Research On Corporate Merger And Acquisition Behaviors Under The Background Of Network Effects

At present,the Internet and a new generation of information technology represented by big data,cloud computing,artificial intelligence,and the Internet of Things are driving another round of industrial upgrading.Internet companies' cross-border entry into traditional industries and the transformation and upgrading of traditional enterprises using information technology are important manifestations of industrial integration and development under this technological background.Among them,a variety of business models and active mergers and acquisitions have emerged.A thorough understanding of the business model and characteristics of M&A behavior in this trend is of great significance for guiding the development of related industries and promoting industrial integration.Based on the network effect economic theory and the relevant theories of industrial organization,this article theoretically models the horizontal mergers and acquisitions of enterprises under the network effect background,and conducts a normative analysis of the cross-border and upgrade of enterprises under the network effect background.The main work has the following aspects:1.Chapter 3 takes network effects as the core focus,conducts a normative analysis of the current active Internet enterprise cross-border,and the industrial integration process of traditional enterprises transformed and upgraded with the help of a new generation of information technology,and proposes an analysis framework from the perspective of utility structure.According to the analysis,from the perspective of network effects,the essence of Internet cross-border and traditional enterprise transformation and upgrading is to switch from providing consumers with a single utility structure to providing consumers an utility structure that attaches equal importance to network utility and basic utility.This conclusion provides a concise perspective for recognizing the current complex and diverse "cross-border and escalation" phenomenon,and at the same time grasps the key economic law,namely the network effect.This analytical framework provides a possible reference index for further quantitative research on related industries.On the basis of this analysis framework,this paper further analyzes the characteristics and paradigms of enterprises' business model construction under the current network effect background,and normatively studies the four types of M&A motivations of network-based enterprises.2.This paper studies the differentiated competition and M&A in a three-enterprise market under the background of network effects.In horizontal mergers and acquisitions,we separately study two types of competitive equilibrium problems in the context of without considering and considering user value respectively.In each case,the effects of the network effect and the constituent factors on equilibrium price,market share,profit,and M&A motivation are discussed separately.The fourth chapter of this paper studies the mergers and acquisitions that do not consider user value.The study found that in the pattern of differentiated competition,the network effect will reduce the degree of differentiation of the enterprise,thereby affecting the pricing and profit of the enterprise,but it will increase the market share of the enterprise and enhance the power and welfare of consumers.The fifth chapter deepens on the basis of the fourth chapter research,incorporates the user value into the enterprise objective function for modeling,and introduces the trade-off factor of economic profit and user value.The study found that when companies consider user value,their decisions become more diverse.The trade-off factor affects the firm's equilibrium price and market share,and thus affects the company's revenue,which is determined by the combined influence of the price's market share.The research shows that enterprises that pay special attention to user value may have lower profit after merger and the welfare of consumers has been improved under the multi-objective decision of enterprises.The above research results theoretically partly explain the reason why loss-making enterprises with huge user volume are highly recognized in the capital market in reality.3.Chapter 6 of this paper studies the problem of mixed M&A in the context of network effects.Hybrid mergers and acquisitions are a common type of corporate mergers and acquisitions in the current industrial integration process.This chapter analyzes the theoretical modeling by constructing a three-enterprise market(two oligopolistic competitions and a monopoly market),and discusses the implementation of bundling and non-bundling after mergers and acquisitions.The equilibrium of competition in the two modes of sales.Under each equilibrium,the influence of factors such as network effect,M&A cost and compatibility on the equilibrium result and M&A motivation are discussed.The study found that monopolistic enterprises will determine their product positioning by observing the oligopoly competition equilibrium results,and maximize profits.In the case of bundling sales after mergers and acquisitions,the motivation of corporate mergers and acquisitions is affected by the characteristics of the two types of products and the cost of mergers and acquisitions.The study found that the network effect of monopolistic products reflects different characteristics from competitive products.Even if the status of monopoly products disappears,the network effect and basic utility still have a positive impact on mergers and acquisitions(satisfying certain conditions situation).In terms of consumer welfare,the bundling model has improved consumer welfare.In the non-bundle sales model,the study found that due to the emergence of compatibility,even if the monopoly products still fully cover the market,the asymmetric network effect reflects different characteristics from the general full coverage symmetric network effect,which brings enterprises a differentiated competitive advantage,which in turn brings gains for mergers and acquisitions.Compared with the bundled sales model,companies are more likely to choose the non-bundle model,but consumer welfare remains the same as it would have been without the mergers and acquisitions.4.The seventh chapter of this article analyzes the industrial policies of network-related enterprises of my country in the past five years,and it also explores the starting point of implementing industrial policies in terms of selective and functional industrial policies.Combined with the theoretical modeling and analysis results of the previous chapters,suggestions are made for relevant industrial policies.The possible innovations in this article are mainly reflected in the following aspects:1.At present,there is a lack of clear definition and research framework for the cross-border Internet companies and the transformation and upgrading of traditional enterprises using ICT technology.At the same time,the existing analysis is mainly from the perspective of management,strategy,and technological progress,but not to the network effect.Pay sufficient attention to key economic laws.This article firmly grasps the theme of network effects,and proposes an analysis framework that examines the cross-border and transformation of enterprises in the context of information technology triggered by network effects.And within this analysis framework,it puts forward the proposition about the nature of network-based enterprises,and the cross-border and transformation of enterprises in the context of network effects.It is pointed out that this work deepens the understanding of this type of enterprise in the field of industrial organization and management.At the same time,this definition framework provides a quantifiable analytical indicator for the next empirical research in this field.2.In this paper,horizontal mergers and conglomerate mergers and acquisitions may have been modeled under conditions of rising mergers and acquisitions cost or diseconomies of scale.Economies of scale is a major driver of mergers and acquisitions,and it is also a common setting in the theoretical research of general mergers and acquisitions.However,in reality,a large number of enterprises implement mergers and acquisitions through leverage,and there are costly internal integration problems,furthur technology investment and even higher cost of sales may exsist after mergers and acquisitions.This paper integrates these real problems into a merger cost parameter and discusses the possible problems of scale diseconomies.Under this constraint,the explanatory power of the theoretical model has been further expanded and deepened,and the actual situation has been further explained in theory.3.Incorporate user value factors into the enterprise's objective function for comprehensive inspection.The role of user value in corporate value is gaining more and more attention from the theoretical community,and this value occupies a more important position in enterprises whose business model has a network effect.In reality,user value has already been incorporated into important strategic decisions by enterprises,and has also been recognized by the investment community and capital markets,but it is rarely involved in current research.This article analyzes and compares several current theoretical models for judging the value of users,and incorporates them into the M&A model for consideration.This work enriches the meaning of enterprise objective function in the theoretical model and deepens the explanatory power of the theoretical model.4.This paper studies the hybrid merger under the background of network effect and discusses the competitive equilibrium of the two different sales modes after the implementation of the mergers and acquisitions.The theoretical model of hybrid mergers and acquisitions in the context of current network effects is rarely discussed.Based on the Hotelling model,this paper builds a three-enterprise competition model.Theoretically modeled general competition and post-merger(bundle and non-bundle cases)respectively.The conclusion of the study shows some distinctive results,such as the gain-type advantage brought by the asymmetric network effect,and the welfare improvement brought by bundling.At the same time,the two states of bundled and non-bundled sales can also be regarded as a simplified simulation of the current diversified enterprise's "multiple" and "closed" ecosystem strategies.The research in this paper makes up for the scarcity of the theoretical research on hybrid mergers and acquisitions in the field to a certain extent,and also makes a theoretical response to the mixed mergers and acquisitions that are widespread in reality.