Negative or positive: Which experience matters for international M&A initiation stage?

Abstract

This study aims to uncover the initiation stage of international M&A and indicate what type of experience affect the successful completion of this stage. Besides different types of experience are analyzed in different formal and informal institutional settings in order to reveal how institutional environment can moderate firm's absorptive capacity implementation on M&A initiation stage. In the study sample of 509 international M&A deals initiated by Russian MNEs in the period of 2000-2012 is empirically tested by mean of logistic regression analysis. The empirical analysis indicates that prior experience in certain market always increases the probability of M&A deal announcement irrespectively the degree of proximity with formal and informal institutions of the host country. However firm's negative experience impedes further internationalization especially if institutional environment is dissimilar. Positive M&A experience may as increase probability of M&A deal announcement as decrease it depending on familiarity with institutional environment.