From distance to integration: regulatory institutions, ownership and strategic fit in cross-border technological acquisitions

Purpose This study aims to examine a model assessing the impact of regulatory institutional distance on the degree of post-acquisition integration, with ownership level acquired in target firm’s equity as a mediating variable. The framework is grounded on institutional theory and the resource-based view, focusing cross-border technological acquisitions (CBTAs) deals. Design/methodology/approach Data concerning CBTAs initiated by 403 acquiring firms was collected from four high-technology industries (including computer, communications, biotechnology and electronics) between 1995 and 2015 for the empirical examination of the research assumptions. The proposed model for the analysis of CBTAs was examined using the fixed effects probit regression approach. Findings The study’s analysis shows that regulatory institutional distance has a negative impact on the acquiring firm’s post-acquisition integration degree. Furthermore, the study showed that this negative effect is mitigated when the acquiring firm obtains higher ownership percentage in the target firm’s equity. Originality/value This study makes a novel contribution to the CBTAs literature by uncovering the facilitating role of acquired ownership in shaping the relationship between regulatory institutional distance and the post-acquisition integration degree of the acquiring firms.