledge network embeddedness. This paper aims to examine their coevolutionary relationships with PMI.
Design/methodology/approach
A coevolutionary framework is tested using a latent growth model and cross-lagged models. The analysis is based on longitudinal data collected from 116 Chinese technology-sourcing overseas merger and acquisition firms.
Findings
This paper unearths a novel idea that variations in post-merger reconstruction of dual knowledge networks can explain why some acquirers increase the degree of integration faster than the others. The results show that the internal knowledge network coupling leads to more knowledge similarity and, in turn, causes a higher degree of integration. The external knowledge network embeddedness also causes higher relative network status of the acquirer, which consequently leads to a higher degree of integration. Furthermore, results from cross-lagged models confirm that an increase in the degree of integration positively influences subsequent changes in the internal knowledge network coupling and external knowledge network embeddedness, thus forming a coevolutionary relationship over time.
Originality/value
This paper responds to recent calls for more insights into the dynamics of PMI. By highlighting different reconstruction mechanisms for internal and external knowledge networks during PMI, this paper explains why it is important to understand PMI dynamics from a dual knowledge network perspective. This paper is the first to adopt a coevolutionary perspective and provide a more comprehensive dynamic framework between PMI and reconstruction of dual knowledge networks. Besides, this paper contributes to the research on emerging market multinational corporations’ cross-border merger and acquisition integration from a dynamic perspective, revealing the time effects of traditionally favored light-touch integration.
Details
Keywords
Feiqiong Chen, Jieru Zhu and Wenjing Wang
This paper aims to investigate whether executive compensation and internal control can prevent overseas compliance risks through the mediating influence of multinational…
Abstract
Purpose
This paper aims to investigate whether executive compensation and internal control can prevent overseas compliance risks through the mediating influence of multinational corporation (MNC) legitimacy and the moderating role of institutional distance.
Design/methodology/approach
Based on a law and economics perspective and the “bad apple,” the “red barrel” and the “bad cellar” theory of business misconduct, this paper constructs a systematic framework of “compliance motivation MNC legitimacy overseas compliance risk prevention” from the individual, organizational and systematic levels and uses data of Chinese MNCs for empirical analysis.
Findings
Empirical data from Chinese MNCs show that overseas compliance risks are comprehensively affected by the factors of the individual, organizational and systematic levels. Higher executive compensation and internal control will reduce MNCs’ overseas compliance risks through MNC legitimacy acquisition; institutional distance hinders the positive effect of internal control on MNC legitimacy and therefore aggravates overseas compliance risks.
Practical implications
This paper contributes to the understanding of the overseas law-abiding and offence behavior of MNCs from a law and economics perspective and offers valuable insights on how to prevent the ever-increasing overseas compliance risks.
Originality/value
Although the literature has analyzed the factors of compliance behavior, they are not interrelated, let alone integrated in a systematic risk prevention framework. This paper applies a law and economic analysis framework to the study of the overseas compliance risks for the first time.
Details
Keywords
Feiqiong Chen, Wenjing Wang and Jieru Zhu
Post-merger integration (PMI) is driven by coevolving processes. This paper examines the coevolution of dynamic integration strategy and network reconstruction and explores how…
Abstract
Purpose
Post-merger integration (PMI) is driven by coevolving processes. This paper examines the coevolution of dynamic integration strategy and network reconstruction and explores how these processes systematically enable emerging market acquirers to upgrade innovation capabilities.
Design/methodology/approach
This paper conducts a multi-case study based on four Chinese overseas acquisitions of manufacturing firms. The data were collected from interviews and archival documentation.
Findings
This study develops a coevolutionary framework of dynamic integration strategy and network reconstruction to explain processes and mechanisms of an acquirer’s innovation capability upgrading. This framework identifies three network motivations, namely, network access, network connection and network synergy. Under different network motivations, dynamic transitions of the acquirer’s integration strategy coevolve with multi-level reconstruction of its networks. Collectively, they are important mechanisms driving innovation capability moves from imitation innovation to asportation and reimitation innovation and then to independent innovation.
Originality/value
This paper responds to a recent call for more insights into the dynamics of PMI and contributes to the research on emerging market multinational corporations’ post-acquisition integration. By integrating the M&A and networks literature, the paper provides evidence of unexplored mechanism of network changes during PMI. It reveals that how acquirers manage the dynamics of PMI to gradually achieve multi-level reconstruction of their networks. Based on a coevolutionary framework, the paper provides a process perspective on how the coevolution of PMI and network reconstruction promotes the upgrading of innovation capabilities.
Details
Keywords
Wenjing Wang, Taiyi He and Zhenhui Li
This paper aims to explore the impact of digital inclusive finance (DIF) on regional economic growth and innovation-driven development.
Abstract
Purpose
This paper aims to explore the impact of digital inclusive finance (DIF) on regional economic growth and innovation-driven development.
Design/methodology/approach
Based on the panel data of 31 provinces (autonomous regions and municipalities directly under the central government) in China from 2011 to 2018, this paper explores the impact of DIF on economic growth and innovative development.
Findings
(1) DIF has a direct positive effect on economic growth and innovative development; (2) there is significant regional heterogeneity in the impact of DIF on economic growth and innovative development. (3) DIF can indirectly affect economic growth and innovative development by increasing residents’ personal disposable income, increasing fiscal expenditure and improving educational level.
Social implications
Exploring the relationship between them and digital inclusive financial development can provide a reference for national productivity construction and development.
Originality/value
Economic growth and innovation-driven development have been one of the main concerns of China’s policymakers. Exploring the relationship between them, digital inclusive financial development can provide a reference for national productivity construction and development.
Details
Keywords
Wenjing Wang, Moting Wang and Yizhi Dong
The paper's purpose is to investigate the effects of digital finance on the risk of stock price crashes and the underlying transmission mechanisms, and to provide suggestions to…
Abstract
Purpose
The paper's purpose is to investigate the effects of digital finance on the risk of stock price crashes and the underlying transmission mechanisms, and to provide suggestions to inhibit the stock crash risk (CR).
Design/methodology/approach
This paper selects all companies that were listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange from 2011 to 2020. It then uses the two-way fixed effect model and the intermediary effect model to verify such effects.
Findings
The overall outcomes demonstrate such a result that the CR of listed companies in China can be significantly reduced by the development of digital finance, and the overall transparency of business financial information and the equity pledge of controlling shareholders are the two underlying transmission mechanisms that digital finance can cause effects on the CR of stocks.
Research limitations/implications
The main limitations are that there may exist some problems in the method for evaluating the CR of stocks. And there may be a problem of endogeneity caused by the empirical model cannot control all correlation variables.
Practical implications
This paper would provide policy implications, for different roles, to inhibit the stock CR and to make the development of the economy more stabilize.
Social implications
Digital finance can promote economic development while restraining financial risks at the same time. Therefore, although this study is based on the relevant data from China, it can also provide a reference for other economies with different basic conditions from China, to promote the overall development of the world economy.
Originality/value
The current academic research on digital finance or stock price CR has been relatively sufficient, but there are few papers that combined both. By combining digital finance with stock CR, this paper researches the influence of digital finance on the CR of stocks through empirical analysis. So, this paper would provide new research ideas and evidence for potential influence factors of the CR of stocks, fill the gap in this research field and provide certain help for subsequent scholars to conduct relevant research.
Details
Keywords
Feng Wan, Peter Williamson and Naresh Pandit
Chinese firms are winning market share from foreign multinational enterprises in domestic markets. The international business literature suggests that this is happening because…
Abstract
Purpose
Chinese firms are winning market share from foreign multinational enterprises in domestic markets. The international business literature suggests that this is happening because these firms are developing non-traditional firm-specific advantages (FSAs). Strategic factor market (SFM) theory provides a good basis for explaining how this is happening. However, it is underdeveloped in terms of analysing unique resources and unique access to those resources by Chinese firms in their domestic markets. This paper aims to develop a framework to understand how Chinese firms have developed non-traditional FSAs.
Design/methodology/approach
The case study method is adopted to explore how Chinese firms develop non-traditional FSAs. Specifically, the authors compare paired case studies of a Chinese firm and a foreign multinational in each of two industries.
Findings
The authors find that Chinese firms have developed non-traditional FSAs because of more relevant experience, better adapted strategies and privileged relationships. This has enabled Chinese firms to develop non-traditional FSAs.
Originality/value
The authors propose a framework that conceptualises non-traditional FSA development in Chinese firms as a product of superior access to unique and valuable resources in their domestic SFMs.
Details
Keywords
The purpose of this paper is to adopt a national cultural perspective to explore the issue of performance management in human resources among successful Chinese software firms…
Abstract
Purpose
The purpose of this paper is to adopt a national cultural perspective to explore the issue of performance management in human resources among successful Chinese software firms which are owned and led by their founders. The paper aims to highlight the unique characteristics of performance management that has emerged from a Confucian culture shaped by the socio‐economic model in post‐Second World War China.
Design/methodology/approach
Multiple case study of large‐medium‐small software firms using data collected from primary and secondary sources.
Findings
The basic tenet is that despite prevailing international best practice of performance management in the Chinese software industry, the success of indigenous firms is associated with entrepreneurial leaders who align their firms' performance management with the core cultural value of collectivism.
Research limitations/implications
The paper provides a unique insight into the influence of collectivism on the process of performance management in the human resources function.
Practical implications
There might be a fine balance between implanting global performance management practices and accentuating the strengths and capabilities of the local employees within the confines of China's long history and distinctive culture.
Originality/value
Since competitor and customer variables share similar characteristics across segments of the global software industry, the human resources that enable firms to generate competitive advantages in marketing and technology will be critical for success. This paper provides an important test of the relationship between core cultural value and performance management of a knowledge‐intensive sector.
Details
Keywords
Joana Baleeiro Passos, Daisy Valle Enrique, Camila Costa Dutra and Carla Schwengber ten Caten
The innovation process demands an interaction between environment agents, knowledge generators and policies of incentive for innovation and not only development by companies…
Abstract
Purpose
The innovation process demands an interaction between environment agents, knowledge generators and policies of incentive for innovation and not only development by companies. Universities have gradually become the core of the knowledge production system and, therefore, their role regarding innovation has become more important and diversified. This study is aimed at identifying the mechanisms of university–industry (U–I) collaboration, as well as the operationalization steps of the U–I collaboration process.
Design/methodology/approach
This study is aimed at identifying, based on a systematic literature review, the mechanisms of university–industry (U–I) collaboration, as well as the operationalization steps of the U–I collaboration process.
Findings
The analysis of the 72 selected articles enabled identifying 15 mechanisms of U–I collaboration, proposing a new classification for such mechanisms and developing a framework presenting the operationalization steps of the interaction process.
Originality/value
In this paper, the authors screened nearly 1,500 papers and analyzed in detail 86 papers addressing U–I collaboration, mechanisms of U–I collaboration and operationalization steps of the U–I collaboration process. This paper provides a new classification for such mechanisms and developing a framework presenting the operationalization steps of the interaction process. This research contributes to both theory and practice by highlighting managerial aspects and stimulating academic research on such timely topic.
Details
Keywords
Yamin Xie, Zhichao Li, Wenjing Ouyang and Hongxia Wang
Political factors play a crucial role in China's initial public offering (IPO) market due to its distinctive institutional context (i.e. “economic decentralization” and “political…
Abstract
Purpose
Political factors play a crucial role in China's initial public offering (IPO) market due to its distinctive institutional context (i.e. “economic decentralization” and “political centralization”). Given the significant level of IPO underpricing in China, we examine the impact of local political uncertainty (measured by prefecture-level city official turnover rate) on IPO underpricing.
Design/methodology/approach
Using 2,259 IPOs of A-share listed companies from 2001 to 2019, we employ a structural equation model (SEM) to examine the channel (voluntarily lower the issuance price vs aftermarket trading) through which political uncertainty affects IPO underpricing. We check the robustness of the results using bootstrap tests, adopting alternative proxies for political uncertainty and IPO underpricing and employing subsample analysis.
Findings
Local official turnover-induced political uncertainty increases IPO underpricing by IPO firms voluntarily reducing the issuance price rather than by affecting investor sentiment in aftermarket trading. These relations are stronger in firms with pre-IPO political connections. The effect of political uncertainty on IPO underpricing is also contingent upon the industry and the growth phase of an IPO firm, more pronounced in politically sensitive industries and firms listed on the growth enterprise market board.
Originality/value
Local government officials in China usually have a short tenure and Chinese firms witness significantly severe IPO underpricing. By introducing the SEM model in studying China IPO underpricing, this study identifies the channel through which local government official turnover to political uncertainty on IPO underpricing.