International M&As: horizontal, vertical or both? Online publication date: Tue, 18-Apr-2023
by Andrzej Cieślik; Monika Tarsalewska
European J. of International Management (EJIM), Vol. 20, No. 1, 2023
Abstract: This paper explores the motives behind international mergers and acquisitions in the context of the multi-country knowledge capital model of multinational enterprise. Within this framework, international M&As may be driven by the market-seeking motive, the efficiency-seeking motive, or both. Our empirical study is based on an extensive dataset of country pairs covering 132 countries around the world over the 1995-2015 period. We find that, if the target is from an emerging market, both market-seeking and efficiency-seeking motives drive the M&A transactions; if the target firm is from a developed country, market-seeking motives are more dominant. This implies that acquisitions of targets from developed countries are focused mainly on scaling their existing businesses, while acquisitions of targets from emerging countries focus instead on efficiency gains. Thus, differences in relative factor endowments and in market size are both important in explaining M&A activity.
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