Skip to main content
SpringerLink
Log in

How to Synergize Different Institutional Logics of Firms in Cross-border Acquisitions: A Matching Theory Perspective

  • Research Article
  • Published:
Management International Review Aims and scope Submit manuscript

Abstract

When cross-border acquisitions take place, whose institutional logics should dominate the control in the daily operation of the acquired entity – the acquirer or the acquiree? To answer this question, this paper investigates how Geely, a Chinese automaker, successfully acquired Volvo from Sweden, a developed country, and managed the differences in the institutional logics of the two firms by transforming its dominant institutional logic. Through the lens of matching theory, we employ an inductive approach and conduct a longitudinal case study of Geely’s acquisition. We find that matching commercial and social logic is an inevitable requirement to cope with external institutional pressures in cross-border acquisitions. We further reveal that the structured interaction between compatibility and complementarity facilitates the matching process between commercial logic and social logic, resulting in a synergistic logic via the three different mechanisms of compatibility, complementarity, and co-evolution. Our findings challenge previous research that focuses on conflicts as the foremost drivers of the transformation of different institutional logics in organizations. Based on our findings, we develop a matching process model that offers insights for firms from developing economies to navigate dominant institutional logic transformation and thrive in the marketplace through their strategic cross-border acquisitions.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4

Similar content being viewed by others

Notes

  1. The dominant institutional logic needs to be distinguished from the dominant logic, which stems from psychology and is used to explain the guidelines that govern the management of various operations within the firm (Prahalad & Betties, 1986).

References

  • Almandoz, J. (2012). Arriving at the starting line: the impact of community and financial logics on new banking ventures. Academy of Management Journal, 55(6), 1381–1406.

    Article  Google Scholar 

  • Altenborg, M. E. (2008). Incompatible strategies in international mergers: the failed merger between Telia and Telenor. Journal of International Business Studies, 39(3), 508–525.

    Article  Google Scholar 

  • Battilana, J., & Dorado, S. (2010). Building sustainable hybrid organizations: the case of commercial microfinance organizations. Academy of Management Journal, 53(6), 1419–1440.

    Article  Google Scholar 

  • Battilana, J., Sengul, M., Pache, A. C., & Model, J. (2015). Harnessing productive tensions in hybrid organizations: the case of work integration social enterprises. Academy of Management Journal, 58(6), 1658–1685.

    Article  Google Scholar 

  • Besharov, M. L., & Smith, W. K. (2014). Multiple institutional logics in organizations: explaining their varied nature and implications. Academy of Management Review, 39(3), 364–381.

    Article  Google Scholar 

  • Canales, R. (2014). Weaving straw into gold: managing organizational tensions between standardization and flexibility in microfinance. Organization Science, 25(1), 1–28.

    Article  Google Scholar 

  • Chang, J., Wang, J. J., & Bai, X. (2020). Good match matters: knowledge co–creation in international joint ventures. Industrial Marketing Management, 84, 138–150.

    Article  Google Scholar 

  • Chen, Y. (1986). Chen Yun anthology. Beijing: People’s Publishing House.

    Google Scholar 

  • Cheng, C., & Yang, M. (2017). Enhancing performance of cross-border mergers and acquisitions in developed markets: the role of business ties and technological innovation capability. Journal of Business Research, 81, 107–117.

    Article  Google Scholar 

  • Child, J., & Rodrigues, S. B. (2005). The internationalization of chinese firms: a case for theoretical extension? Management and Organization Review, 1(3), 381–410.

    Article  Google Scholar 

  • Choi, J., & Contractor, F. J. (2016). Choosing an appropriate alliance governance mode: the role of institutional, cultural and geographical distance in international research & development (r&d) collaborations. Journal of International Business Studies, 47(2), 210–232.

    Article  Google Scholar 

  • Chung, C. C., Xiao, S. S., Lee, J. Y., et al. (2016). The interplay of top-down institutional pressures and bottom-up responses of transition economy firms on FDI entry mode choices. Management International Review, 56(5), 699–732.

    Article  Google Scholar 

  • Davis, J., Eisenhardt, K., & Bingham, C. B. (2009). Optimal structure, market dynamism, and the strategy of simple rules. Administrative Science Quarterly, 54(3), 413–452.

    Article  Google Scholar 

  • Deng, P. (2009). Why do chinese firms tend to acquire strategic assets in international expansion? Journal of World Business, 44(1), 74–84.

    Article  Google Scholar 

  • Deng, P. (2012). The internationalization of chinese firms: a critical review and future research. International Journal of Management Reviews, 14(4), 408–427.

    Article  Google Scholar 

  • DiBenigno, J., & Kellogg, K. C. (2014). Beyond occupational differences: the importance of cross-cutting demographics and dyadic toolkits for collaboration in a U.S. hospital. Administrative Science Quarterly, 59(3), 375–408.

    Article  Google Scholar 

  • Du, Y. (2013). Institutional pluralism and new venture growth in China: a three way interaction. Academy of Management Proceedings, 2013, 12732.

    Article  Google Scholar 

  • Dunn, M. B., & Jones, C. (2010). Institutional logics and institutional pluralism: the contestation of care and science logics in medical education, 1967–2005. Administrative Science Quarterly, 55(1), 114–149.

    Article  Google Scholar 

  • Dutton, J. E., & Dukerich, J. M. (1991). Keeping an eye on the mirror: image and identity in organizational adaptation. Academy of Management Journal, 34(3), 517–554.

    Article  Google Scholar 

  • Eisenhardt, K. M. (1989). Building theories from case study research. Academy of Management Review, 14(4), 532–550.

    Article  Google Scholar 

  • Eisenhardt, K. M., & Graebner, M. E. (2007). Theory building from cases: opportunities and challenges. Academy of Management Journal, 50(1), 25–32.

    Article  Google Scholar 

  • Friedland, R. (2017). Moving institutional logics forward: emotion and meaningful material practice. Organization Studies, 39(4), 515–542.

    Article  Google Scholar 

  • Friedland, R., & Alford, R. R. (1991). In W. W. Powell & P. J. DiMaggio (Eds.), 232–263. University of Chicago Press.

    Google Scholar 

  • Fujiwara-Greve, T., & Greve, H. R. (2000). Organizational ecology and job mobility. Social Forces, 79(2), 547–585.

    Article  Google Scholar 

  • Glaser, B. G., & Strauss, A. L. (1967). The discovery of grounded theory: strategies for qualitative research. Aldine de Gruyter.

    Google Scholar 

  • Govindarajan, G. V. (1986). Resource sharing among SBUs: strategic antecedents and administrative implications. Academy of Management Journal, 29(4), 695–714.

    Google Scholar 

  • Greenwood, R., Hinings, C. R., & Whetten, D. (2014). Rethinking institutions and organizations. Journal of Management Studies, 51(7), 1206–1220.

    Article  Google Scholar 

  • Greenwood, R., Raynard, M., Kodeih, F., Micelotta, E. R., & Lounsbury, M. (2011). Institutional complexity and organizational responses. Academy of Management Annals, 5(1), 317–371.

    Article  Google Scholar 

  • Haas, M. R., Criscuolo, P., & George, G. (2015). Which problems to solve? Online knowledge sharing and attention allocation in organizations. Academy of Management Journal, 58(3), 680–711.

    Article  Google Scholar 

  • Hall, P. A., & Soskice, D. (2003). Varieties of capitalism and institutional complementarities. In R. Franzese, P. Mooslechner, & M. Schürz (Eds.), Institutional conflicts and complementarities (pp. 43–76). Boston, MA: Springer.

    Chapter  Google Scholar 

  • Henrich, R., Greve, C., & Zhang, M. (2017). Institutional logics and power sources: merger and acquisition decisions. Academy of Management Journal, 60(2), 671–694.

    Google Scholar 

  • Jones, C., Maoret, M., Massa, F. G., & Svejenova, S. (2012). Rebels with a cause: formation, contestation, and expansion of the de novo category modern architecture, 1870–1975. Organization Science, 23(6), 1523–1545.

    Article  Google Scholar 

  • Kang, Y., & Jiang, F. (2012). FDI location choice of chinese multinationals in East and Southeast Asia: traditional economic factors and institutional perspective. Journal of World Business, 47(1), 45–53.

    Article  Google Scholar 

  • Krishnan, R., Martin, X., & Noorderhaven, N. G. (2006). When does trust matter to alliance performance? Academy of Management Journal, 49(5), 894–917.

    Article  Google Scholar 

  • Liou, R., Chao, M., & Yang, M. (2016). Emerging economies and institutional quality: assessing the different effects of institutional distances on ownership strategy. Journal of World Business, 51(4), 600–611.

    Article  Google Scholar 

  • Logan, J. A. (1996). Opportunity and choice in socially structured labor markets. American Journal of Sociology, 102(1), 114–160.

    Article  Google Scholar 

  • Luo, Y., & Tung, R. L. (2007). International expansion of emerging market enterprises: a springboard perspective. Journal of International Business Studies, 38(4), 481–498.

    Article  Google Scholar 

  • Luo, Y., & Tung, R. L. (2018). A general theory of springboard MNEs. Journal of International Business Studies, 49(2), 129–152.

    Article  Google Scholar 

  • Madhok, A., & Keyhani, M. (2012). Acquisitions as entrepreneurship: asymmetries, opportunities, and the internationalization of multinationals from emerging economies. Global Strategy Journal, 2(1), 26–40.

    Article  Google Scholar 

  • Marquis, C., & Lounsbury, M. (2007). Vive la resistence: competing logics and the consolidation of U. S. community banking. Academy of Management Journal, 50(4), 799–820.

    Article  Google Scholar 

  • Marquis, C., & Qian, C. (2014). Corporate social responsibility reporting in China: symbol or substance? Organization Science, 25(1), 127–148.

    Article  Google Scholar 

  • Mindruta, D. (2013). Value creation in university-firm research collaborations: a matching approach. Strategic Management Journal, 34(6), 644–665.

    Article  Google Scholar 

  • Misangyi, V., Weaver, G. R., & Elms, H. (2008). Ending corruption: the interplay among institutional logics, resources, and institutional entrepreneurs. Academy of Management Review, 33(3), 750–770.

    Article  Google Scholar 

  • Mitsuhashi, H., & Greve, H. R. (2009). A matching theory of alliance formation and organizational success: complementarity and compatibility. Academy of Management Journal, 52(5), 975–995.

    Article  Google Scholar 

  • Mondal, A., Lahiri, S., & Ray, S. (2021). Strategic response to inward foreign direct investment: a study of indian family firms. Management International Review, 61(2), 207–233.

    Article  Google Scholar 

  • Mtar, M. (2010). Institutional, industry and power effects on integration in cross-border acquisitions. Organization Studies, 31(8), 1099–1127.

    Article  Google Scholar 

  • Pache, A. C., & Santos, F. (2010). When worlds collide: the internal dynamics of organizational responses to conflicting institutional demands. Academy of Management Review, 35(3), 455–476.

    Google Scholar 

  • Pache, A. C., & Santos, F. (2013). Inside the hybrid organization: selective coupling as a response to competing institutional logics. Academy of Management Journal, 56(4), 972–1001.

    Article  Google Scholar 

  • Patton, M. Q. (2002). Qualitative research and evaluation methods. Sage.

    Google Scholar 

  • Prahalad, C. K., & Bettis, R. A. (1986). The dominant logic: a new linkage between diversity and performance. Strategic Management Journal, 7(6), 485–501.

    Article  Google Scholar 

  • Rabbiosi, L., Elia, S., & Bertoni, F. (2012). Acquisitions by EMNCs in developed markets. Management International Review, 52(2), 193–212.

    Article  Google Scholar 

  • Ramus, T., Vaccaro, A., & Brusoni, S. (2017). Institutional complexity in turbulent times: formalization, collaboration, and the emergence of blended logics. Academy of Management Journal, 60(4), 1253–1284.

    Article  Google Scholar 

  • Reay, T., & Hinings, C. R. (2009). Managing the rivalry of competing institutional logics. Organization Studies, 30(6), 629–652.

    Article  Google Scholar 

  • Rui, H., & Yip, G. (2008). Foreign acquisitions by chinese firms: a strategic intent perspective. Journal of World Business, 43(2), 213–226.

    Article  Google Scholar 

  • Sarala, R., & Vaara, E. (2010). Cultural difference, convergence, and cross-vergence as explanations of knowledge transfer in international acquisitions. Journal of International Business Studies, 41(8), 1365–1390.

    Article  Google Scholar 

  • Schilke, O. (2018). A micro-institutional inquiry into resistance to environmental pressures. Academy of Management Journal, 61(4), 1431–1466.

    Article  Google Scholar 

  • Shipilov, A. V., Greve, H. R., & Rowley, T. J. (2010). When do interlocks matter? Institutional logics and the diffusion of multiple corporate governance practices. Academy of Management Journal, 53(4), 846–864.

    Article  Google Scholar 

  • Sine, W. D., Mitsuhashi, H., & Kirsch, A. (2006). Revisiting burns and stalker: formal structure and new venture performance in emerging economic sectors. Academy of Management Journal, 49(1), 121–132.

    Article  Google Scholar 

  • Sinkovics, R. R., Penz, E., & Ghauri, P. N. (2008). Enhancing the trustworthiness of qualitative research in international business. Management International Review, 48(6), 689–714.

    Article  Google Scholar 

  • Smets, M., Morris, T., & Greenwood, R. (2012). From practice to field: a multilevel model of practice-driven institutional change. Academy of Management Journal, 55(4), 877–904.

    Article  Google Scholar 

  • Smith, L. G., Gillespie, N., Callan, V. J., Fitzsimmons, T. W., & Paulsen, N. (2017). Injunctive and descriptive logics during newcomer socialization: the impact on organizational identification, trustworthiness, and self-efficacy. Journal of Organizational Behavior, 38(4), 487–511.

    Article  Google Scholar 

  • Stahl, G., & Voigt, A. (2008). Do cultural differences matter in mergers and acquisitions? A tentative model and examination. Organization Science, 19(1), 160–176.

    Article  Google Scholar 

  • Sun, Z. (2018). Chinese reverse M&A: the Wu Wei paradigm of post-M&A integration process. Chinese Management Studies. https://doi.org/10.1108/CMS-12-2017-0338

    Article  Google Scholar 

  • Thomas, D. E., Eden, L., Hitt, M. A., & Miller, S. R. (2007). Experience of emerging market firms: the role of cognitive bias in developed market entry and survival. Management International Review, 47(6), 845–867.

    Article  Google Scholar 

  • Thornton, P. H. (2002). The rise of the corporation in a craft industry: conflict and conformity in institutional logics. Academy of Management Journal, 45(1), 81–101.

    Article  Google Scholar 

  • Thornton, P. H. (2004). Markets from culture: Institutional logics and organizational decisions in higher education publishing. Stanford University Press.

    Book  Google Scholar 

  • Thornton, P. H., & Ocasio, W. (1999). Institutional logics and the historical contingency of power in organizations: executive succession in the higher education publishing industry, 1958–1990. American Journal of Sociology, 105(3), 801–843.

    Article  Google Scholar 

  • Thornton, P. H., Ocasio, W., & Lounsbury, M. (2012). A new approach to culture structure and process. Oxford University Press.

    Google Scholar 

  • Vissa, B. (2011). A matching theory of entrepreneurs’ tie formation intentions and initiation of economic exchange. Academy of Management Journal, 54(1), 137–158.

    Article  Google Scholar 

  • Wei, T., & Clegg, J. (2015). Overcoming the liability of foreignness in internationalization in emerging economies: lessons from acquiring a chinese firm. Thunderbird International Business Review, 57(2), 103–117.

    Article  Google Scholar 

  • Yin, R. K. (2002). Case study research: design and method (4th ed.). Sage Publications.

    Google Scholar 

  • York, J. G., Hargrave, T. J., & Pacheco, D. F. (2016). Converging winds: logic hybridization in the Colorado wind energy field. Academy of Management Journal, 59(2), 579–610.

    Article  Google Scholar 

  • York, J. G., Vedula, S., & Lenox, M. J. (2018). It’s not easy building green: the impact of public policy, private actors, and regional logics on voluntary standards adoption. Academy of Management Journal, 61(4), 1492–1523.

    Article  Google Scholar 

  • Zhang, H. J., Young, M. N., Tan, J., & Sun, W. (2018). How chinese firms deal with a legitimacy imbalance when acquiring firms from developed economies. Journal of World Business, 53(5), 752–767.

    Article  Google Scholar 

  • Zheng, Q. X., Noorderhaven, B., & Du, J. (2022). Making the unlikely marriage work: the integration process of chinese strategic asset-seeking acquisitions. Journal of World Business, 57(3), 101305.

    Article  Google Scholar 

  • Zhu, H., Ma, X., Sauerwald, S., & Peng, M. W. (2019). Home country institutions behind cross-border acquisition performance. Journal of Management, 45(4), 1315–1342.

    Article  Google Scholar 

Download references

Acknowledgements

We acknowledge the financial support from National Natural Science Foundation of China (71772164, 72271179, 72032008), and Natural Science Foundation of Zhejiang Province (LR19G020001).

Author information

Authors and Affiliations

  1. China Institute for Small and Medium Enterprise, Zhejiang University of Technology, Hangzhou, China

    Cong Cheng

  2. College of Business Administration, University of Nebraska at Omaha, Omaha, USA

    Xiaoming Yang

  3. School of Management, College of Business and Law, RMIT University, Melbourne, Australia

    Fuming Jiang

  4. School of Management, Zhejiang University of Technology, Hangzhou, China

    Ze Yang

Authors
  1. Cong Cheng
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Xiaoming Yang
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Fuming Jiang
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Ze Yang
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Ze Yang.

Additional information

Publisher’s Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Cheng, C., Yang, X., Jiang, F. et al. How to Synergize Different Institutional Logics of Firms in Cross-border Acquisitions: A Matching Theory Perspective. Manag Int Rev 63, 403–432 (2023). https://doi.org/10.1007/s11575-023-00502-8

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11575-023-00502-8

Keywords

Search

Navigation