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Abstract Mergers and acquisitions have become the main strategy of enterprise expansion with the advent of 21st century, whether to the developed economies or to the emerging economies. Therefore in-depth study about M&A activities becomes particularly indispensable, and two of the most critical and urgent questions to the point are: (1) Did the M&A behavior play a positive or negative role in these M&A firms? (2) What important factors are influencing the firms' M&A performance? Based on these two key questions, this paper collects 424 merger & acquisition events as research samples from 366 Chinese firms which are listed in A-share market of Shanghai and Shenzhen Stock Exchange, to study the change of firm performance due to M&A, and the key factors influencing M&A performance from the integrated perspective of resource-based View (RBV) and institution-based View (IBV) in strategic management theory. Empirical results show that: (1) The firm performance of post-M&A is significantly lower than the level of pre-M&A, indicating that M&A activities damage the value of Chinese firms generally. And it also serves as a warning to those firms' M&A behavior: Though M&A is a feasible method to expand the enterprise rapidly, it is accompanied with a high risk simultaneously. (2) The results of multivariate regression turn out that both factors from RBV and IBV have significant impacts on firms' M&A performance. Specifically, the internal resources endowment of firms, the resource-utilizingability, the involvement degree of government in a firm and the degree of regional marketization are all positively significant to firms' M&A performance. The better internal resources endowment of firms and resource-using ability, the higher government involvement degree and regional marketization degree, will all result in significant positive impact on M&A performance of Chinese firms, which illustrates that RBV and IBV are suited to explain Chinese Firms' growth strategy of M&A. (3) Further analysis on the institutional factors indicates that the government involvement not only has a direct impact on Chinese firms' M&A performance, but also moderates the relationship between resource factors and M&A performance. Besides the positive role as ″supporting hands″ in the main effect, it shows the negative role as ″robbing hands″ in moderating effects. According to the multiple relationships in main effect and moderating effects, we can draw the following conclusion: if a firm occupies good internal resource endowments, it should reduce the degree of government involvement, so that to get good performance; if a company has a bad internal resources endowment and weak resource-utilizing ability at the same time, government involvement is more likely to play a positive role. The main contributions and innovations of this study are as follows: (1) Different from most of previous studies which only focused on unilateral internal factors influencing the M&A performance, this paper takes into account various factors influencing the M&A performance, such as the external macro institutional environment which should not be ignored, and thus sets up four independent variables based on the integrated perspective of RBV and IBV, to explore the influence on M&A performance generated from the firms' internal resources endowment, the resource-utilizing ability, the degree of regional marketization and the involvement degree of government. This is not only different from previous research focused on the internal factors unilaterally, but also takes important institutional factors that Chinese enterprises are facing such as government involvement and the degree of regional marketization into study, to fill the related research gap. (2) The dual-theory perspective not only helps to account for the multiple influence factors of Firms' M&A performance, but also connects RBV with IBV of enterprise strategy in theory, making beneficial theoretical exploration and attempt on the view ″to solve problems of firms' growth strategy based on integrated theoretical perspective.″ (3) This research, combined with institutional factors of firms' M&A performance, practically proves that the government involvement played a positive or negative role in current firms' M&A activities, and points out that government involvement presents two different functions of ″support″ or ″rob″ on Chinese enterprises' M&A in different situations.
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