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

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

Authors

Gerhard Kling

Abby Ghobadian

Michael A. Hitt

Utz Weitzel



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'. © 2013 British Academy of Management.

Journal Article Type Article
Publication Date Jan 2, 2014
Journal British Journal of Management
Print ISSN 1045-3172
Electronic ISSN 1467-8551
Publisher Wiley
Peer Reviewed Not Peer Reviewed
Volume 25
Issue SUPPL.1
Pages S116-S132
APA6 Citation Kling, G., Ghobadian, A., Hitt, M. A., Weitzel, U., & O'Regan, N. (2014). The Effects of Cross-border and Cross-industry Mergers and Acquisitions on Home-region and Global Multinational Enterprises. British Journal of Management, 25(SUPPL.1), S116-S132. https://doi.org/10.1111/1467-8551.12023
DOI https://doi.org/10.1111/1467-8551.12023
Keywords effects, cross-border, cross-industry, home-region, global, multinational entreprises
Publisher URL http://dx.doi.org/10.1111/1467-8551.12023
Additional Information Additional Information : Article first published online: 17 June 2013
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