Research on institutional logic transformation of Chinese firm’s organization integration after cross-border M&A: based on hybrid logic

【Author】

CHENG Cong

【Institution】

China Institute for Small and Medium Enterprises, Zhejiang University of Technology

【Abstract】

The prosperity of global economy and trade, and the high-speed development of China’s economy provide a large number of opportunities for cross-border M&As by Chinese enterprises. However, most of Chinese enterprises usually face an embarrassing situation of the inefficient integration when they complete cross-border M&A activities. Chinese firms usually focus more on negotiation and transactions but emphasize less organizational integration in cross-border M&A activities. From the view of institutional logic, when Chinese enterprises complete the acquisition of targeted companies in cross-border M&As, the organizational integration of such companies is essentially an institutional logic transformation among multiple institutional logic collision, interaction and integration. Hence, we attempted to explore how to improve the organizational integration performance when completing the cross-border M&As for Chinese multinationals. We constructed a logical transformation model of the organizational integration system after the completion of a company’s cross-border M&A from the perspective of structural hybrid logic and interactive hybrid logic. We collected data from the cross-border M&A of Volvo Cars by Zhejiang Geely Holding Group Co., Ltd. (hereinafter referred to as Zhejiang Geely), which is a typical case of cross-border M&A in China. According to the survey and interview of Zhejiang Geely’s acquisition of Volvo Cars in the past ten years after the completion of M&A, the research results show that the logical changes of the organizational integration system after the completion of Chinese enterprises’ cross-border M&A mainly includes three forms, namely, structural hybrid logic, interactive hybrid logic, and structural and interactive hybrid logic. In different logical forms, there are not only great differences in the connection of logical decision between business units, but also differences in the cross-hierarchy influence mechanism between business units and organizational control. To be specific, in the structural hybrid logic form, business unit logic connection in the organization is weak, and the organizational logic decision focuses on business units. However, in the interactive hybrid logic form, the business unit logic connection in the organization is strong, and hence the organizational logic decision emphasizes the organizational control. Finally, in the structural and interactive hybrid logic, both independent business units and interdependent business units exist in such hybrid logic. Therefore, both business units and organizational control are the focus of organization logical decisions. In addition, from the perspective of the hierarchical logic decision, structural hybrid logic is a bottom-up logical decision from business unit to organizational control; by contrast, the interactive hybrid logic is a top-down logical decision from organizational control to business unit. In the end, the structural and interactive hybrid logic exhibits the interacted institutional logic decisions between business units and organizational control. The findings make theoretical contribution in the following two aspects. On one hand, our study extends the extant research on the structural hybrid logic and interactive hybrid logic, and proposes a new hybrid institutional logic, namely, structural and interactive hybrid logic which is obviously conducive to the hybrid logic analysis and cross-hierarchy logic decision making in institutional logic research. On the other hand, our study also builds a new theoretical framework about how Chinese enterprises promote the organizational integration of the targeted companies when completing cross-border M&A in developed countries. Finally, this study offers managerial implications for Chinese enterprises’ M&A of enterprises in the developed countries.

【Keywords】

structural hybrid logic;interactive hybrid logic;structural and interactive hybrid logic;business unit;organizational control

References

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Springer Journals Database

Total: 48 articles

  • [1] Wu Yajun, The Strategic Duality of China's New Domestic Entrepreneurial Firms:A Theoretic Exploration Based on the Practice of the Companies—Huawei,Lenovo and Haier, Management World,
  • [2] TANG Yan-zhao~1 WANG Zi-zhe~2 WANG Xiao-pei~1 (1.School of Management,Xiamen University,Xiamen,Fujian,361005,China; 2.Xiamen Eastex Firetec CO.INC,Xiamen,Fujian,361005,China), Screwy Dynamic Rotation Model:A Analytical Framework of Cultural Integration in Cross-Border M&A——Comments on the Cultural Integration in Cross-boarder M&A of Chinese Enterprises, Economic Management,
  • [3] Tian Zhilong,Li Chunrong,Jiang Qian,Wang Hao,Liu Lin,Zhu Li and Zhu Shoutuo, The Operation Strategy of the Weak Late Comers in China's Auto Markets:a Study Based on the Cases of China's Auto Companies such as Jili,Qirui,Huacheng,BYD and Hafei, Management World,
  • [4] DU Yun-zhou;YOU Shu-yang;School of Business Administration,Anhui University of Finance & Economics;Business School,Nanjing University;, Analysis of the Frontier of Institutional Logic and Institutional Pluralism Research and Prospects for Further Research, Foreign Economics & Management,

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