Mergers and Acquisitions (Research Proposal Sample)

Cross-Border Mergers and Acquisitions by Emerging Market Multinational Enterprises: the case of China
Contents TOC \o "1-3" \h \z \u 1.Introduction PAGEREF _Toc388008021 \h 21.1. Research Rationale PAGEREF _Toc388008025 \h 31.2.Research Questions PAGEREF _Toc388008026 \h 31.3.Research aim and objectives PAGEREF _Toc388008027 \h 42.Literature Review PAGEREF _Toc388008028 \h 42.1. Cross-border M&A as a mode of entry in a foreign market PAGEREF _Toc388008029 \h 42.2.Cross-border M&A as a Dynamic Learning Process PAGEREF _Toc388008030 \h 62.3.Cross-border M&A as a Value Creating Strategy PAGEREF _Toc388008031 \h 73.Methodology PAGEREF _Toc388008032 \h 83.1. Research approach PAGEREF _Toc388008033 \h 83.2. Research strategy PAGEREF _Toc388008034 \h 93.3. Research instruments PAGEREF _Toc388008035 \h 93.4. Sampling PAGEREF _Toc388008036 \h 104. Timetable PAGEREF _Toc388008037 \h 105. Ergo PAGEREF _Toc388008038 \h 116. Research feasibility PAGEREF _Toc388008039 \h 117. Research ethics PAGEREF _Toc388008040 \h 127. Conclusion PAGEREF _Toc388008041 \h 128. Reference PAGEREF _Toc388008042 \h 139. Appendix PAGEREF _Toc388008044 \h 15Appendix 1: English questionnaire PAGEREF _Toc388008045 \h 15
1 Introduction
In comparison to the more reputable multinational corporations from developed economies, the basis and the internationalization trends of transnational firms from emerging nations are extremely different. They are largely based in nations that are characterized by low to average income levels and meagre business environments. Normally, they do not hold exclusive advantages like brand and technology when they invest overseas, and are likely to be latecomers penetrating a congested field. Furthermore, developing transnationals have not only rapidly internationalized, however they have astonished observers through their aggressive patterns in their early phases of their outward internationalization: penetrating actively into developed economies and displaying a profound interest in acquisitions as a mode of their entry strategy into these nations (Madhok and Keyhani, 2012). Globalization along with advancement in technology has greatly led to the popularity of cross border mergers and acquisitions. Owing to the growing number of cross-border M&A by developing economies transnationals and their significance in the international market, an effective understanding of this phenomenon is needed.
Cross-border mergers and acquisitions are normally considered as an implementation tool for organisations’ internationalization method. Further, cross-border M&A is termed as mergers and acquisitions that involve a buyer firm and a target company whose head offices are established in different countries (Sudarsanam, 2010). The dynamics of cross-border M&A are mainly comparable to those of domestic M&A. Nevertheless, owing to the global nature, they similarly encompass distinct challenges, since nations have diverse cultural distances, institutional, economic, and regulatory structures. In undertaking cross-border M&A, organisations take into account several conditions such as industry, firm, and country-level factors, which associate both with the buying and target organisation.
1.1. Research Rationale
Traditionally, economic concepts like transaction cost economics (TCE) as well as ownership location internationalisation (OLI) structures have offered strong theoretical foundations in which cross-border M&A research was founded on. However, recent studies examine cross-border M&A from the organisational learning and resource-based view (RBV) perspectives. Consistent with Shimizu et al. (2004), cross-border M&A has been viewed as a mode of entry in overseas markets, as a value creating approach, and a dynamic process of learning. Nonetheless, it is not clear whether study findings associated with bigger multinationals from established countries may be extended to transnationals from developing economies. Furthermore, studies on the application of a theoretical structure touching on, as well as the procedure for cross-border M&A are minimal and far between (Gilroy & Lukas, 2006), particularly in the context of the Chinese electronics sector. Therefore, the aim of this study will be to gain a better understanding of the strategies of Chinese electronics corporations in relation to cross-border M&A as well as to identify their resultant motivations and barriers. The study will be developed as follows: firstly the theoretical perspectives on the objectives and preparation for cross-border M&A will be examined. Secondly, the Chinese context in relation to cross-border M&A will be analysed. Lastly, a survey will be carried out to explore the objectives of, along with barriers faced by Chinese electronic corporations in cross-border M&A.
1 Research Questions
This study will develop a detailed framework symbolising three attributes of cross-border M&A of multinationals from developing nations: value creation, dynamic learning and mode of entry. The study will attempt to answer three study questions:
1 What are the drivers of Chinese MNCs cross-border M&A?
2 How do Chinese MNCs that make multiple cross-border M&A learn from their past experiences?
3 Do Chinese MNCs engaging in cross-border M&A create value for the acquired companies or their shareholders?
2 Research aim and objectives
The main aim of this research is to analyse cross-border M&A of emerging multinationals
The objectives are as follows:
1 To explore the drivers of Chines MNEs’ cross-border M&As
2 To analyse cross-border acquisitions as a dynamic learning process
3 To explore if Chinese multinationals making cross-border M&As create value for their shareholders or for the acquired firms
2 Literature Review
2.1. Cross-border M&A as a mode of entry in a foreign market
There is a vast spectrum of literature on cross-border M&A as a possible entry method into overseas markets. By and large, choices of entry mode may range from equity based such as joint ventures, acquisitions and green-field to non-equity based such as exports and alliance methods. In terms of International business, expanding into global markets has a high prospective for the investing company, however the mode of entry is a vital decision involving significant impacts on the success of the investment. Companies penetrating overseas markets are faced with distinct risks like liability of foreignness and information asymmetry (Chen. and Mujtaba, 2007). Disparities in national culture, business practices, consumer preferences as well as institutional powers like government regulations, may prevent organisations from totally attaining their strategic goals. To triumph over these challenges in internationalisation, organisations normally pursue the sequence of entry mode from export to joint ventures to mergers and acquisitions. Actually, they learn from previous entries and adjust the methods of subsequent entry strategy (Canabal and White III, 2008).
Although the global flows of FDI reduced by 14-percent in 2008, outward FDI from China went up by 111-percent, ranking among the top twenty globally (Ministry of Commerce of the People’s Republic of China, 2008). In addition, interestingly the deal value of cross-border M&A carried out by Chinese transnationals in 2008 was 21-percent more than the flow of FDI from China (Ministry of Commerce of the People’s Republic of China, 2008). This implies that Chinese multinationals not only employ cross-border M&A as a key method of internationalisation, however also raise substantial debt or capital in overseas markets. Through avoiding earlier entry modes and concentrating on M&A, emerging Chinese transnationals appear to challenge the traditional construct of internationalisation.
The main theoretical perceptions used in the study on entry mode choice have been OLI and TCE theories. The impacts of firm’s distinct and diverse resources and capabilities have not gained enough attention in this line of study (Madhok & Keyhani, 2012). In response to the appeal of Shimizu et al. (2004), this study implements an integrated theoretical structure that integrates organisational learning accompanied by the resource-based view and transaction cost perspective. Through concurrently taking capabilities and motivations into consideration, it will be termed as the motivation-capability strategy.
In terms of strategic level, the entry mode is influenced by the drivers underlying the action of diversification. In spite of the moderately high costs of coordination, organisations are likely to employ acquisitions as the way to gain technology and knowledge. However, organisations trying to expand their scope of products and markets will choose joint ventures instead of acquisitions. An additional vital determinant of mode of entry is the form of advantage held by the investing company. This study will examine the correlation between the proprietary knowledge of the investing company, its transferability, as well as its impact on the entry mode. Companies with a high level of technological capabilities might choose acquisitions over joint ventures with the main objective of protecting their particular competences from prospective domestic rivals. Although companies with strong governing capabilities are inclined towards joint ventures because they can handle related appropriation issues.
Furthermore, ownership structure has been claimed to take a vital role in cross-border M&A. Majidi (2007) studied the impact of state owned shares on the post-acquisition outcome of cross-border acquisitions. In state-owned enterprises of China, the responsibilities of the senior management groups and state proprietor are not clearly defined, resulting in a...