Post-acquisition performance of emerging market multinationals in developed markets, impact of institutional distance and international experience. Evidence from South Africa.

Abstract

This paper looked at the past performance of multinational companies from emerging market countries post their merger and acquisition deals of subsidiaries based in developed markets. It investigated the link and influence of cultural distance and international experience on the post-acquisition operational performance of emerging market multinational firms. Two hypotheses were developed i.e., that the is a negative link of cultural distance to performance and secondly there is a positive correlation of international experience to performance after the acquisition. In a review of 116 merger and acquisition deals from South Africa to developed countries between 1994 and 2018, the investigation found that these multinational firms on average experienced a deterioration in performance after the foreign direct investment deal. The investigation did not find enough statistical evidence in support of the two hypotheses; thus both were rejected.