Abstract
Corporate investment strategies and decision-making processes are crucial for understanding the operation and evolution of socioeconomic systems. Mergers and acquisitions (M&As) have been the main mode of corporate investment, growth, and upgrading, deeply affecting corporate reorganization, regional industrial restructuring, and economic globalization. By building a database including 5543 M&A partnerings and 1.89 million M&A non-partnerings, this study aims to uncover the systematic dynamics of M&A partnering in regional China during different phases since the mid-1990s, with particular attention given to the effects of firm heterogeneities and multi-dimensional proximities. Although geographical, cognitive, organizational, and institutional proximity dimensions are significantly influential for M&A partnering, we find that the effects of multi-dimensional proximities differ across M&A types and involving firms. Specifically, organizational proximity matters more for large- and medium-sized acquirers, while institutional proximity plays a more vital role in the acquisition target selection of private-owned and small-sized acquirers. Cognitive proximity measured by industrial and technical relatedness is more crucial for horizontal, vertical, and conglomerate M&As that are tightly associated with the corporate product, technical, and functional upgrading. The results indicate that the benefits of cognitive proximity may offset the risks and costs resulting from long-distance M&As, demonstrating the interactive dynamics between proximity dimensions. Our findings suggest that firm heterogeneities, proximity dynamics, and contextual factors should be focused on when explaining the investment decision-making processes of individual corporations in emerging and transitional economies such as China.
Funder
National Natural Science Foundation of China
Subject
Information Systems and Management,Computer Networks and Communications,Modeling and Simulation,Control and Systems Engineering,Software
Cited by
2 articles.
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