The importance of investment motives and financial strategies in merger and acquisition (M&A) processes in transition countries with reference to the regulatory framework – A multidisciplinary analysis

© 2025 by the authors. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license .

Mergers and acquisitions (M&A) are strategic business processes in which two or more companies merge or one company buys another. M&As are established with the aim of achieving certain business synergies, economies of scale, business diversification, market share growth, or other strategic and financial goals. Both processes, i.e. merger, which implies the merger of two or more companies, and acquisition, which implies the absolute purchase of one company, aim to increase competitiveness, business diversification, synergistic effects and company growth. Therefore, M&A are transactions in which companies merge or buy one another in order to achieve strategic and financial goals (e.g. Nestorović, 2015;

2.    Literature review

On the one hand, the defining feature of M&A in the context of global capital flows in the literature is that M&A is a strategic tool for companies, as it allows them to capitalize on global capital flows and diversify their operations (Mauboussin, 2010; Hossain, 2021). Cross-border M&As, in particular, allow companies to access new sources of capital, technology and talent, which can improve their overall competitiveness (Hitt & Pisano, 2004; Li, Li & Wang, 2016; Zheng, Wei, Zhang & Yang 2016; Christofi, Vrontis, Thrassou & Shams 2019) and profitability (Hitt & Pisano, 2004; Li, Li & Wang, 2016). On the other hand, the success of M&A in the context of global capital flows is not guaranteed, as there are challenges that companies face. The most relevant challenges in this sense are cultural differences, regulatory obstacles and integration challenges (Moschieri, Ragozzino & Campa, 2014; Vanwalleghem, Yildirim & Mukanya, 2020;

Regarding M&A in transition economies, i.e. in those countries undergoing economic and political transitions, M&A are often particularly complex and challenging. The reason for this is that the mentioned transitions include privatization, deregulation, development of legal and regulatory frameworks, development of institutional framework, development of innovative technologies and the like (e.g. Uhlenbruck & Castro, 2000). However, the success of M&A in the context of these countries often depends on determinants such as the quality of institutions, the level of political and economic stability, and the ability of companies to manage a complex regulatory and cultural environment. These determinants together represent challenges for foreign investors (Moschieri, Ragozzino & Campa, 2014;

Regarding investment decisions in the context of M&A, they are critical, as they can have significant implications for the success or failure of the transaction. The increasing complexity of the global business environment and the growing importance of factors such as sustainability, technological changes and geopolitical risk indicate that it is necessary to pay considerable attention during the process and in making decisions about M&A (e.g. Denčić-Mihajlov, 2020;

• Institutional and regulatory obstacles belong to the group of dominant impediments to M&A development in transition economies, compared to other barriers. For example, many transition economies have adopted or revised competition laws to prevent increased industry concentration and market power but the effective enforcement of these laws remains a challenge. Regrading privatization regulation, privatization acquisitions differ from conventional acquisitions due to constraints imposed by the privatization context, the depth of subsequent restructuring, and the sensitivity required toward the local context and societal changes (Lebedev, Peng, Xie & Stevens, 2015). Besides competition and privatization regulation, there are many others related to M&A such as intitutional distance, FDI restrictions in many

3.    Research methodology

countries, EU and international regulations that interfere with national laws etc., that represent the challenge for FDI expansion.

The stages of research that are characteristic of the SLR method are as follows (Dezi, Battisti, Ferraris & Papa, 2018): Phase 1: Defining keywords to search the database; Phase 2: Search for articles (papers) in the database; Phase 3: Reading and selection of titles and abstracts; Phase 4: Reading and selection of articles (papers); Phase 5: Analysis of articles (papers) for research purposes.

4.    Research results

Table 1. SLR and a multidisciplinary approach

Author(s)	Year	Journal	Discipline
Hitt & Pisano	2004	Mergers and acquisitions: Creating integrative knowledge	Management
Glaister & Ahammad	2010	Mergers and acquisitions in practice	Management
Estrin & Uvalić	2014	Economics of Transition	International economy
Francis et al.	2014	Journal of Corporate Finance	Corporative finance
Nestorović	2015	Ekonomske teme [ Economic Themes ]	Macroeconomy
Li, Li & Wang	2016	International Business Review	International business
Zheng	2016	International Business Review	International business
Buckley et al.	2016	Journal of World Business	International business
Caccia & Baleix	2018	Revista de economía mundial	International economy
Riepina et al.	2018	Financial and credit activity problems of theory and practice	Finance
Christofi et al.	2019	Technological Forecasting and Social Change	Technology and Sociology
Dikova, Panibratov & Veselova	2019	International Business Review	International business
Denčić-Mihajlov	2020	Ekonomika poljoprivrede [ Economics of agriculture ]	Agriculture
Perić	2020	Management: Journal of Sustainable Business and Management Solutions in Emerging Economies	Management
Vertakova, Vselenskaya & Plotnikov	2021	Journal of Risk and Financial Management	Finance
Zámborský et al.	2021	Journal of Risk and Financial Management	Finance
Niemczyk et al.	2022	Energies	Technology and energetics
Perić	2023	Repository Singidunum University	Business economy
Hajiyev et al.	2024	International Journal of Sustainable Development & Planning	Sustainable economy
Xiao, Peng & He	2024	International Review of Financial Analysis	Finance

Source: Authors’ elaboration

Table 2. Hypothesis confirmation of SLR results

Author (Year)	Hypothesis confirmation	Author (Year)	Hypothesis confirmation	Author (Year)	Hypothesis confirmation
Hitt and Pisano (2004)	H2; H4.	Glaister and Ahammad (2010)	H1	Francis et al. (2014)	H1 – especially the first determinant
Nestorović (2015)	H4 partially	Li, Li & Wang (2016)	H4; H2.	Zheng et al. (2016)	H1
Buckley et al. (2016)	H1; H3.	Caccia & Baleix (2018)	H2; H4.	Riepina et al. (2018)	H3; H4.
Dikova, Panibratov & Veselova (2019)	H1 partially ; H2.	Duan et al. (2019)	H3 ; H4 .	Denčić-Mihajlov (2020)	H1
Vertakova, Vselenskaya & Plotnikov (2021)	H4	Zámborský et al. (2021)	H1; H2 .	Niemczyk et al. (2022)	H1 partially
Perić (2023)	H1; H2; H3.	Hajiyev et al. (2024)	H3 ; H4 .	Xiao, Peng & He (2024)	H1

Source: Authors’ elaboration

investigated over Russian MNE and their M&A (two data sets – 322 countrylevel observations, and 318 individual M&A transactions, both for 2007–2013 period). Dependent variable used were outcomes of M&A (total number of M&A at the country level) and ownership structure in individual acquisitions (fully or partially owned), while independent variables were investment motives according to the OLI paradigm. Russian MNE best utilize M&A when combining location advantages (e.g., wealth of natural resources in the target country) with internalization (full ownership of the acquired firm). Common motives for M&A (e.g., resource, market) were found, but they are strongly conditioned by the institutional framework, confirming H1 partially and H2. Russia and Azerbaijan (examples of cross-border M&A in a competitive financial market; e.g., acquisitions in the banking sector) were used as a sample in Hajiyev et al. (2024) research. The results of their literature review suggest that there are four key strategies that companies apply in the M&A process to become market leaders were identified: (1) organizational, (2) innovative, (3) investment, and (4) financial. It was also found that investment motives are closely linked to the choice of M&A strategy;

In their event study, Li, Li and Wang (2016) analysed 367 M&A of Chinese companies (2000–2011), determining change in company value after acquisition announcement (stock price reaction and later financial results) as dependent, and Hofstede’s Cultural Dimensions, and Greater China plus Singapore Dummy (GCS), and characteristics of Chinese companies and their acquisitions (e.g., firm size, prior experience, sector) as independent variables. Their results confirm H4 and H2 mostly by showing that Chinese firms on average see an increase in stock value after international acquisition announcements, especially when acquiring firms with valuable resources (technology, brands) in developed countries. Greater international experience and lower cultural/institutional distance contribute to successful integration and value creation. M&A can thus create value (measured by financial indicators), but the outcome correlates with strategic and institutional factors. Another study regarding China was conducted by Xiao, Peng and He (2024) in which the authors used private listed companies in China (with CEOs from rural backgrounds), for 2007–2018 period. In the correlation and regression analysis, dependent variables were reflected in main motives for M&A in the company, while independent ones were “rural experience” of top managers (CEOs raised in rural areas;

5.    Discussion

6.    Conclusion

The limitations of this research are reflected in the sample of only 20 papers and it is limited only to transition economies in a general sense. Therefore, the academic community is encouraged to further research and question the generalizability of the results of this research, not only because of the sample but also because transition countries, although similar, may be different in terms of their economic, social and institutional differences.

Conflict of Interest

The authors declare no conflict of interest.

Author Contributions

Conceptualization, J.G.; methodology, J.V.T. and B.L.; formal analysis, B.L.; funding acquisition, B.L.; investigation, B.L.; project administration, J.G.; resources, J.G.; supervision; J.V.T., J.G., and B.L.; validation, J.V.T.; visualization, J.G.; writing - original draft preparation, B.L.; writing - review and editing, B.L., J.V.T. and J.G. All authors have read and agreed to the published version of the manuscript.

Laličić Branka

Univerzitet Privredna akademija u Novom Sadu, Fakultet za ekonomiju i inženjerski menadžment u Novom Sadu, Novi Sad, Srbija; Visoka poslovna škola strukovnih studija, Novi Sad, Srbija

Vapa Tankosić Jelena

Univerzitet Privredna akademija u Novom Sadu, Fakultet za ekonomiju i inženjerski menadžment u Novom Sadu, Novi Sad, Srbija

Gardašević Jovana

Univerzitet Privredna akademija u Novom Sadu, Fakultet za ekonomiju i inženjerski menadžment u Novom Sadu, Novi Sad, Srbija

ZNAČAJ INVESTICIONIH MOTIVA I

FINANSIJSKIH STRATEGIJA U PROCESIMA

SPAJANJA I KUPOVINE U ZEMLJAMA U

TRANZICIJI SA OSVRTOM NA REGULATORNI

OKVIR – MULTIDISCIPLINARNA ANALIZA

Ključne reči : spajanja i kupovine (M&A), zemlje u tranziciji, investicioni M&A motivi, finansijske strategije, regulatorni faktor, institucionalni faktor, upravljanje rizicima.