The Influence of Protectionism on Cross-Border Acquisitions: The Importance of Legitimacy

Abstract

This study investigates the impact of host country protectionism on the completion likelihood of an announced cross-border acquisition. Adopting a legitimacy perspective, I identify and test boundary conditions at the firm and national levels to study the relationship between protectionism and cross-border acquisition completion. I hypothesize that in host countries with a high level of protectionism, as reflected by the level of non-tariff barriers, cross-border acquisitions are less likely to be completed. I also propose that the relationships between protectionism and acquisition outcomes are influenced by critical host and home country's political conditions such as political constraint, political affinity and government ownership.