Strategic Alliances and International Mergers and Acquisitions in the Modern Global Business Environment
Strategic Alliances and International Mergers and Acquisitions in the Modern Global Business Environment
The modern globalized world has triggered stark change in the actions of many of the actors in traditional society. One such actor that has embraced this change and recognized its benefits is in the area of international business. With globalization providing access to a myriad of new networks, markets, and technology at an unprecedented pace, international business firms have aligned themselves to capitalize on these new opportunities. While inter-firm alliances, mergers, and acquisitions are certainly not a new innovation in international business practice, the modern international business environment has seen a significant increase in the number of mergers, acquisitions, and joint ventures in response to globalization. The motivations for these inter-firm alliances have also changed in conjunction with this recent trend. Traditionally, businesses engaged in inter-firm alliances, mergers, or acquisitions to either increase their market power in a region or territory, or to reduce a firm’s transaction costs. However, in accordance with the globalization of international business activity, firms have had new motivations emerge as reasons for inter-firm alliances, mergers, or acquisitions. The extent that these new motivations arise in firm activity must be examined by studying the following questions: i) why have motivations changed; ii) what are the factors that have led to the formation of these motivations; and, iii) how do these motivations lead the firm to choose on which form of activity to partake. Each of these questions will be addressed in turn.
I. Why have the motivations for inter-firm alliances, mergers, and acquisitions changed? Corporate firms have long engaged in alliances, mergers, and acquisitions as a strategic tool to optimize their particular economic goals. As described by Andrew Inkpen in his analysis of strategic alliances
The modern globalized world has triggered stark change in the actions of many of the actors in traditional society. One such actor that has embraced this change and recognized its benefits is in the area of international business. With globalization providing access to a myriad of new networks, markets, and technology at an unprecedented pace, international business firms have aligned themselves to capitalize on these new opportunities. While inter-firm alliances, mergers, and acquisitions are certainly not a new innovation in international business practice, the modern international business environment has seen a significant increase in the number of mergers, acquisitions, and joint ventures in response to globalization. The motivations for these inter-firm alliances have also changed in conjunction with this recent trend. Traditionally, businesses engaged in inter-firm alliances, mergers, or acquisitions to either increase their market power in a region or territory, or to reduce a firm’s transaction costs. However, in accordance with the globalization of international business activity, firms have had new motivations emerge as reasons for inter-firm alliances, mergers, or acquisitions. The extent that these new motivations arise in firm activity must be examined by studying the following questions: i) why have motivations changed; ii) what are the factors that have led to the formation of these motivations; and, iii) how do these motivations lead the firm to choose on which form of activity to partake. Each of these questions will be addressed in turn.
I. Why have the motivations for inter-firm alliances, mergers, and acquisitions changed? Corporate firms have long engaged in alliances, mergers, and acquisitions as a strategic tool to optimize their particular economic goals. As described by Andrew Inkpen in his analysis of strategic alliances
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