Mergers and Acquisitions and Foreign Direct Investment in Taiwan: A Literature Review of Strategic Drivers, Institutional Constraints, and Geopolitical Realignment
DOI:
https://doi.org/10.61656/sbamr.v7i4.521Keywords:
Mergers and Acquisitions (M&A), Foreign Direct Investment (FDI), Taiwan, Financial Holding Company, New Southbound Policy, GeopoliticsAbstract
Purpose: This study examines how mergers and acquisitions (M&A) and foreign direct investment (FDI) have shaped corporate strategy and economic development in Taiwan. It focuses on three questions: what drives M&A and FDI decisions of Taiwanese firms, how these strategies affect firm efficiency, productivity, and risk, and how regulation and cross-strait geopolitics condition their outcomes.
Method: The study applies a qualitative literature review. Twenty peer-reviewed articles and working papers published between 1999 and 2025 were selected from Crossref, OpenAlex, and RePEc/IDEAS, then analyzed descriptively and thematically.
Findings: M&A in Taiwan has been dominated by financial-sector consolidation under the Financial Holding Company Act and the financial restructuring scheme of the early 2000s. Its efficiency gains are modest, slow to appear, and strongly conditioned by corporate governance, managerial ownership, and the cultural fit of merging banks. FDI has served Taiwan both as a channel of technology spillover and as an outward strategy of Taiwanese manufacturers. Its domestic effects depend on the type of investment (horizontal, vertical, expansive, or defensive), its destination, and governance quality. Since 2016, the New Southbound Policy, the US–China trade war, and semiconductor geopolitics have redirected investment away from mainland China and toward Southeast Asia and technologically advanced countries, while inbound Chinese investment remains tightly screened.
Implication: The results help policymakers design investment and merger regulations that balance openness with economic security, and help managers plan post-merger integration and overseas expansion under geopolitical uncertainty.
Originality: This study integrates two research streams that are usually discussed separately in Taiwan, financial-sector M&A and manufacturing FDI, and reads them through synergy, agency, and eclectic-paradigm lenses together with the geopolitical dimension of cross-strait relations.
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