Bounded Rationality: Effect on International M&A Performance of MNEs

Abstract

From a transaction cost economics perspective, this study builds a model to explain how the bounded rationality suggested by transaction cost economics affects the cross-cultural management capability, which in turn influences multinational enterprises’ (MNEs) performance of international Mergers and Acquisitions (M&A). We explain the moderating effects of cultural distance, cultural intelligence and global mindset in the relationship between bounded rationality and MNEs’ performance, and argue that cultural distance has a negative impacts on MNEs’ post M&A performance and cultural intelligence and global mindset are positively associated with the cognitive capability of managers to deal with crosscultural issues.