Hybrid ownership structures and cross-border acquisition completion of emerging market firms: An institutional and signalling theory perspective

<p><b>Over the last decade, cross-border acquisitions (CBAs) have emerged as one of the most significant engines through which emerging market firms (EMFs) carry out foreign investments. Yet, emerging market acquirers (EMAs) terminate a significant percentage of initiated CBAs before completion. Compared to the 18 percent termination rate of CBAs involving acquirers from developed economies (DEs), CBAs by EMAs have a 33 percent termination rate. Scholars attribute the higher CBA termination by EMAs to the dual hurdle of 'liability of origin' and 'liability of foreignness' arising from direct government involvement and institutional voids in emerging economies. Although extant research provides in-depth insights into why EMAs have higher CBA termination rates than developed economies acquirers, they fall short in exploring how EMAs can navigate these challenges. Hence, in this study, I aim to investigate ownership based solutions to the institutional challenges affecting the CBA completion of EMAs.</b></p> <p>A striking phenomenon in the foreign investment of EMFs is that a firm's ownership matters. Pioneering ownership-based studies reveal that state-owned enterprises (SOEs) and private-owned enterprises (POEs) experience distinct interactions with home and host countries leading to diverse foreign investment challenges and strategies. Government regulatory discretion combined with capital market imperfection in emerging markets means that SOEs are privileged in accessing government support. In contrast, POEs lack direct government support and seek to establish and leverage political ties to survive. This need for sustained firm government relationships and the gradual pro-market reforms in many emerging economies catalyse hybrid ownership structures among EMFs where state and private owners coexist in one organization. However, this emergence of hybrid ownership structures and their implications for EMFs' foreign investment activities are under-investigated in the international business domain.</p> <p>Building on the new institutional theory and the signalling theory, I argue that hybrid ownership structures can act as signals through which external stakeholders evaluate and confer legitimacy on EMAs during the CBA process. My conceptualization emphasizes the mixture of unique resources brought into hybrid organizations by both SOEs and POEs. Accordingly, I assert that as hybrid organizations incorporate elements prescribed by both SOEs and POEs, they are likely to project at least partial appropriateness to a broader set of institutional referents. As a result, hybrid ownership structures confer legitimacy-enhancing benefits, resource-enhancing benefits, and operational autonomy benefits that position EMAs to simultaneously navigate the home and host institutional challenges in CBAs ultimately increasing the completion likelihood. In addition to proposing a direct effect of hybrid ownership on CBA completion, I develop novel varieties of hybrid ownership structures that categorize variations in the internal configurations of hybrid organizations as typology, degree, and nature of hybridization. I carry out further investigation on how the hybrid ownership effect might vary with these varieties of hybrid ownership structures. Subsequently, I identify top executives' political connection, target industry political sensitivity, and host country regulatory quality as contingences to the effect of hybrid ownership on CBA completion of EMAs.</p> <p>Analysing a dataset of 838 CBAs by Chinese firms between the years 2008 to 2017, the results from this study demonstrate that acquirers with hybrid ownership structures are more likely to complete CBAs than nonhybrid acquirers. Moreover, while the hybridization effect varied with the degree of hybridization, the results did not provide conclusive evidence for the nature of hybridization. The result also reveals that top executives' political connection and the host country regulatory quality present differing interactions with the hybrid ownership effect relative to the hybrid organization's typology. With these findings, I contribute to the literature on EMFs' CBA completion by demonstrating that hybrid ownership structures benefit from their different owners' resources to overcome challenges in CBAs. I also contribute to the conceptualization and implication of hybrid ownership for EMFs strategic outcomes. I find that the benefits of hybrid ownership differed with the controlling shareholder's identity and the degree of hybridization in a hybrid organization. Furthermore, by examining the boundary conditions of top executives' political connection, target industry political sensitivity, and host regulatory quality, I provide insights into how intra-organizational attributes and external factors shape the significance of ownershipstructures in EMFs foreign investment.</p>

Hybrid ownership structures and cross-border acquisition completion of emerging market firms: An institutional and signalling theory perspective

<p><b>Over the last decade, cross-border acquisitions (CBAs) have emerged as one of the most significant engines through which emerging market firms (EMFs) carry out foreign investments. Yet, emerging market acquirers (EMAs) terminate a significant percentage of initiated CBAs before completion. Compared to the 18 percent termination rate of CBAs involving acquirers from developed economies (DEs), CBAs by EMAs have a 33 percent termination rate. Scholars attribute the higher CBA termination by EMAs to the dual hurdle of 'liability of origin' and 'liability of foreignness' arising from direct government involvement and institutional voids in emerging economies. Although extant research provides in-depth insights into why EMAs have higher CBA termination rates than developed economies acquirers, they fall short in exploring how EMAs can navigate these challenges. Hence, in this study, I aim to investigate ownership based solutions to the institutional challenges affecting the CBA completion of EMAs.</b></p> <p>A striking phenomenon in the foreign investment of EMFs is that a firm's ownership matters. Pioneering ownership-based studies reveal that state-owned enterprises (SOEs) and private-owned enterprises (POEs) experience distinct interactions with home and host countries leading to diverse foreign investment challenges and strategies. Government regulatory discretion combined with capital market imperfection in emerging markets means that SOEs are privileged in accessing government support. In contrast, POEs lack direct government support and seek to establish and leverage political ties to survive. This need for sustained firm government relationships and the gradual pro-market reforms in many emerging economies catalyse hybrid ownership structures among EMFs where state and private owners coexist in one organization. However, this emergence of hybrid ownership structures and their implications for EMFs' foreign investment activities are under-investigated in the international business domain.</p> <p>Building on the new institutional theory and the signalling theory, I argue that hybrid ownership structures can act as signals through which external stakeholders evaluate and confer legitimacy on EMAs during the CBA process. My conceptualization emphasizes the mixture of unique resources brought into hybrid organizations by both SOEs and POEs. Accordingly, I assert that as hybrid organizations incorporate elements prescribed by both SOEs and POEs, they are likely to project at least partial appropriateness to a broader set of institutional referents. As a result, hybrid ownership structures confer legitimacy-enhancing benefits, resource-enhancing benefits, and operational autonomy benefits that position EMAs to simultaneously navigate the home and host institutional challenges in CBAs ultimately increasing the completion likelihood. In addition to proposing a direct effect of hybrid ownership on CBA completion, I develop novel varieties of hybrid ownership structures that categorize variations in the internal configurations of hybrid organizations as typology, degree, and nature of hybridization. I carry out further investigation on how the hybrid ownership effect might vary with these varieties of hybrid ownership structures. Subsequently, I identify top executives' political connection, target industry political sensitivity, and host country regulatory quality as contingences to the effect of hybrid ownership on CBA completion of EMAs.</p> <p>Analysing a dataset of 838 CBAs by Chinese firms between the years 2008 to 2017, the results from this study demonstrate that acquirers with hybrid ownership structures are more likely to complete CBAs than nonhybrid acquirers. Moreover, while the hybridization effect varied with the degree of hybridization, the results did not provide conclusive evidence for the nature of hybridization. The result also reveals that top executives' political connection and the host country regulatory quality present differing interactions with the hybrid ownership effect relative to the hybrid organization's typology. With these findings, I contribute to the literature on EMFs' CBA completion by demonstrating that hybrid ownership structures benefit from their different owners' resources to overcome challenges in CBAs. I also contribute to the conceptualization and implication of hybrid ownership for EMFs strategic outcomes. I find that the benefits of hybrid ownership differed with the controlling shareholder's identity and the degree of hybridization in a hybrid organization. Furthermore, by examining the boundary conditions of top executives' political connection, target industry political sensitivity, and host regulatory quality, I provide insights into how intra-organizational attributes and external factors shape the significance of ownershipstructures in EMFs foreign investment.</p>

The Iterative Process of Legitimacy-Building in Hybrid Organizations

Hybrid organizations face the fundamental challenge of building legitimacy. To deal with this challenge in administrative theory and practice, we apply an analytical framework following an organizational logic of legitimacy building to an exemplary case of hybridity—the Swiss Institute for Translational and Entrepreneurial Medicine. Our framework application illustrates that pragmatic legitimacy (i.e., establishing instrumental value) must be built before moral legitimacy (i.e., fostering normative evaluation) and cognitive legitimacy (i.e., creating comprehensibility), followed by an iterative process of mutual influence between the legitimacy forms. Originating in the management literature, the framework promises new insights for public administration research on hybrids.

A Matter of Transition: Authenticity Judgments and Attracting Employees to Hybridized Organizations

Category-spanning organizations have been shown to face a number of penalties compared with organizations occupying a single category. The assumption seems to be, however, that organizations spanning the same categories will be evaluated similarly. Yet, this is not always the case. We know far less about why evaluations may differ within category-spanners, largely due to existing studies’ focus on comparing single-category to category-spanning organizations in equilibrium states at a fixed point in time. Instead, this paper investigates audience judgments of organizations as they transition from single to multiple categories. We rely on the empirical setting of social-commercial hybrids—an intriguing context in which to explore category-spanning across market and nonmarket domains associated with distinct values, norms, and expectations. In a series of two experimental studies, we investigate how hybridization affects audience judgments of organizational authenticity and the ability to attract potential employees. We find that across organizational fields associated with nonprofit (communal) and for-profit (market exchange) norms, hybridization—more than hybridity itself—triggers audience cynicism and leads to decreased judgments of authenticity. However, the penalties for hybridizing are only observed when organizations also move away from field-level profit-status norms. The findings contribute to the category-spanning and authenticity literatures by integrating social psychological and organizational theory perspectives to offer a dynamic view of spanning beyond for-profit, market contexts. They also offer empirical support for the theorized multidirectionality of mission drift in hybrid organizations, while suggesting that drifting need not always be detrimental.

Accountability disclosure of SOEs: comparing hybrid and private European news agencies

Purpose This paper aims to explore the financial and non-financial accountability disclosure patterns of state-owned enterprises (SOEs), as hybrid organizations. Design/methodology/approach Adopting the hybridity concept and resorting to stakeholder theory, this paper works on a comparison between the accountability disclosure patterns of hybrid and private organizations operating in the same industry. European national news agencies are selected as units of analysis and an extensive web content analysis is performed on three categories of information. Findings SOEs are found to disclose a broader spectrum of information than private organizations, and differences between them have been found. Nevertheless, both financial and non-financial disclosures are underdeveloped in the two organizational types. Research limitations/implications This paper illustrates how hybridity explains SOEs’ accountability disclosure patterns. Results could not be complemented through information on disclosure through alternative channels. Future studies are encouraged to perform simultaneous comparisons among hybrid, public and private organizations, as well as considering industry specifics. Practical implications As web accountability disclosure helps to address the demands of distant stakeholders, efforts are needed to enhance SOEs’ web accountability disclosures and not to undermine democratic accountability relationships. Originality/value This paper contributes to the ongoing debate on the accountability mechanisms and style of SOEs. Using a framework for hybrid organizations provides an understanding of how SOEs, as hybrid organizations, disclose information for accountability. In turn, this allows, and then promotes, the investigation of social phenomena by conceiving hybridity as a standalone institutional space.

Unpacking Hybrid Organizing in a Born Green Entrepreneurial Company

The role green businesses can play in a transition to a more sustainable society is an emergent area of questioning that has attracted the attention of both environmental and business academics. Different disciplines have contributed to a growing base of literature, yet a few key gaps exist, such as how green companies balance economic and environmental concerns and how green businesses operate as hybrid organizations. Utilizing ethnographic tools including observations and semi-structured interviews, this study closely analyses a born green company. The study attempts to identify how the green entrepreneurial company creates and captures environmental, economic, and social value as well as how these three types of value are interrelated. The study refrains from economic quantification of environmental and social value, instead focusing on identifiable instances of value creation and capture. This is conducted out of a recognition of non-substitutability concerns to give equal footing to different forms of value, therefore, avoiding some of the economic biases present in previous research. It is suggested that environmental and economic value can have a complementing or competing relationship depending on how the business uses its resources. A four-stage model is proposed, highlighting how this reflexive and dynamic relationship can influence firm performance. The potential benefits of social value creation by green businesses are identified as an overlooked and under-researched area that could have a significant impact on firm performance. Built on the nexus of hybrid organizations and green entrepreneurship, this study contributes to theory and practice by unpacking hybrid ways of creating and capturing value.

New avenues for HRM roles: A systematic literature review on HRM in hybrid organizations

In recent decades, the emergence of hybrid organizational forms has placed new demands on the role of human resource management (HRM) contributing to organizational goals. Moreover, research emphasizes that the increasing hybridity of contexts, stakeholder requirements, and goals lead to organizational tensions that, if not properly addressed, can lead to organizational downfall. However, although organization and management research recognize the importance of elaborating HRM roles for hybrid contexts, drawing upon findings from the hybrid literature has been widely neglected. Thus, by mapping the research landscape regarding hybridity, this article provides insight into the configuration of organizational HRM roles and functions that contribute to the development of hybrid goals and are associated to the management of tensions. Significantly, this article introduces three specific HRM roles— hybrid strategist, capability adapter, and identification generator—as essential HRM roles for hybrid contexts.

Reconciling Institutional Logics Within First Nations Forestry-Based Social Enterprises

The institutional frameworks that Indigenous groups put in place to govern economic processes within their communities are critical to the advancement of their diverse cultural-ecological, social, and economic development goals. Through the lens of institutional logics, this article examines the ways in which First Nations community sawmill enterprises in British Columbia, Canada, navigate the sectoral demands brought by a productivist paradigm of forestry. We find that First Nations community sawmill enterprises represent spaces of both logical tension and innovation where conflicts that arise between dominant “commercial” logics and culturally legitimate “Indigenous” logics can be reconciled. Through this analysis, this article offers an empirical example of the emergence of Indigenous institutional frameworks, as well as a contribution to the growing body of literature that addresses the ways in which hybrid organizations can and do navigate and overcome conflicting institutional logics.

Hybrid Organizations: A Micro-Level Strategy for SDGs Implementation: A Positional Paper

(1) Background: The Sustainable Development Goals (SDGs) are a set of objectives and sub-targets that aim to promote a more comprehensive system for sustainability, peace, and social justice. The SDGs propose a more holistic approach to the evolution of society, enlarging the responsibilities and roles for their implementation; therefore, it is worthwhile asking who will be in charge of the processes to develop adequate strategies. (2) Methods: This is a positional paper based on a literature review about the two main topics of this analysis: hybrid organizations and the SDGs’ governance. (3) Results: The hybrids combine diverse institutional logics within a unique organizational structure as a central tool for SDG implementation. The scientific literature explains how this organizational form is capable of mitigating possible tensions and trade-offs stemming from its heterogeneity and how hybrid structures can prove to be a useful solution for SDG implementation at the micro-level. (4) Conclusion: Although hybrid organizations can be a valuable aid to sustainable development, the absence of clear-cut coordination and responsibility structures at the macro-level could jeopardize efforts at the micro-level. In light of this hypothesis, this paper argues that hybrid organizations cannot be left in isolation in this mission, especially as the SDGs’ rationality is based on a new, holistic vision of development, which exposes a risk of implausibility surrounding macro-level political forces.