Understanding the Paradigm Shift in Strategy of M&As in India in a Volatile Period Through Motive Analysis: Evidences from the IT Industry

Abstract

The reform period in India led to corporate restructuring, including mergers and acquisitions (M&As). Specifically, the reform process helped the Indian information technology (IT) sector to gain a competitive edge. With the gain in competitive edge, IT companies experienced the foreign-led rapid organic and inorganic growth. However, the subprime crisis of 2008–2009 not only caused a decline in inorganic investment but also caused a shift in preference from the international sector to the domestic sector. This study provides evidence of the paradigm shift in merger and acquisitions (M&A) strategies of Indian IT companies through motive analysis (2000–2015). In that context, this article explores the trend and pattern of motives for both domestic and cross-border M&As (CBMAs) by Indian IT firms and specifically seeks to investigate the main motives of CBMAs. The empirical evidence suggests a marked difference and dynamism in the pattern of motives for domestic and CBMAs across different sub-time periods. Furthermore, it indicates that the market and efficiency-seeking motives seem to be the dominant drivers of IT sector firms for emerging countries like India, whereas the role of efficiency-seeking motive became more prominent after the period of subprime crisis.