Interplays of Political Ties and Social Evaluation of Emerging Market Multinational Corporations

Abstract

In this paper, we address the question of how interplays of home country political ties and target nation political ties might shape social evaluation of EMMNCs with different ownership structures. We conduct a comparative case study of four overseas acquisitions made by two EMMNCs (one SOE and one POE) from China during 2014–2017 in a strategic (port) industry. The port investments include China Merchant Group’s (CMG) Hambantota Port, Sri Lanka, and Port of Newcastle, Australia) and Landbridge Group (LBG)’s Port of Darwin, Australia, and Colon Container Port, Panama). The research result shows a relationship between interplays of political ties across home and target nations and levels of public disapproval faced by EMMNCs. This study makes three contributions. First, it extends the political embeddedness perspective by developing propositions about the relationships of political ties’ interplays and public disapproval levels. In particular, the case data reveals that target nation ties play a stronger role than home country ties in influencing public disapproval of EMMNCs. Second, it enriches the perspective by providing an argument for the sociopolitical liabilities (i.e., generating concerns across domestic and international levels) of political ties, depending on the strength of such ties to the home country and to a target nation. Third, it adds to literature on nonmarket strategy by highlighting the sociopolitical liabilities of CPA conducted by leveraging partnerships with governments or intergovernmental relationships. We outline future research directions and implications for EMMNC managers.