Explaining the Surge in M&A as an Entry Mode: Home Country and Cultural Influences

Prior studies examining the effects external factors on international market expansion have focused on host country factors with scant attention being given to home country factors. This study examines the trends, patterns and the impact of cultural and home country macroeconomic influences on Chinese cross-border mergers and acquisitions (CBM&A) as an entry strategy for the period of 1998-2011. Our findings indicate that CBM&A is the preferred mode of market entry by the Chinese emerging market firms. The regression results indicate that home country macroeconomic and cultural variables, including GDP, money supply, interest rates, inflation, acquisitions in resource seeking sectors and cultural distance play an important role in explaining the foreign market expansion of Chinese firms.