Introduction

Since the 1990s, the global economic environment has undergone profound changes. The liberalization of trade and capital flows, rapid advances in information technology, development of global capital markets and the trend of privatization and deregulation in many parts of the world have resulted in an explosion of merger and acquisition (M&A) activities among firms in high-income countries. After 1980, M&A activities completed worldwide grew at an average annual rate of 42 per cent to reach US$ 2.3 trillion in 1999, or 8 per cent of world GDP. Between 1980 and 2000, M&A activities worldwide generated a combined transaction value of more than US$ 12 trillion. The world has not seen this magnitude of business restructuring since the merger wave that created giant American corporations at the turn of the nineteenth century. The outcome of the latest wave of M&A activities is no less than a profound transformation at the heart of the global business structure. Nolan (2001a) has named this phenomenon ‘the global business revolution’. The global business revolution has fundamentally changed the nature of the capitalist firm, the pattern of competition and the way in which economic production is organized in much of the global economy.