Research On The Relationship Between The Interlocking Director Network And The Cross-border Acquisitions Completion From The Perspective Of Organizational Learning: Theoretical Mechanism And Empirical Evidence

With the development of economic globalization and the ’One Belt One Road’ initiative,Chinese multinational companies have stepped onto the international stage with a more active attitude,and achieved overseas market expansion and increased international influence through foreign investment.Among them,cross-border mergers and acquisitions,as one of the important ways for companies to ’go global’,have achieved rapid development in recent years in terms of the number of mergers and acquisitions and merger finance.However,the completion rate of corporate cross-border mergers and acquisitions is not optimistic.Research data shows that nearly half of companies have not succeeded in declared cross-border mergers and acquisitions.As ’latecomers’ in the global M&A market,most Chinese companies face problems such as insufficient internationalization experience,lack of legitimacy,and unsuitability in overseas markets,which have become the main factors restricting the successful cross-border mergers and acquisitions.In the current situation,how to effectively coordinate the contradiction between the high growth of corporate cross-border mergers and acquisitions and the low completion rate of mergers and acquisitions is a key practical issue that needs to be resolved urgently in this field.Based on the perspective of organizational learning,existing studies have carried out a wealth of research on the relationship between the company’s own M&A experience and the completion of cross-border M&A.In fact,different companies in the Chinese market form direct and indirect connections through the concurrent appointment of chain directors,which also provides channels and conditions for companies to learn and accumulate successful mergers and acquisitions experience of connected companies,and to accelerate information flow and knowledge transfer between organizations.Enterprises acquire experience in mergers and acquisitions of connected companies through alternative learning,which not only reduces the cost of trial and error and the time cost of their own experience accumulation,but also has important significance for Chinese enterprises to quickly accumulate competitive advantages and realize the strategy of ’catch-up’ in the global market.However,previous studies have not paid enough attention to this.This paper takes China’s listed companies participating in cross-border mergers and acquisitions from 2008 to 2020 as a research sample,combined with organizational learning theory and social network theory,empirically examines the impact of the M&A experience of connected companies based on the interlocking director network on the completion of cross-border mergers and acquisitions,and further distinguishes the acquired companies.Types of cross-border M&A experience(general cross-border M&A experience & target country M&A experience)and chain-director network connection method(first-level director connection & second-level director connection),explore the connection of different directors’ network connection,and combine the company’s M&A experience to focus on the completion of cross-border mergers and acquisitions.Differences in role,realization path and influence mechanism.On this basis,combined with the perspective of internal and external governance,a systematic analysis of the role of corporate internal governance structure and external governance environment in the adjustment of the relationship between the merger experience and the completion of corporate cross-border mergers and acquisitions.Through Fosun Pharma’s case analysis and empirical research methods,the main research conclusions of this paper are as followed:First,on the whole,the general M&A experience of affiliated companies does not have a significant impact on the completion of cross-border mergers and acquisitions by focus companies.Due to the institutional and cultural differences between different countries,the general M&A experience of affiliated companies has limitations for companies to obtain necessary information and resource support from the target country.Distinguish the geographical sources of M&A experience of connected companies and found that only the M&A experience of the target country can promote the completion rate of cross-border mergers and acquisitions of the focus company,and when the connected company and the focus company are in the same industry,based on the similarity of knowledge structure and knowledge absorption capacity,the M&A experience of the connected company is connected The impact on the completion of corporate cross-border mergers and acquisitions is more significant;Second,there are differences in the effect of different director network connections on knowledge transfer.In the first-order director connection,the chain directors directly participate in the cross-border mergers and acquisitions of the connected company,which is conducive to the transmission of tacit knowledge and promotes the trust and cooperation between the connected company and the enterprise.In the second-tier director connection,the company has more connected companies and more extensive information.Both the first-tier and second-tier director connections enhance the possibility of companies completing cross-border mergers and acquisitions.A further comparative study found that the company’s acquisition of associated company M&A experience in the first-tier director connection is more comprehensive,timely,and of higher quality,and there is less resistance to the flow of knowledge.Compared with the second-tier director connection,it is more conducive to the completion of corporate cross-border mergers and acquisitions..Among the first-tier director connections,the M&A experience of connected companies is more prominent in the cross-border mergers and acquisitions of private enterprises;Third,based on the perspective of internal and external governance,the study found that from the perspective of internal governance structure,the leadership structure of the CEO’s two positions is conducive to strengthening the absorption and application of external experience and knowledge.The higher the age heterogeneity of the board of directors,the higher the communication cost and coordination cost within the organization;the higher the gender heterogeneity of the board of directors,it helps to improve the rationality and transparency of decision-making,and the M&A experience of connected companies affects corporate cross-border mergers and acquisitions.Produce positive regulation.From the perspective of external governance environment,the larger institutional distance increases the difficulty for companies to understand the market environment of the target country and the threshold for obtaining external legitimacy.Companies rely more on the M&A experience of the target country of the connected company.And if the target country’s economic development level is relatively high,it is easy for companies to obtain knowledge and information about the target country’s market through open channels,which can replace the experience of mergers and acquisitions in the target country of the associated company.The main research contributions of this paper are embodied in: First of all,this paper innovatively introduces an alternative learning perspective,emphasizing that enterprises can help improve the possibility of completing cross-border mergers and acquisitions by learning from the merger and acquisition experience of the target country of the company.The research conclusions of this article expand the application of organizational learning theory in the study of Chinese companies’ cross-border mergers and acquisitions,and provide a theoretical basis for how companies in other emerging market countries can use the advantages of peer companies to enhance their international competitiveness.Secondly,this article deepens the study of organizational learning theory and social network theory in the investment relationship of corporate cross-border mergers and acquisitions,and provides a new research perspective for further enriching the role of interlocking director networks in cross-border mergers and acquisitions,and is also a useful supplement to the field.In addition,this article identifies and distinguishes for the first time two different director network connection methods in the Chinese context,and reveals the difference in the role of the combined company’s M&A experience on the cross-border M&A practice of focus companies under the first-order and second-order director’s connection methods,and further enhances the chain of directors’ network.The effectiveness of corporate cross-border mergers and acquisitions provides theoretical support.Finally,this paper studies from the two dimensions of internal governance structure and external governance environment,and systematically identifies the factors that affect the relationship between the M&A experience of the target country of the associated company and the completion of the cross-border M&A of the focus company.It not only enriches the mechanism research on the improvement of the completion rate of corporate cross-border mergers and acquisitions based on the perspective of internal and external governance,but also provides new evidence and theoretical references for the construction of a more comprehensive theoretical research model on the effectiveness of Chinese corporate cross-border mergers and acquisitions.