Acquisition Ownership Research Articles

Public sentiment is everything: Host-country public sentiment toward home country and acquisition ownership during institutional transition

Under strict scrutiny of public governance primed by international relation tensions, geopolitics, and the rise of social movements and public activism in the globalized economy, public sentiment is exerting increasing pressure on multinational corporations (MNCs). Utilizing the context of inward acquisition, a sensitive cross-border action that often triggers sentiment of host-country nationals, we theorize from the public sentiment perspective and the public thermostat analogy that foreign acquirers will adjust their ownership levels in target firms according to how they perceive to be acceptable and legitimate as expressed by host-country nationals’ public sentiment toward their home country. Using a sample of 410 acquisition deals from 22 foreign countries/economies into China during 2010–2017 and a sentiment analysis of 100,902 blog posts, we find that a host country’s public sentiment toward the acquiring firm’s home country is positively related to acquisition ownership levels, and has a mutualistic symbiotic interaction with the host region’s marketization level. Our study contributes to the study of informal institutions by proposing public sentiment as a new form of informal institution that is normative-cognitive whilst affective, and can be mobilized and communicated broadly and timely via a public sphere to confer social, political, and cognitive legitimacy to MNCs.

A fuzzy-set qualitative comparative analysis of ownership strategy and acquisition performance in cross-border acquisitions

Based on a survey database of cross-border acquisitions by Chinese private firms, this study uses a fuzzy-set qualitative comparative analysis (fsQCA) to explore the holistic impact of acquisition ownership, organizational factors and environmental factors on acquisition performance in cross-border acquisitions. It is found that the cross-border acquisitions taken by Chinese private enterprises have four kinds of acquisition ownership strategies leading to high acquisition performance under different internal and external conditions. This study points out that ownership strategy is a key decision affecting cross-border acquisition performance and provides a variety of paths leading to the same outcome rather than just finding the linear relationship between corporate activity and performance. This study supports the assumption of equivalence, and reveals a variety of scenarios in which cross-border acquisition ownership contributes to the outcome of high cross-border acquisition performance, and further confirms the view of causal asymmetry between condition and outcome. This study reveals whether the proportion of cross-border acquisition ownership affects cross-border acquisition performance and under what circumstances is conducive to the realization of expected cross-border acquisition performance.

Psychic distance and ownership in acquisitions: Direction matters

Recent research has begun to explore the impact of country-of-origin and direction on internationalization decisions in response to controversy over the use of symmetrical and absolute values of distance. In this paper we contribute to this stream of research by studying the moderating influence of direction on the distance–ownership relationship as it relates to cross-border acquisitions. We ground our arguments in transaction cost economics and supplement this lens using institutional theory to contextualize the home-host country relationship through moderating effects. Through our study of 25,440 full and partial acquisitions (9577 MNEs, 25 countries, 15 years), we demonstrate that the distance–ownership relationship is moderated by direction. We further find that acquisition ownership decisions made by emerging country MNEs differ significantly from those made by developed country MNEs. Our findings demonstrate that future research on the impact of distance should consider the differences between MNEs from emerging versus developed economies, in addition to host country characteristics.

Twice as Smart? The Importance of Managers’ Formative‐Years’ International Experience for their International Orientation and Foreign Acquisition Decisions

This study examined how top management team's (TMT) international orientation influences perceptions of environmental uncertainty and how these perceptions impact international strategic decisions, in particular regarding ownership stakes taken in foreign acquisitions. We highlighted the need for the concept of TMT international orientation to encompass executives’ formative‐years’ international experiences along with their international career experiences and nationalities. Empirical tests based on a sample of 2122 international acquisitions completed by 561 UK firms over the period 1999–2008 showed that TMT international orientation positively moderated the negative impact of cultural differences and host country risk on acquisition ownership stakes. The results underscored the importance of considering decision‐makers’ attributes due to their experiences at a young age, beyond their demographic characteristics or professional experience, in the context of international strategic choices. We also discussed some implications of one of the possible consequences of executives’ formative international experience, namely biculturalism, for international business.