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Do international acquisitions by emerging-economy firms create shareholder value? The case of Indian firms

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  • Sathyajit R Gubbi

    (Indian Institute of Management Calcutta, Kolkata, India)

  • Preet S Aulakh

    (Schulich School of Business, York University, Toronto, Ontario, Canada)

  • Sougata Ray

    (Indian Institute of Management Calcutta, Kolkata, India)

  • M B Sarkar

    (Fox School of Business, Temple University, Philadelphia, PA, USA)

  • Raveendra Chittoor

    (Indian School of Business, Hyderabad, India)

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    Abstract

    While overseas acquisitions by emerging-economy firms are gaining increased attention from the business press, our understanding of whether and why this inorganic mode of international expansion creates value to acquirer firms is limited. We argue that international acquisitions facilitate internalization of tangible and intangible resources that are both difficult to trade through market transactions and take time to develop internally, thus constituting an important strategic lever of value creation for emerging-economy firms. Furthermore, the magnitude of value created will be higher when the target firms are located in advanced economic and institutional environments: country markets that carry the promise of higher quality of resources, and therefore, stronger complementarity to the existing capabilities of emerging-economy firms. An event study of 425 cross-border acquisitions by Indian firms during 2000–2007 supports our predictions.

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    Bibliographic Info

    Article provided by Palgrave Macmillan in its journal Journal of International Business Studies.

    Volume (Year): 41 (2010)
    Issue (Month): 3 (April)
    Pages: 397-418

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    Handle: RePEc:pal:jintbs:v:41:y:2010:i:3:p:397-418

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    Cited by:
    1. Jaya Prakash Pradhan, 2010. "Strategic Asset-Seeking Activities of Emerging Multinationals: Perspectives of Foreign Acquisitions by Indian Pharmaceutical MNEs," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 1(2).
    2. Bhagat, Sanjai & Malhotra, Shavin & Zhu, PengCheng, 2011. "Emerging country cross-border acquisitions: Characteristics, acquirer returns and cross-sectional determinants," Emerging Markets Review, Elsevier, vol. 12(3), pages 250-271, September.
    3. Manuel Portugal Ferreira & Fernando A. Ribeiro Serra & Benny Kramer Costa, 2011. "The RBV in International Business Studies: A bibliometric study of Barney?s (1991) contribution to the field," Working Papers 82, globADVANTAGE, Polytechnic Institute of Leiria.

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