Effects of institutional (in)congruence between home and host countries on the ownership level of cross-border M&As

Yafei Hu and Yuanxu Li

International Business Review, 2025, vol. 34, issue 6

Abstract: Institutional (in)congruence between home and host countries plays an important role in cross-border mergers and acquisitions (M&As). Drawing upon prior research on the diversity strand from an institutional economics perspective, we explore the (in)congruence effects of both formal and informal institutions between home and host countries on the ownership level of cross-border M&As. Using a sample of 19352 deals in Belt and Road Initiative (BRI) countries in 2008–2020, we find empirical support for congruence and incongruence effects for both formal and informal institutions. Our research contributes to the institutional economics literature by introducing a typology of formal institutional congruence, formal institutional incongruence, informal institutional congruence, and informal institutional incongruence. It also contributes to the international business literature by highlighting the critical roles that both formal and informal institutional congruence between home and host countries play in determining the ownership percentage of cross-border M&As.

Keywords: Formal institutional congruence; Formal institutional incongruence; Informal institutional congruence; Informal institutional incongruence; Percentage of ownership; Cross-border mergers and acquisitions (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.ibusrev.2025.102502

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