Defying Distance? Cross-Border Acquisitions by Emerging-Economy Firms

Abstract

We argue that emerging-economy firms’ international location choices are driven by the pursuit of dynamic efficiency rather than the immediate minimization of transaction and learning costs, and hence the relationship between country distance and the number of cross-border acquisitions will be less negative for these firms relative to advanced-economy firms. We then test the hypothesis with respect to four measures of country distance—geographic, economic, cultural, and institutional—and find support for the hypothesis. Our study provides empirical support for claims in the literature about differences in the international expansion behavior of emerging-economy firms with respect to location. In addition, our study makes a theoretical contribution by showing that the theoretical perspective of dynamic efficiency can explain the difference in the location choices for cross-border acquisitions by emerging-economy firms relative to those by advanced-economy firms. © 2016 Wiley Periodicals, Inc..