Purpose While cross-border mergers and acquisitions (M&A) as a key instrument for organizational renewal and expansion have gained in popularity in the construction industry over the past decades, empirical efforts to specify the characteristics of this type of strategic action have been sparse. This study aims to explore how the inter-regional M&A network in the construction industry exhibits specific macro-level structural characteristics and how the formation of the network is underpinned by micro-level actor-covariate effects related to the industry characteristics of both acquirer and target regions. Design/methodology/approach Data were collected from worldwide construction-related cross-border M&A data during 2005–2023. These data were analyzed using the exponential random graph model method, a statistical framework for modeling network structures by flexibly estimating the probability of tie formation based on structural patterns and nodal attributes. Findings The results illustrate that the network exhibits distinct scale-free and community-based structures around a small number of “star” countries in Europe and North America. Network dynamics modeling results further illustrate that regions with larger market sizes, lower market potential, higher levels of technical assets and better business environments are more likely to initiate cross-border M&A transactions, whereas regions with larger market sizes, lower levels of technical assets and better business environments are more likely to be targeted for M&A. However, regional market potential does not significantly affect the likelihood of a region becoming a target for cross-border M&A. The formation of cross-border M&A transactions is also illustrated to be significantly influenced by cultural, political, geographic and economic distance between acquirer and target regions. The findings provide clear evidence that compared to the strategic motives of seeking long-term market access and technical assets, short-term market- and efficiency-seeking motivations play more significant roles in driving cross-border M&A in the construction industry. Originality/value As an exploratory effort of using network dynamics models to characterize the structural characteristics and formation mechanisms of cross-border M&A relationships in the construction domain, this study contributes to a deepened understanding of how construction companies in regions with heterogenous contextual characteristics concretely interact with each other for strategic renewal and expansion as a complex adaptive system.
Wu et al. (Tue,) studied this question.