The effects of ownership identity on corporate diversification strategy of Chinese companies in foreign markets

Rao-Nicholson, Rekha; Cai, Yingdan

Abstract

In this paper, we examine the impact of acquirer’s ownership identity on corporate diversification decisions of Chinese companies in their cross-border acquisitions. Few studies to date have looked at the effect of ownership on corporate decisions to diversify abroad, particularly in the emerging market context. We find that certain characteristics of acquirer’s ownership identity such as the government ownership, business group membership and being publicly traded will be negatively linked with industry diversification in international markets. Also, the effects of ownership identities are contingent upon the host country selection, and acquisitions into developed host countries are likely to be in unrelated industries. We observe that Chinese companies that buy in developed markets engage in global consolidation. These results support our arguments on domestic market protection strategies adopted by the Chinese companies for mitigating competition from their developed market rivals.

• Journal Article Type: Article
• Acceptance Date: Mar 21, 2018
• Online Publication Date: Jun 8, 2018
• Publication Date: Mar 31, 2020
• Deposit Date: Apr 12, 2018
• Publicly Available Date: Jun 8, 2019
• Journal: Asia Pacific Journal of Management
• Print ISSN: 0217-4561
• Electronic ISSN: 1572-9958
• Publisher: Springer (part of Springer Nature)
• Peer Reviewed: Peer Reviewed
• Volume: 37
• Issue: 1
• Pages: 91-126
• DOI: https://doi.org/10.1007/s10490-018-9578-8
• Keywords: outward investment, China, government ownership, business group, industry diversification, developed country acquisitions
• Public URL: https://uwe-repository.worktribe.com/output/867421
• Publisher URL: https://doi.org/10.1007/s10490-018-9578-8
• Additional Information: Additional Information : The final publication is available at Springer via https://doi.org/10.1007/s10490-018-9578-8
• Contract Date: Apr 30, 2018