Chinese MNE Acquisition of Unrelated Foreign Businesses: The Role of Diversified Business Group Affiliation, Private Ownership and Strategic Asset Seeking

Shi, Xinwei; Sutherland, Dylan; Williams, Chris; Rong, Ke

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.

Citation

Shi, X., Sutherland, D., Williams, C., & Rong, K. (2021). Chinese MNE Acquisition of Unrelated Foreign Businesses: The Role of Diversified Business Group Affiliation, Private Ownership and Strategic Asset Seeking. Journal of Business Research, 129, 145-156. https://doi.org/10.1016/j.jbusres.2021.02.036

• Journal Article Type: Article
• Acceptance Date: Feb 18, 2021
• Online Publication Date: Mar 6, 2021
• Publication Date: 2021-05
• Deposit Date: Feb 18, 2021
• Publicly Available Date: Sep 6, 2022
• Journal: Journal of Business Research
• Print ISSN: 0148-2963
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 129
• Pages: 145-156
• DOI: https://doi.org/10.1016/j.jbusres.2021.02.036
• Public URL: https://durham-repository.worktribe.com/output/1252131