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Friends or Foes? Bilateral Relationships and Ownership Choice in Cross-Border Acquisitions by Emerging Market Firms

Author

Listed:
  • H. Yoon
  • Jonathan Peillex

    (CRIISEA - Centre de Recherche sur les Institutions, l'Industrie et les Systèmes Économiques d'Amiens - UR UPJV 3908 - UPJV - Université de Picardie Jules Verne)

  • P.J. Buckley

Abstract

Emerging market firms (EMFs) are increasingly recognized as a heterogeneous group of business enterprises, providing a unique context for examining the predictive power of existing theories. Drawing on real options and internalization theories, this paper predicts the contrasting effect of bilateral relationships on EMFs' ownership choice in cross-border acquisitions. The conflicting conjectures are tested using data consisting of almost 1,000 cross-border acquisition deals. Our results show that weak economic, political and military relationships between acquiring and target countries induce EMFs to opt for full acquisitions. The findings support the view of internalization theory, highlighting that EMFs prefer full ownership over partial ownership by coping with the political risk derived from weak bilateral relationships. \textcopyright 2020 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management

Suggested Citation

  • H. Yoon & Jonathan Peillex & P.J. Buckley, 2021. "Friends or Foes? Bilateral Relationships and Ownership Choice in Cross-Border Acquisitions by Emerging Market Firms," Post-Print hal-03678300, HAL.
    • Handle: RePEc:hal:journl:hal-03678300
    DOI: 10.1111/1467-8551.12442
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    Cited by:

    1. Liou, Ru-Shiun & Faifman, Leon & Ellis, Kimberly, 2023. "Navigating political risk: Protectionism and ownership strategy in cross-border M&As," Journal of Business Research, Elsevier, vol. 162(C).
    2. Gnekpe, Christian & Jimenez, Alfredo, 2023. "Smoke signal: When firms' patent strategy and local patent protection system affect equity stakes in cross-border acquisitions," Journal of International Management, Elsevier, vol. 29(6).
    3. Buckley, Peter J & Cui, Lin & Chen, Liang & Li, Yi & Choi, Yoona, 2023. "Following their predecessors’ journey? A review of EMNE studies and avenues for interdisciplinary inquiry," Journal of World Business, Elsevier, vol. 58(2).
    4. Huang, Dongdong & Tsui-Auch, Lai Si & Dieleman, Marleen & Gomulya, David, 2024. "Politically connected EMNCs in a (de)globalising world: A review and future research directions," International Business Review, Elsevier, vol. 33(3).
    5. Bazel-Shoham, Ofra & Lee, Sang Mook & Ahammad, Mohammad Faisal & Tarba, Shlomo Y. & Alon, Ilan, 2023. "IP protection and ownership in cross-border acquisitions," International Business Review, Elsevier, vol. 32(3).
    6. Lai Si Tsui‐Auch & Dongdong Huang & Jun Jie Yang & Si Zheng Koh, 2022. "Double Trouble: Containing Public Disapproval Arising from an Interplay of Stigmatized Categories," Journal of Management Studies, Wiley Blackwell, vol. 59(8), pages 2101-2123, December.
    7. Han, Xia & Lukoianove, Tatiana & Zhao, Shasha & Liu, Xiaohui, 2024. "International relations in international business research: A review and research agenda," Journal of Business Research, Elsevier, vol. 174(C).
    8. Luiz, John M. & Barnard, Helena, 2022. "Home country (in)stability and the locational portfolio construction of emerging market multinational enterprises," Journal of Business Research, Elsevier, vol. 151(C), pages 17-32.

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