Determinants of Inbound Cross Border Mergers and Acquisitions Empirical Evidence from India an Emerging Economy

Abstract

Globalisation broke the entry barrier for multinational enterprises (MNEs) to enter different geographical borders through various entry modes. The hierarchical choice of entry modes is broadly categorised into two heads, namely, non-equity and equity modes (Pan and Tse, 2000), as shown in Figure 1. MNEs have shifted their internationalisation strategies from non-equity to equity modes as equity modes give more control over the business and related decisions (Luo and Tung, 2007). Foreign direct investments (FDI) activities have become a key engine for global economic growth. Emerging economies (EE) have dramatically accelerated internationalisation and attracted FDI globally in the past three decades. Based on the World Investment Report 2021, EE contributed more than half of the $837 billion worth of global FDI inflows, which was increased by 30% from the preceding year in 2021. Among developing Asia, despite of pandemic COVID 19 and the Russia-Ukraine war, received more than 40% of the global FDI in 2021, reaching $619 billion, which increased by 19% from the preceding year and more than 80% of which was concentrated to six economies including India. India is ranked as the 8th most attractive destination in the world, 4rd in Asia, and 1st in South Asia for FDI investments. It received an FDI inflow of $64 billion in 2020, which increased by nearly 26% from 2019 and $45 billion in 2021, which fell by 26% from $52 billion in 2020 (UNCTAD, 2022). The short-term fall was due to the Russia-Ukraine war; however, India s FDI inflow has steadily increased over the last three decades. The research objectives include Primary Objective- To empirically analyse the country-level determinants impacting the India s inbound CB MandA volume. To meet this objective two secondary objectives are formulated. Secondary Objectives A. To analyze the impact of environmental factors 1. To analyse the impact of CO2 emission of the home country on the volume of inbound CB MandA activities 2. To analyse the moderating role of India s control..