Multinational enterprises, intra-regional cross-border M&As, and performance: Location advantages of market versus knowledge

Building on the theories of internalization and regional MNEs and using a sample of 11,098 cross-border M&As in 1997–2017, this study investigates performance implications of MNEs’ cross-border M&As aimed to locate overseas market potential versus knowledge endowment, in terms of intra-regional vis-à-vis inter-regional M&As. The main findings from this study are threefold: (1) Intra-regional cross-border M&As’ positive effects on their completion and post-merger operating performance are location advantage-specific phenomena; (2) When cross-border M&As are geared towards those foreign countries of strong market potential, intra-regional cross-border M&As are more likely to be completed, and followed by better post-merger operating performance of the acquirers than their inter-regional counterparts; and (3) When cross-border M&As are targeted towards those foreign countries endowed with sophisticated knowledge, intra-regional cross-border M&As are less likely to be completed, and do not seem to help the acquirers achieve better post-merger operating performance, compared to their inter-regional counterparts. The study concludes with important theoretical, practical, and public policy implications.