Do Market, Resource and Knowledge Distance Impact Inbound Cross-Border Acquisition?

With the increasing phenomena of cross-border acquisitions (CBA) activities of the emerging economies (EE), the evidence on the “distance” factors that make these economies attractive to home country firms is sparse. Given this background, we employ major locational advantage distance measures such as market distance, resource distance, and knowledge distance, and examine their impacts on the volume and number of inbound CBAs in India. We sourced inbound CBA deal data from the Thomson Reuters EIKON database for the 1990 – 2020 period while 47 home countries were on process of making acquisitions of their targets in India. We developed relevant hypotheses based on a literature review and ran the Tobit and Negative Binomial regression models on a final sample of 921 country-pair-year observations to test the hypotheses. The results show that the increasing market and knowledge distances enhanced the volume and number of India's inbound CBAs, fuelled by the country's growth potential and knowledge base. However, we have no evidence of any role played by resource distance