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Cross-border acquisitions by state-owned and private enterprises: A perspective from emerging economies

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  • Reddy, K.S.
  • Xie, En
  • Huang, Yuanyuan

Abstract

Leveraging insights from the institutional theory, resource- and industry-based views and OLI paradigm, we conceptually design a dialectic globalization framework to analyze the acquisition strategy of emerging economy (EE) enterprises. Firstly, we provide trend analysis of the market for cross-border acquisitions by Chinese and Indian multinationals over the last two decades, 1995–2014. Specially, this paper, to date, is the first to analyze high-valuation cross-border acquisitions of Chinese state-owned (SOEs) and Indian private enterprises (POEs). Based on 61 high-valuation deals valued at approximately US$200 billion, we find that Chinese SOEs completed more high-valuation deals, seek to invest in resource-scarce industries, and diversify their risk by targeting developed, emerging and developing countries. While Indian POEs largely prefer to invest in developed economies for both market and strategic-asset seeking, and follow an effective portfolio matrix by concentrating diversified sectors. Lastly, we discuss several policy implications pertaining to disinvestment and turnaround strategy of loss-making SOEs in EE, national interest and security concerns over EE state-driven outbound acquisitions, and foreign investment regulations.

Suggested Citation

  • Reddy, K.S. & Xie, En & Huang, Yuanyuan, 2016. "Cross-border acquisitions by state-owned and private enterprises: A perspective from emerging economies," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1147-1170.
    • Handle: RePEc:eee:jpolmo:v:38:y:2016:i:6:p:1147-1170
    DOI: 10.1016/j.jpolmod.2016.10.002
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    5. Massimo FLORIO & Matteo FERRARIS & Daniela VANDONE, 2018. "State-Owned Enterprises: Rationales for Mergers and Acquisitions," CIRIEC Working Papers 1801, CIRIEC - Université de Liège.
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    More about this item

    Keywords

    Cross-border mergers and acquisitions; Foreign direct investment; Internationalization; Emerging economies; State-owned enterprises;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration

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