The Emergence of Strategic Capabilities in a South-North Cross-Border M&A and their Post-Acquisition Process

UoM administered thesis: Doctor of Business Administration

  • Authors:
  • Rui Oliveira

Abstract

The internationalization of Chinese companies is a new reality. This is even more innovative if we isolate Chinese private firms and in particular those having businesses in developed countries as targets. If the first internationalizations of Chinese private firms to developed countries showed us less than optimal results; the latest show mixed outcomes. Interestingly, some of the latest firms with positive results are breaking through stable and complex global value chains, such as the automotive industry, to become first tier suppliers to transnational assemblers and even acquire large and apparently more capable first-tier global suppliers in developed countries. Based on the relevant literature, namely: automotive global value chain (Holweg et al., 2009; Humphrey & Memedovic, 2003; Sturgeon & Lester, 2004; Sturgeon & Van Biesebroeck, 2011; Thun, 2001); developing countries firms internationalization (Boisot & Meyer, 2008; Buckley et al., 2007; Child & Rodrigues, 2005; Dunning, 2006b; Luo & Tung, 2007; Mathews, 2006); and Chinese business system (Redding & Witt, 2009; Whitley, 1992, 1999b; Witt & Redding, 2013a, 2013b; Zhang & Whitley, 2013); this is not expected. This is why we decided to thoroughly understand the dynamic capabilities of one of such firms.Using an in-depth case study the analysis was performed with an integrative tri- perspective approach using institutional, industrial and firm levels. The starting point was on the understanding of the dynamic capabilities that the Chinese firm had since its incorporation until become a first-tier supplier to a transnational assembler followed by its internationalisation. Delving deeper into the internationalisation of the organisation, the study analysed, using the business system framework, how the Chinese firm was able to acquire and manage its new acquisition, which had superior tangible and intangible capabilities, and successfully overcame the predictable clashes that such a setting creates. This is in line with the call for exploratory research (Deng, 2012; Meyer, 2014; Narula, 2012; Ramamurti & Singh, 2009) due to the still infancy of the problem under study, the anecdotal descriptions, and the lack of reliable quantitative data.Our findings show us a Chinese firm with specific and divergent dynamic capabilities since its incorporation, when compared with the expected and typical companies, that should have emerged from the Chinese business system. A clear focus in a unique industry associated with the ambition, yet constraints, to become a global company, combined with the necessity of an industrial upgrade, and a deliberate strategy that allowed the firm to become a turnover company of €1 Billion in less than ten years. Furthermore, the long-term vision of the group and the use of a supportive partnering strategy for the post- acquisition period has been an essential component of the firm's success. Finally, we found that the firm has been joining disperse competences and resources it was lacking, using different dynamic capabilities, by grouping and directing them into a specific well-stated vision. From a theoretical perspective, these findings are particularly important since they do not support the institutional arbitrage literature nor accommodate the current different theoretical extensions on international business literature. From an empirical sense we explain that firms are not fate to integrate in a post M&A period and describe how this can be achieved.

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Original languageEnglish
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Award date1 Aug 2017