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

Hyungseok Yoon*, Jonathan Peillex, Peter J. Buckley

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

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.

Original languageEnglish
Pages (from-to)852-871
Number of pages20
JournalBritish Journal of Management
Volume32
Issue number3
Early online date18 Nov 2020
DOIs
Publication statusPublished - 4 Jul 2021

Bibliographical note

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© 2020 The Authors. British Journal of Management published by John Wiley & Sons Ltd on behalf of British Academy of Management

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