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Cross-border acquisition in services: Comparing ownership choice of developed and emerging economy MNEs in India

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  • Lahiri, Somnath
  • Elango, B.
  • Kundu, Sumit K.

Abstract

Despite rapid increase in cross-border acquisitions (CBAs), prior research has not examined ownership choice of foreign MNEs investing in the services sector in emerging economies. Drawing on multiple strands of literature, we posit acquirer's ownership choice (partial versus full acquisition) to be influenced by type of service offering (soft versus hard), institutional distance between acquirer and target nation, and acquirer's country-of-origin (emerging versus developed economy). Empirical analysis of 385 CBAs undertaken in India over an 11-year period provides evidence that services, in particular soft services, and high institutional distance increases the likelihood of full acquisition by emerging economy acquirers. However, acquirers from developed economies show preference for partial acquisition under similar circumstances.

Suggested Citation

  • Lahiri, Somnath & Elango, B. & Kundu, Sumit K., 2014. "Cross-border acquisition in services: Comparing ownership choice of developed and emerging economy MNEs in India," Journal of World Business, Elsevier, vol. 49(3), pages 409-420.
  • Handle: RePEc:eee:worbus:v:49:y:2014:i:3:p:409-420
    DOI: 10.1016/j.jwb.2013.08.003
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    Cited by:

    1. Stevens, Charles E. & Makarius, Erin E. & Mukherjee, Debmalya, 2015. "It Takes Two to Tango: Signaling Behavioral Intent in Service Multinationals' Foreign Entry Strategies," Journal of International Management, Elsevier, vol. 21(3), pages 235-248.
    2. Kundu, Sumit K. & Lahiri, Somnath, 2015. "Turning the Spotlight on Service Multinationals: New Theoretical Insights and Empirical Evidence," Journal of International Management, Elsevier, vol. 21(3), pages 215-219.
    3. Driffield, Nigel & Mickiewicz, Tomasz & Temouri, Yama, 2016. "Ownership control of foreign affiliates: A property rights theory perspective," Journal of World Business, Elsevier, vol. 51(6), pages 965-976.
    4. Xie, En & Reddy, K.S. & Liang, Jie, 2017. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions," Journal of World Business, Elsevier, vol. 52(2), pages 127-183.
    5. repec:eee:worbus:v:52:y:2017:i:6:p:798-808 is not listed on IDEAS
    6. Cahen, Fernanda Ribeiro & Lahiri, Somnath & Borini, Felipe Mendes, 2016. "Managerial perceptions of barriers to internationalization: An examination of Brazil's new technology-based firms," Journal of Business Research, Elsevier, vol. 69(6), pages 1973-1979.
    7. Malhotra, Shavin & Lin, Xiaohua & Farrell, Carlyle, 2016. "Cross-national uncertainty and level of control in cross-border acquisitions: A comparison of Latin American and U.S. multinationals," Journal of Business Research, Elsevier, vol. 69(6), pages 1993-2004.
    8. Liou, Ru-Shiun & Chao, Mike Chen-Ho & Yang, Monica, 2016. "Emerging economies and institutional quality: Assessing the differential effects of institutional distances on ownership strategy," Journal of World Business, Elsevier, vol. 51(4), pages 600-611.

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