Conflicts, trust toward the acquirer from emerging economies and post-acquisition cooperation intention

Abstract

PurposeThe purpose of this paper is to examine the impact of inter-group conflicts on the trust toward the acquirer and then further on cooperation intention after acquisitions in cross-border mergers and acquisitions (M&As), in the lens of the social classification theory. Two types of conflicts (realistic conflicts and symbolic conflicts) and a mediating mechanism (trust toward the acquirer) exhibit different effects on cooperation intention. The research further examines two moderating coping strategies (localizing management and assigning trustworthy expatriate managers) and tests their effectiveness in promoting trust toward the acquirer and increasing cooperation intention in cross-border M&As.Design/methodology/approachThe research hypotheses were empirically tested in the context of post-acquisition of Chinese companies' cross-border M&As. In total, 600 questionnaires were provided to the research participants of 37 acquired firms/units from advanced economies of 12 Chinese companies, and 209 valid questionnaires were collected (the response rate is 34.83%). Confirmatory factor analysis was conducted to verify data validity and hierarchical multiple regression analyses were employed to test relational and moderating effects.FindingsThis research demonstrates that both realistic and symbolic conflicts can reduce the intention to cooperate, but the latter does not have a significant influence. The results also uncover that whether employees from acquired firms trust in their acquirers mediates the relationship between realistic conflicts and cooperation intention. Moreover, management localization (a measurement of whether local/original managers are retained with a high degree of freedom and autonomy after M&As) and trustworthiness of expatriate managers (a measurement of whether the assigned expatriate managers is trustworthy) positively moderate the relation between realistic conflicts and trust toward the acquirer. In addition, trust toward the acquirer mediates the interaction of realistic conflicts and management localization on the cooperation intention of the acquirers' employees.Originality/valueThis study examines how inter-organizational conflicts influence trust toward the acquirer and then cooperation intentions in the context of Chinese companies' M&A behavior of targets from developed countries and gain supportive evidence, which enriches the literature on the management of international M&As. By introducing two management localization and trustworthiness of expatriate managers into the model, the research deepens our knowledge of how to build trust toward the acquirer in cross-border M&As.