Two essays on cross-border strategic activities of multinational enterprises

Abstract

To expand their business footprint and better adapt to foreign markets, multinational enterprises (MNEs) use cross-border strategies, including cross-border mergers and acquisitions (M&As) and corporate social responsibility (CSR) of overseas subsidiaries. It is very important for MNEs to make cross-border strategies, which can help firms not only enter a new market but also survive in the new market. Previous research has suggested that national characteristics and firm traits influence the legitimacy of MNEs and, as a result, the MNEs’ cross-border strategic activities. But little attention has been paid to the impact of city characteristics and firm signals on cross-border strategic activities. However, the current debate on globalization/deglobalization has highlighted the role of city identities and firm initiatives, necessitating more research on how city characteristics and firm signals influence cross-border strategic activities. A lot of studies discussed entry mode choices and other entering strategies. Other studies emphasize one of the most important things after entering a foreign market is to survive in the market. Following this logic that entering the foreign market first and then surviving in the market, my dissertation presents two studies to fill this research gap. The first study examines the signaling effect of cross-listing on the completion of cross-border M&As. We argue that the cross-listing can function as a signal to facilitate cross-border M&A deals; the information and signaling environments and receiver attention influence this signaling effect. The empirical analysis of cross-border M&A deals during 2001–2018 shows that acquirer cross-listing can function as a signal of acquirers’ information credibility, thus facilitating deal completion. This signaling effect appears to be strengthened if the home and host countries share a common language or if the host country is developed, but it appears to be weakened if the two countries have a bilateral investment treaty. The second study investigates the impact of sister city on foreign subsidiary CSR. We posit that sister-city relationships promote the local CSR of foreign subsidiaries, and such positive relationship is influenced by both firm- and country-level factors. Our empirical analysis of 90 foreign subsidiaries in China from 2012 to 2019 shows that the sister-city relationship promotes the local CSR of foreign subsidiaries. The positive relationship is weakened when foreign subsidiaries are older or when two countries have higher political affinity but is strengthened when foreign subsidiaries are larger.