Cross-border mergers and acquisitions : links between acquiring firm capabilities and resources and target country location

Purpose: Drawing upon the eclectic paradigm and the regulative dimension of institutional distance theory, it is posited that to understand a firms’ cross-border merger and acquisition (CBMA) location choices, it is critical to examine the acquirers’ ownership advantages. Design/methodology/approach: Using a sample of CBMAs undertaken by US firms from 1999 to 2015, the paper explores the extent to which acquiring firm ownership advantages – financial and innovation capabilities – influence target firm country selection in relation to regulative distance. Findings: It is shown that acquiring firms with greater innovative capabilities are likely to choose target firms in nations with less regulative distance from their home market; whereas firms with greater financial capabilities target firms in more distant nations. Originality/value: This paper builds on the important research on CBMA activity, focusing on the largely neglected pre-acquisition resources in relation to the regulative distance between target firms and the acquirer.