A fuzzy-set qualitative comparative analysis of ownership strategy and acquisition performance in cross-border acquisitions

Abstract

Based on a survey database of cross-border acquisitions by Chinese private firms, this study uses a fuzzy-set qualitative comparative analysis (fsQCA) to explore the holistic impact of acquisition ownership, organizational factors and environmental factors on acquisition performance in cross-border acquisitions. It is found that the cross-border acquisitions taken by Chinese private enterprises have four kinds of acquisition ownership strategies leading to high acquisition performance under different internal and external conditions. This study points out that ownership strategy is a key decision affecting cross-border acquisition performance and provides a variety of paths leading to the same outcome rather than just finding the linear relationship between corporate activity and performance. This study supports the assumption of equivalence, and reveals a variety of scenarios in which cross-border acquisition ownership contributes to the outcome of high cross-border acquisition performance, and further confirms the view of causal asymmetry between condition and outcome. This study reveals whether the proportion of cross-border acquisition ownership affects cross-border acquisition performance and under what circumstances is conducive to the realization of expected cross-border acquisition performance.

Keywords

Fuzzy-set qualitative comparative analysis (fsQCA)acquisition ownership acquisition performance cross-border acquisition

1 Introduction

Most existing studies have focused on the antecedents of acquisition ownership decision in cross-border acquisitions [1], while the relationship between acquisition ownership and acquisition performance in cross-border acquisitions has not been sufficiently discussed. In particular, it should be noted that the activity of cross-border acquisition is a highly complex process, subject to a variety of internal and external environmental factors, a single factor may not have an absolute effect on the result of acquisition, and the outcome of a certain result is often the result of a combination of factors [2]. In the past, most of the research on cross-border acquisition focused on the impact of single or a few influencing factors on the performance of the acquisition, this ‘independent variable- dependent variable’ is a two factor combined statistical method, and would be difficult to clearly explain the interaction between more than three variables, resulting in the research logic being too ‘constrained’ [3].

This study attempts to use fuzzy-set qualitative comparative analysis (fsQCA) method to combine the factors of ownership, related enterprise-level characteristics and external environmental characteristics as a systematic interdependent configuration rather than regard them as single isolated variables [4]. Our object is to find ownership decision matching the specific environmental background from the perspective of holism [5], providing a new perspective to the study of the influencing factors of acquisition performance, and also offering some theoretical guidance to Chinese private enterprises in making ownership strategy in cross-border acquisitions.

This study takes Chinese private enterprises that have conducted cross-border acquisition as research objects for the following reasons. First, private enterprises have developed rapidly and become the main force of cross-border acquisitions of Chinese enterprises. Second, due to the high degree of association with the government, Chinese state-owned enterprises have to consider more political factors rather than its own interests, especially economic interests in the decision-making progress [6], while Chinese private enterprises are more independent in formulating internationalization strategies [7]. Therefore, this paper focuses on the ownership strategy and its influence on acquisition performance of Chinese private enterprises in cross-border acquisitions, trying to analyze the internal mechanism of the above factors.

2 Literature review and theoretical model

As can be seen from the existing literature, cross-border acquisition performance is influenced by many factors. Macro-level factors, including institutional environment, cultural environment, regional economic development; Industry-level factors, including industry relevance, industry uncertainty [8]. Firm-level factors, including relative capability, acquisition experience, firm size; Transaction-related factors, including acquisition ownership, transaction method, third-party organization, etc. Although the related researches are rich, there is no consistent conclusion. One of the important but not fully studied issues is the conditions for the effective transformation of cross-border acquisition ownership into acquisition performance. This ownership related issue is critical because the higher the proportion of ownership acquired, the higher the cost and risk would be in cross-border acquisitions, the investment in that decision may reduce the ability of the acquirers to allocate resources and make integration decisions in acquisitions, so to affect the acquisition performance.

Scholars of international business and strategic management have been focusing on acquired ownership in cross-border acquisition for a long time, but most studies focuses on ownership as a major variable in cross-border investment (including cross-border acquisition), especially on the factors influencing the choice of ownership in the choice of foreign market entry mode, including the impact of market entry motivation on ownership [9], and the impact of institutional environment on ownership [10]. As an early work, Chari and Chang (2009) studied the acquired ownership as an independent cross-border acquisition strategy and discussed the impact of relevant factors involved in the integration of target enterprises on ownership selection during cross-border acquisition [11]. In addition, there are also researches focusing specific factors that affect cross-border acquisition ownership by Chinese enterprises, including macro level factors such as host country environment, cultural distance, location, industry and other factors, as well as corporate level factors such as acquisition experience, cultural distance, R & D capability and other factors in cross-border acquisition on the impact of ownership choice.

Although the previous studies have shown that organizational and environmental factors will influence acquirers’ ownership strategy that may be related with the acquisition of high control so to promote integration in cross-border acquisitions [12]. However, these studies focus more on the interaction between acquisition ownership and single-organization factors or single environmental factors and their impact on performance, hindering the deep understanding of more complex conditions that enterprises always face in the internal and external environment.

To fulfill the above research gaps, this paper aims to offer a holistic, configurational approach on how ownership strategy affects cross-border acquisition performance by investigating interactions of acquisition ownership, organizational factors (relative capabilities and acquisition experience), and environmental factors (industry relevance and institutional distance). For the enterprise-level characteristics that affect acquisition performance in cross-border acquisitions, enterprise capability, especially the relative capability, and acquisition experience of the acquirer are the most concerned aspects in cross-border acquisition studies, but these are also controversial aspects. Similarly, industry relevance and institutional distance are also the most prominent environmental factors affecting acquisition performance in cross-border acquisitions, especially in the recent research based on institutional theory, but the research conclusions also face contradictions and inconsistencies. In the meantime, the above critical firm-level and environment-level factors have important impact on the decision-making of cross-border acquisition integration [4]. Therefore, we choose these four factors with acquisition ownership to clarify the contribution of ownership strategy to acquisition performance by adopting qualitative comparative analysis (QCA) for a holistic, comprehensive analysis.

2.1 Acquisition ownership

Scholars have early noticed that the proportion of the ownership acquired in acquisitions will affect the acquirer’s control over the operation and strategic decisions of the targets [13]. The higher proportion of the ownership owned by the acquirers, the greater the control over the targets will be, which can promote the operation of the targets more in line with the strategic interests of the acquiring party. On the other hand, since ownership is a resource commitment of the parent company to the subsidiary company [14], therefore different proportions in ownership usually mean the differences in the degree of resource input by the acquirers in cross-border acquisitions.

At the same time, ownership is a channel to access resources, through which the complementary resources and capabilities of shareholders or stakeholders can be exchanged and integrated [15], and the proportion of interest obtained is also directly related with the proportion of ownership. Especially in cross-border acquisitions, when the organizational characteristics of the acquirers and the environmental characteristics in the cross-border acquisition change, the legitimacy of the acquirers and the acquisition transaction will be affected, thus further affecting the integration and acquisition performance [1]. Therefore, it is necessary to consider the influence of acquisition ownership on acquisition performance in combination with the corresponding organizational and environmental factors.

2.2 Organizational factors

2.2.1 Relative capability

The realization of strategic goals in acquisition process often depends on the ‘relative capability’ in the negotiation and the degree of ownership and control rights that the acquirers own. However, there are different logics in the relationship among relative capability, acquisition ownership and acquisition performance of the acquirers. On the one hand, private enterprises with international advantages shows a high degree of control preference to a certain extent in cross-border acquisitions, while having a stronger relative capability is more beneficial to the acquirers in terms of both internal legitimacy and external legitimacy, and helps to enhance the bargaining capability, which can promote the acquirers to obtain higher proportion of ownership but also be beneficial to the integration process after the cross-border acquisition transaction [15]. The implementation of high ownership control of enterprises with high capabilities can be more conducive to the integration of resources, reduce transaction costs, obtain higher internal and external legitimacy and produce stronger learning effects in cross-border acquisitions. On the other hand, however, the potential risk lie in enterprises with strong capability may realize the desired results without acquiring too much proportion of ownership, but because of their higher relative capacities, the targets or stakeholders may have higher expectation on them, resulting in more cost inputs [9]. And when the acquisition performance is lower than expected, the negative effect may be even greater. If the relative capacity of the acquirers is weak, such as the phenomenon of ‘snake swallows an elephant’ in cross-border acquisitions, although the implementation of high ownership control can obtain more complementary or scarce resources or capabilities, but may affect the acquirers’ legitimacy during the acquisition transaction, especially their legitimacy from the targets, which may lead to potential conflict and resistance between the two parties and reduce integration efficiency. Therefore, relative capability of the acquirers will affect the relationship between acquisition ownership and acquisition performance in cross-border acquisitions.

2.2.2 Acquisition experience

From the perspective of organizational learning theory, some scholars believe that cross-border acquisition experience can help managers understand and become familiar with the process of international acquisition activities, enhancing their capabilities in operation and management of enterprise in cross-border acquisitions, therefore, enterprises with rich cross-border acquisition experience tend to adopt high ownership control strategy; However, some scholars believe that cross-border acquisition experience may mislead the decision-making behaviors of managers, and the blind dependence on experience may lead to negative learning effects [16]. For one thing, if the acquirer has previously experienced fewer acquisitions and the scale of the targets is small, it may not be appropriate or difficult to apply the previous experience to the decision-making process of larger-scale enterprises [17]. For another, with the increase in the number of acquisitions experienced by the acquirers, decision-makers may have a tendency of experience blindness [18]. For example, if the ownership strategy adopted in previous acquisitions has always had a positive impact on performance, decision-makers will often be overconfident about previously experience, copying previous acquisition strategies, which may instead mislead acquirers to make wrong decisions. So, previous experience in cross-border acquisitions may also negatively affect the effectiveness of the ownership strategy taken by the acquirers.

On the whole, there is some uncertainty about the effect that both relative ability and acquisition experience can have on the acquisition ownership and acquisition performance, and other factors, especially external environmental factors, need to be considered at the same time.

2.3 Environmental factors

2.3.1 Industry relevance

Industry relevance is always a focus in the study of cross-border acquisitions. According to the industry relationship between the two parties in acquisition transaction, this study divides the acquisition into peer acquisition and cross-industry acquisition. Most of the early literatures on acquisitions concluded that acquiring targets with relevance could improve acquisition performance [19], but recent literature has raised some suspects about this view, pointing out that the expected performance of acquisitions depends largely on the effective use of the resources of the targets [20]. Peer acquisitions can significantly eliminate or reduce the learning needs for acquirers’ managers to learn about the business of the targets, while promoting knowledge learning in the acquisition process [21]. Through high ownership strategy, acquirers could more effectively integrate resources, so as to exert the scale and synergy effect in acquisitions, but excessive control over peers will bring potential conflict and contradiction [8]. However, reducing the proportion of ownership may make it difficult to achieve expected integration objectives smoothly and timely. In the case of cross-industry acquisitions, if the two parties in the acquisition are related in the industrial chain, it will be helpful for the managers from the acquiring enterprises to pass their dominant logic to the acquired enterprises more effectively [22]. High ownership strategy, on the one hand, may bring the integration effect generated by the complementary resources to the acquirers, but on the other hand, it may also result in excessive integration costs due to insufficient understanding of the targets [7]. While reducing the proportion of ownership towards the targets may reduce the level of control thus lead to risk.

2.3.2 Institutional distance

Institutional distance is an important condition affecting the strategic decision of enterprises, and the enterprises are in multiple institutional environments in cross-border acquisitions [23]. Under different institutional distances, the ownership strategy of cross-border acquisition will be affected by different levels of legitimacy and different acquisition costs, resulting in differences in acquisition performance [24]. On the one hand, when there exists high institutional distance, the implementation of high ownership control can enhance the efficiency of decision-making, reducing the influence of external uncertainty and potential opportunistic behaviors, achieving greater market complementarity effect, obtaining greater knowledge complementarity and learning effect through market with high institutional differences [25]. However, the potential risk lies in the relatively low level of legitimacy from stakeholders and the increased difficulties of integration, which may require the investment of additional resources and costs to adapt to the local institutional environment [26]. As a result, the acquiring enterprises may choose to transfer parts of ownership to the local stakeholders, including relevant government departments, so as to obtain more local policy concessions and support which are beneficial to the acquirers. On the other hand, when the institutional distance is relatively small, high ownership control brings high external legitimacy and also reduces difficulties in integration from the perspective of institutional factors. In terms of market factors, the uncertainty is relatively small and the risk is relatively low, but the input cost of acquisitions is relatively high and the market flexibility is insufficient. Therefore, there will be uncertainty about the impact of enterprise’s ownership strategy.

In summary, this study holds that in cross-border acquisition of Chinese private enterprises, the acquisition ownership, organizational factors (relative capability and acquisition experience) and environmental factors (industry relevance and institutional distance) will interact with each other and have a comprehensive impact on acquisition performance. Based on this, the ownership strategy in this study is defined as: based on their own abilities and experience, the acquirers can flexibly choose the proper proportion of ownership in the face of different acquisition targets and different regions, so as to realize high-level acquisition performance. Referring to Leischnig and Geigenmuller (2018), we use Venn Chart (Venn diagram) to describe our theoretical framework as it is shown in Fig. 1.

Fig. 1

Research framework of cross-border acquisition ownership strategy and acquisition performance.

3 Methodology

3.1 Research method

QCA was first proposed by Ragin (1987) in sociology study. Different from traditional regression analysis where independent variables of hypotheses are independent from each other and the ‘net effect’ of independent variables on dependent variables should be investigated, fuzzy-set QCA is based on the idea of set theory [27]. By conceptualizing cases into configurations of different types of attributes [28], fsQCA methodology replaces independent variables with conditional configurations, replaces ‘net effect’ thought with configuration ideology and substitutes set relationship with correlativity [29]. Consequently, fsQCA integrates the advantages of qualitative analysis (case-oriented) and quantitative analysis (variable-oriented) and also takes the possible complicated interaction of different antecedent variables into account [29]. By means of comparing a certain number of cases, fsQCA analysis induces and recognizes the relationship between different combinations of antecedent conditions and outcome variables, explores the possible ‘causal relationship’, and recognizes the complex relationship between a set of underlying mechanisms [30]. Fuzzy-set qualitative comparative analysis (fsQCA) provides a method to dig deeper into the data to reveal finer-grained detail about the complexity of entrepreneurial phenomenon. The fsQCA method accommodates data asymmetry, recognizes the potential interdependence of antecedent variables, identifies asymmetric data relationships, and reveals multiple equally-effective pathways to the same outcome, if they exist [31]. This study uses fsQCA method to explore the comprehensive impact of cross-border acquisition ownership and enterprise relative capability, acquisition experience, industry relevance and institutional distance on cross-border acquisition performance. FsQCA uses consistency (Consistency) and coverage (Coverage) indicators to test the asymmetric relationship between independent variables and due variables. Consistency can be compared with the fitting superiority of traditional quantitative research, which is simply understood as: to what extent it can ensure that the X-factor set can reach the Y-result set. The degree of coverage can be understood as the extent to which the X-factor set is guaranteed to be the only path to the Y-result set. This study uses the qualitative comparative analysis software fs/QCA3.0 developed by Ragin (2000).

3.2 Sample and variable

In this study, a questionnaire survey was used to obtain primary data for analysis, and the sample subjects are the cross-border acquisitions carried out by Chinese private enterprises. We chose the acquisitions in which more than 10% ownership of the target was acquired. The private enterprise refers to the enterprise whose final controlling share is owned by private equity or person. Respondents to the survey were mainly executives of the enterprises or those who are directly responsible for the acquisition activities. Finally, a total of 30 valid questionnaires were obtained. The number of samples meets the requirements of qualitative comparative studies and is more suitable for qualitative comparative studies rather than large sample quantitative studies and case analysis.

The outcome variable (known as dependent variable in traditional qualitative analysis) in this study is cross-border acquisition performance (AP). According to the studies of Capron and Hulland (1999) and Shimizu (2004), this study used the Likert seven-point method to ask the respondents to judge to which extent does the cross-border acquisition achieve the expected goal. There are 13 items related to cross-border acquisition performance including market expansion, risk diversification, technological innovation, product upgrading, sales revenue, scale effect, profit increase, return on investment, brand promotion, market position, strategic transformation, global integration, others. The mean value is used to measure AP.

The conditional variables in this study include: (1) Acquisition Ownership (AO), which is a 0-1 dummy variable, measured by the proportion of ownership obtained by the acquirers in the cross-border acquisition, when the proportion of ownership exceeds 50%, it is regarded as absolute holding, and the AO value is 1, otherwise 0. (2) Relative Capability (RC), reference to the study of Luo (2010), this study used the Likert seven-point method to ask the respondents to judge the acquirers’ capabilities of manufacturing, marketing, R&D, operation, financing and management in comparison with the targets, and use the mean value of the six items to measure the relative capacity. (3) Acquisition Experience (AE), which is a 0-1 dummy variable, if the acquirers had cross-border acquisition experience before, the AE value is 1, otherwise 0. (4) Industry Relevance (IR), is a 0-1 dummy variable, when acquiring peer enterprise, the value of IR is 1, otherwise 0. (5) Institutional Distance (ID), following this study used the Likert seven-point method to ask the respondents to judge the differences in terms of regulation systems, industry norms and cultural cognition environments between the two parties in the cross-border acquisition. There are seven items including macro legal policy, industry-related legal policy, business rules within the industry, business rules of related upstream and downstream industries, cultural cognition of main customers, cultural cognition of financial institutions and other relevant interest groups, and cultural cognition of public. The mean value is used to measure ID. AP, RC and ID, which are measured by more than one item, have been tested for reliability and validity. The results of reliability and validity are shown in Table 1.

Table 1
The reliability and validity test results of AP, RC and ID

Variable Cronbach’s Alpha if item deleted Cronbach’s Alpha KMO value Cumulative rate of loading extraction (%)

AP 0.966 0.969 0.759 65.12

0.977

0.965

0.966

0.967

0.968

0.965

0.966

0.966

0.966

0.966

0.968

0.964

RC 0.831 0.867 0.492 61.443

0.838

0.812

0.841

0.881

0.854

ID 0.957 0.963 0.806 82.361

0.956

0.962

0.955

0.953

0.959

0.959

Variable	Cronbach’s Alpha if item deleted	Cronbach’s Alpha	KMO value	Cumulative rate of loading extraction (%)
AP	0.966	0.969	0.759	65.12
	0.977
	0.965
	0.966
	0.967
	0.968
	0.965
	0.966
	0.966
	0.966
	0.966
	0.968
	0.964
RC	0.831	0.867	0.492	61.443
	0.838
	0.812
	0.841
	0.881
	0.854
ID	0.957	0.963	0.806	82.361
	0.956
	0.962
	0.955
	0.953
	0.959
	0.959

4 Analysis and results

Data calibration is needed first in the qualitative comparative analysis of fuzzy sets. Since the initial sample data used to measure the variables of acquisition performance, relative capability and institutional distance do not meet fsQCA Boolean logical analysis conditions, they need to be transformed into fuzzy set memberships. In this paper, the continuous assignment scheme of Ragin (2008) is used to select the thresholds according to the upper quartile, median and lower quartile by using the linear scaling method, and the variable data is mapped to the [0,1] interval. The value on the [0, 1] interval represents the membership of a continuous fuzzy set, 1 indicates that the variable is fully in (full membership) and 0 represents the variable is fully out (full non-membership). The necessity analysis of the calibrated data is carried out by fsQCA3.0 software, to a certain variable, when the consistency score is >0.9, the exist of this variable is considered to be the necessary condition of the result, and it will be regarded as the core condition for the corresponding configuration [32]. According to the analysis results in Table 2, whether the outcome is ‘high cross-border acquisition performance’ or ‘not high cross-border acquisition performance’, there is no necessary condition.

Table 2
The necessity analysis results

High performance Not high performance

Attributes Consistency Coverage Consistency Coverage

AO 0.805 0.807 0.453 0.193

AO 0.195 0.458 0.547 0.542

RC 0.863 0.786 0.898 0.347

RC 0.282 0.867 0.445 0.579

AE 0.5 0.811 0.275 0.189

AE 0.5 0.619 0.725 0.381

IR 0.55 0.681 0.607 0.319

IR 0.45 0.73 0.393 0.27

ID 0.751 0.803 0.866 0.392

ID 0.432 0.883 0.565 0.491

	High performance	Not high performance
AO	0.805	0.807	0.453	0.193
AO	0.195	0.458	0.547	0.542
RC	0.863	0.786	0.898	0.347
RC	0.282	0.867	0.445	0.579
AE	0.5	0.811	0.275	0.189
AE	0.5	0.619	0.725	0.381
IR	0.55	0.681	0.607	0.319
IR	0.45	0.73	0.393	0.27
ID	0.751	0.803	0.866	0.392
ID	0.432	0.883	0.565	0.491

Then, we refer to the study of Ragin (2008), using the truth table algorithm of Ragin (2008) for sufficiency analysis, setting the original consistency threshold to 0.8 and the case frequency threshold to 1. At the same time, in order to avoid simultaneous subset relations of attribute combinations in both the outcome and its absence, this study selects PRI ≥ 0.75 [32]. FsQCA software carries out standard analysis on the basis of true value table and then obtains complex solution, intermediate solution and parsimonious solution. Referring to the mainstream QCA research method, this paper chose intermediate solution [32] to analyze. Conditions that appear simultaneously in the parsimonious solution and the intermediate solution are recorded as ‘core conditions’, conditions appear only in intermediate solutions but do not appear in the parsimonious solution are recorded as ‘contributing conditions’ [28]. In qualitative comparative analysis, * means ‘and’, means ‘none’.

As shown in Table 3, the analysis results show that there are four configurations that meet the performance of high cross-border acquisitions, and consistency and coverage score of the overall solution and each configuration are also shown. In adequacy analysis, consistency highlights the importance of subset relationship, and coverage indicates the proportion of cases involving a particular configuration in the case covered by the overall solutions [33]. When it comes to high-performance configurations, the overall solution consistency is 0.908, and the consistency of the specific configuration is 0.831 or more. In addition, the overall solution coverage is 0.736, which indicates that the configuration accounts for more than 73.6% of the sample, and the raw coverage for a particular configuration is between 0.071 and 0.315.

Table 3

Configuration of ownership strategy and acquisition performance of cross-border acquisition of Chinese private enterprises

	High performance				Not high performance
	C1	C2	C3	C4	C5a	C5b	C6
AO	●	●	●	⊗	⊗	⊗	⊗
RC	•	•			•	⊗	●
AE			●	●	⊗	•	⊗
IR		⊗	•	⊗	●	●
ID	⊗			•		•	●
Raw coverage	0.273	0.300	0.316	0.071	0.214	0.056	0.298
Unique coverage	0.049	0.210	0.182	0.071	0.015	0.056	0.099
Consistency	1	0.968	0.831	0.993	0.687	1	0.960
Solution coverage			0.736		0.369
Solution consistency			0.908		0.791

Notes: ●indicate the presence of a condition, while □ indicate its absence. Blank spaces indicate ‘don’t care’, i.e., the condition is not relevant to that particular configuration. Large circles including □□ and □□mean core or central conditions, while small circles (□and□) mean contributing or peripheral conditions.

Configuration 1 (AO*RC* ID) contains the conditions of acquisition ownership, relative capability and the absence of institutional distance. In this configuration, acquisition ownership and the absence of institutional distance are core conditions, and the relative capability is the contributing condition. This configuration shows that Chinse private enterprises can realize high cross-border acquisition performance through high ownership strategy when the acquisition activities are taken in countries with low institutional distance, but this situation often happens under higher relative capacity of the acquiring enterprise. For example, a leading general aviation manufacturing enterprise acquired 96.16% ownership of a Swiss aero engine enterprise which helped this acquirer successfully complete its layout in the general aviation sector.

Configuration 2 (AO*RC* IR) contains the conditions of acquisition ownership, relative capability and the absence of industry relevance. Acquisition ownership and industry relevance are core conditions, and relative capability is the contributing condition. This configuration shows that Chinese private enterprises can achieve high performance through high ownership control strategy if they acquire enterprises in a different industry, but this situation always happens under higher relative capacity of the acquiring enterprise. Taking one new energy company in Guangdong as an example, it acquired the unique technical advantages of the lithium niobate battery through the acquisition of a nanotechnology enterprises in the United States, thus successfully completing the strategic layout in the new energy bus market.

Configuration 3 (AO*AE*IR) contains the conditions of acquisition ownership, acquisition experience and industry relevance. Acquisition ownership and experience are core conditions, and industry relevance is a contributing factor. This configuration shows that enterprises with cross-border acquisition experience can achieve high acquisition performance through high ownership control strategy, but this situation often happens when peer cross-border acquisitions occur. For example, a Chinese private optical electronics enterprise acquired brand advantage through the acquisition of a well-known optical instrument enterprise in Germany, thereby enhancing its own sales capability and opening its sales channels in the European market.

Configuration 4 ( AO*AE* IR*ID) contains the conditions of acquisition experience, institutional distance, the absence of acquisition ownership and the absence of industry relevance. Acquisition experience and the absence of industry relevance are core conditions, institutional distance and the absence of acquisition ownership are contributing conditions. This configuration shows that private enterprises with acquisition experience are likely to achieve high acquisition performance through low ownership control strategy when conducting cross-border acquisitions across industries, even in countries or regions with high institutional distances. For example, through the acquisition of part of the ownership of a German machine tool enterprise, an intelligent equipment manufacturer, effectively promotes the external extension of its own industrial chain and the optimization of its product structure, which helped to achieve its international competitiveness.

Further, we use ‘not-high performance’ as the outcome. And for the sake of comparison, the paper shows the result of both high-performance configurations and not-high performance configurations in the same table (showN in Table 4). The result shows that there are two configurations leading to not high performance, of which there are two neutral permutations [28] in configuration 5, namely configuration 5a and configuration 5b, both have the same core conditions. Configuration 5a ( AO*RC* AE*IR) has relative capability and the absence of acquisition experience as contributing conditions, while in configuration 5b ( AO* RC*AE*IR*ID), the absence of relative capability, acquisition experience and institutional distance are contributing conditions. These two configurations suggest that the acquisition of a peer enterprise and the implementation of low ownership strategy may lead to not high acquisition performance, for example, when the acquirer has strong relative capability but with few cross-border acquisition experience, or when the acquirer are experienced in cross-border acquisition but the acquisition transaction taken in countries with high institutional distance, the acquirers may fail to realize the expected acquisition goals. Configuration 6 ( AO*RC* AE*ID) contains the conditions of the absence of acquisition ownership, relative capability, institutional distance and the absence of acquisition experience which are all core conditions. It shows that acquirers with strong relative capability but who are inexperienced, when the cross-border acquisition activities happen in countries with high institutional distance, taking low acquisition ownership strategy always leads to not high performance.

5 Discussion and implication

Based on the sample of cross-border acquisitions of Chinese private enterprises, this study explores the comprehensive impact of acquisition ownership, relative capability, acquisition experience, industry relevance and institutional distance on acquisition performance in cross-border acquisitions. Through the method of fuzzy-set QCA, it is found that the cross-border acquisitions taken by Chinese private enterprises have four kinds of acquisition ownership strategies which are conducive to the realization of the acquisition target under different internal and external conditions.

5.1 Theoretical contribution

The theoretical contribution of the study are as follows.

First, it is proved that the acquisition ownership is the key condition that affects the performance of cross-border acquisition, and it is an important way to realize the high performance of cross-border acquisition under most conditions. Among the four configurations of high acquisition performance, acquisition ownership appears as a core condition in three of the configurations (C1, C2 and C3). At the same time, the absence of ownership is the key factor leading to not high performance, and among the three groups of not high acquisition performance, the absence of ownership appears as a core condition. And acquisition ownership or its absence is the only condition that exists in all configurations that lead to high performance and not high performance. To a certain extent, this conclusion supports the view that through absolute control of the ownership is conducive to acquirers to get control right over the targets so to better integrate the resource of the two parties in cross-border acquisitions [34].

Second, the more important contribution is that this study provides more refinement and nuanced findings by unraveling the pattern of complex causal conditions that lead to high acquisition performance based on acquisition ownership, rather than just discovering the linear relationship between conditions [5]. We have found a variety of causal asymmetries, that is, the relationship between a single dependent condition and the acquisition performance is not a purely linear, but based on the configuration of other internal and external conditions. For example, while acquisition ownership is a key condition in realizing high acquisition performance, the absence of acquisition ownership is still likely to achieve high performance under certain conditions, as revealed in C4. Similarly, we find that the phenomenon of causal asymmetry can occur between each condition and the outcome, such as relative capacity may bring out high acquisition performance (C1 and C2), but it also may lead to not high performance (C5a and C6). Industry relevance may cause high acquisition performance (C3), while it can also lead to not high performance (C5a and C5b).

Third, our findings, to certain extent, challenge the view that peer cross-border acquisition is conducive to high acquisition performance [19] and that high institutional distance is not beneficial to the realization of high acquisition performance [10], and confirm that cross-industry acquisitions can also achieve high performance based on specific enterprise capability and acquisition strategy (C2 and C4). Similarly, when acquisition transaction happens in countries with high institutional distance, acquirers can also achieve high performance (C4).

5.2 Practical implication

Based on the above findings, our study also has some managerial implications. First, emerging market firms need to pay more attention to the selection of ownership strategies so as to flexibly respond to the internal and external environment [2]. Although the adoption of high ownership may help post-acquisition control and integrate resources, enhance decision-making efficiency and reduce external uncertainty and potential opportunism behaviors, Chinese MNEs need to fully combine external environment and the internal characteristics of firms to make effective ownership strategies to achieve the expected acquisition outcome. Second, compared to environmental factors, internal factors are more important for acquisition performance in cross-border acquisitions. In no matter inter-industry or cross-industry acquisitions, facing different institutional environment, a Chinese private firm could choose suitable ownership strategy basing its own capability to achieve acquisition performance. For a Chinese private firm, enhancing corporate ability and getting more acquisition experience would be helpful for expected acquisition outcome.

6 Conclusion

This paper is mainly manifested in complementing the literature in the field of cross-border acquisitions from the perspective of configurations based on fuzzy-set qualitative comparative analysis, and an understanding of these configurations can deepen our recognition in the impact of cross-border acquisition of ownership, organizational conditions and environmental conditions on cross-border acquisition performance. The result of this study shows that in the paths of high cross-border acquisition performance, there are many coexisting and different configurations which are made up by different conditions but can all lead to the outcome of high cross-border acquisition performance. This finding supports the assumption of equivalence (equifinality) issued by Fiss (2011), and reveals a variety of scenarios in which cross-border acquisition ownership contributes to the outcome of high cross-border acquisition performance, and further confirms the view of causal asymmetry between condition and outcome [30]. This study reveals whether the proportion of cross-border acquisition ownership affects cross-border acquisition performance and under what circumstances is conducive to the realization of expected cross-border acquisition performance. For enterprises that implement acquisitions, especially when they face different internal and external conditions, this research has certain reference significance to their strategic decisions such as acquisition ownership and their integration process.

There are several limitations of our research, which may serve as a starting point for future cross-border acquisition studies. First, our research does not include other major organizational and environmental factors. Therefore, further research may consider other corporate and environmental characteristics and examine their interactions with acquisition ownership so as to predict acquisition performance. Second, it is difficult to fully reflect the differences in different configuration effects in all sub-dimensions of acquisition outcome. Future studies may further clarify the impact of acquisition ownership on different levels of acquisition performance. For example, high ownership may have more positive effect on long-term performance but potential negative influence on short-term performance, while low ownership might have positive effect on market performance but less effect on innovative performance.

Notes on author

Xing Hua, M.D., a lecturer at Department of Finance and Economics, Guangdong Youth Vocational College. She has been a visiting scholar in Wuhan University. Her research interests include corporate strategic management and corporate management.

Qi Yue, Ph.D., a professor at School of Economics and Management, South China Normal University. He has been a visiting scholar in Cleveland State University in USA and University of Ferrara in Italy. His research interests include corporate strategic management and international business.

Footnotes

Acknowledgments

This work was supported by National Social Science Foundation of China under grant number 18BGL024, Guangdong Provincial Natural Science Foundation of China under grant number 2018A0303130229, Guangdong Provincial Department of Education Foundation of China under Grant 2018WTSCX020 and Guangzhou Social Science Foundation of China under grant number 2019GZYB34.

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	High performance		Not high performance
Attributes	Consistency	Coverage	Consistency	Coverage
AO	0.805	0.807	0.453	0.193
AO	0.195	0.458	0.547	0.542
RC	0.863	0.786	0.898	0.347
RC	0.282	0.867	0.445	0.579
AE	0.5	0.811	0.275	0.189
AE	0.5	0.619	0.725	0.381
IR	0.55	0.681	0.607	0.319
IR	0.45	0.73	0.393	0.27
ID	0.751	0.803	0.866	0.392
ID	0.432	0.883	0.565	0.491