Title: Cross-border mergers and acquisitions as a tool to transfer knowledge and foster competitive capabilities

Authors: Pedro M. Oliveira, Aleda V. Roth, Katherine M. Ponte

Addresses: The Kenan-Flagler Business School, The University of North Carolina at Chapel Hill, McColl Building, CB#3490, Chapel Hill, NC 27599-3490, USA. ' The Kenan-Flagler Business School, The University of North Carolina at Chapel Hill, McColl Building, CB#3490, Chapel Hill, NC 27599-3490, USA. ' New York, USA

Abstract: In recent years, the number and the transaction amounts of mergers and acquisitions (M&As), both domestic and cross-border, have increased rapidly in virtually all sectors of economic activity. Some recent changes in the business environments of many countries, including the trend towards deregulation, market liberalisation and increasing globalisation, have facilitated the recent wave of M&As. However, empirical studies examining the stock market reaction find little evidence of wealth creation. Similarly, there appears to be little or no improvement in the post-acquisition operating performance. This creates a troubling paradox, since the pace of M&As is not expected to abate in the near future. In this context, this paper addresses the following research questions: What motivates the accelerated pace of M&As activity? How can companies achieve competitive capabilities through cross-border M&As? We argue that, through M&As, companies can obtain the knowledge-based competencies required to achieve the combinative capabilities necessary to compete in today|s uncertain and complex business environment. Cross-border M&As can provide a network for knowledge transfer, and can play an important role in restructuring the operations and reallocating assets in the countries where the companies are located, namely by leveraging the competitive capabilities of those companies.

Keywords: cross-border mergers and acquisitions; knowledge transfer; competitive capabilities.

DOI: 10.1504/IJTPM.2003.003890

International Journal of Technology, Policy and Management, 2003 Vol.3 No.2, pp.204 - 223

Published online: 28 Jan 2004 *

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