Simulation of Technology Sourcing Overseas Post-Merger Behaviors in a Global Game Model

The abilities to efficiently identify potential innovation profits and form an optimal post-merger strategy are key to evaluating overseas merger and acquisition (M&A) performances. The paper uses a global game with asymmetric payoff structure and multi-agent simulation methods to analyze the optimal overseas post-merger strategy. We model three stages of the M&A processes: merger decision stage, post-merger integration stage, and technology innovation after M&A, to analyze how different resource similarity and resource complementarity of the two companies influence the degree of optimal post-merger integration and target autonomy as well as technology innovation profit after M&A. The agent-based simulation shows that, in overseas M&As, resource similarity has a positive relation with integration and a negative relation with target autonomy; however, resource complementarity has the opposite effect. The negative interaction effect between resource similarity and complementarity will decrease the degrees of integration. In high-resource-similarity and low-resource-complementarity M&As, a high integration degree and low target autonomy will maximize innovation profit, while for high-resource-similarity and high-resource-complementarity M&As, a high integration degree and target autonomy is best for innovation profit. For low-resource-similarity and high-resource-complementarity M&As, a low integration degree and high target autonomy will be the best post-merger strategy. Model outputs are robust to variations of the parameters.