Research on the relationship between transnational M&A strategies and the leap forward development of enterprises

Abstract

Driven by the rapid development of China's economy and the tide of globalization, the number of the cross-border M&As cases of Chinese enterprises grows dramatically. This dissertation summarizes four major waves of cross-border M&A that Chinese enterprises have experienced since 1992. However, Chinese enterprises also encountered a series of challenges or even had serious problems while they obtained great strategic opportunities through cross-border M&As. Some researchers regard that up to 70% of Chinese enterprises' overseas M&A projects are unsuccessful. Therefore, it is necessary to have a close and serious study on the influences of corporate strategy, especially transnational M&A strategy, on the healthy and rapid development of enterprises (i.e., leap forward development), especially on how transnational M&A strategy affects the success of M&A and development of enterprises, and which factors have important impacts on the transnational M&A results. The main research objectives in this dissertation include: (1) the influence of transnational M&A strategy on the leap forward development of enterprises, that is, how does transnational M&A strategy affect the development of enterprises, and the internal logic inside; (2) how to measure the leap forward development of enterprises (3) what factors have important impacts on the effects of transnational M&A? (4) On the basis of (1), (2) and (3), it further summarizes and discusses how Chinese Non SOE enterprises can achieve rapid developments through reasonable strategic planning and overcome the challenges of globalization and technology innovation. Accordingly, some fundamental hypothesizes are put forward, such as the positive correlation between strategic planning and enterprise’s healthy development. A lot of research has been carried out on the theoretical basis of M&A strategy, the influence of M&A strategy on the development of enterprises and the main influencing factors of M&A results, and a series of important results have been obtained. For example, transnational M&As can help Chinese enterprises (1) obtain better institutional environment (such as taxation, supervision, etc.), or enter into more lucrative overseas markets; (2) acquire complementary strategic assets such as key resources and core technologies; (3) seek tangible assets and intangible assets on economy scale. However, through analyzing the above literatures, we found that the existing studies have differences in research background, research time, priority, focus and type so that it’s difficult to draw general best practice or reference. Meanwhile, research samples from different sources and the use of different types of research methods result in the scattered research conclusions in the field of transnational M&As strategy and the unified consensus, which affects researchers' in-depth exploration of cross-border M&A strategy. In addition, based on the fact that a lot of Chinese enterprises achieved great development or breakthrough through transnational M&As in recent decade, there is still a tremendous lack of systematic researches on the success (or failure) of Chinese enterprises transnational M&As, especially researches on the key factors that affecting the success or failure of those M&As or researches on how to promote development through M&As. As one of the founders, key decisions makers and top managers of the Joyson Electronics, the author has personally led and participated in the formulation and implementation of Joyson Electronics’ development strategies and M&A strategies in the past years, has participated in several domestic and international M&As of Joyson Electronics, and has witnessed the successful and failed M&A cases of many companies in the industry. Through domestic and transnational M&As in the field of automotive electronics in the last 10 years, Joyson Electronics achieved leap-forward development and became a world-leading automotive electronics company. Therefore, basing on the first-hand experience of the author as an entrepreneur and a manager, this research has theoretical and practical significance on M&A study through in-depth analysis and research on Joyson Electronics and other companies’ cross-border M&A cases. This dissertation analyzes the development of Joyson Electronics in detail and summarizes the overall strategies and M&A strategies of Joyson Electronics and their implementation. Then it analyzes and evaluates the results and achievements of Joyson Electronics' strategies and M&A strategies. On this basis, this dissertation concludes that overall and M&A strategies, resource similarity and complementarity, international management and M&A experience, competence in post-M&A integration, and R&D capability may be key factors in determining whether a company can achieve rapid growth, thus providing a realistic basis for establishing a conceptual model between corporate strategy (including overall corporate strategy and M&A strategy) and business development, and constructing the basic assumptions between a company's cross-border M&A strategy and leapfrogging development. Based on analysis of typical cases of Joyson Electronics and theoretical study, this dissertation establishes a conceptual model of the relationship between the enterprise strategies (including the overall strategy and the M&A strategy) and the operation and development of the enterprise, and constructs fundamental hypothesis between the cross-border M&A strategy and the leap-forward development of the enterprise. In the conceptual model, this dissertation regards leap-forward development status after M&A as the dependent variable and evaluates enterprise’s performance from multiple dimensions such as financial performance, technological enhancement and resource optimization respectively. In addition, this dissertation also regards overall strategy and M&A strategy, resource similarity and complementarity, international management level, M&A capability and experience, research and development ability as the independent variables, while the business volume of both parties in M&A transactions is used as a moderating variable to study the influence of the above factors on the development status of enterprises after cross-border M&As. This dissertation uses multiple regression analysis to conduct empirical research on dozens of manufacturing enterprises which carried out several M&As from 2002 to 2019, and several conclusions are made. First of all, systematic and clear corporate strategy as well as correct M&A strategy has a positive effect on enterprise development. This positive effect is applicable to financial performance, technological enhancement and resource optimization. Secondly, the similarity of M&A resources has significant impacts on post-M&A enterprise performance, which is applicable to financial performance, technological enhancement and resource optimization. The complementarity of M&A resources also has significant impacts on the performance of M&A technology improvement and resource optimization, but has no significant impact on the financial performance. Thirdly, international management level of the acquirer has an important impact on the financial performance of the enterprise, but it has no significant impact on the performance of technological improvement and resource optimization. Fourthly, M&A ability along with the existing historical M&A experience has no significant influence on the financial performance, technology improvement and resource optimization Fifthly, the research and development ability of enterprise only affects dramatically on post-M&A technological improvement but has limited influence on the financial performance and resource optimization. Finally, based on the summary of the above research, this dissertation provides new suggestions for Chinese enterprises' cross-border M&A strategy and business development. Meanwhile, the limitations of this study are analyzed, and further prospects of research are also proposed.