Political animosity in cross-border acquisitions: EMNCs’ market and nonmarket strategy in a developed market

Ru Shiun Liou, Lee Warren Brown, Dinesh Hasija

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


Purpose: Many multinational corporations that originate from emerging economies (emerging market multinational corporations (EMNCs)) opt for acquiring a target firm in a developed market to expediently upgrade their strategic capabilities. To successfully achieve their strategic goals in the developed markets, EMNCs may use market actions and nonmarket actions to mitigate the potential risk derived from the national political differences between their home emerging economy and host developed economy. This paper aims to extend the legitimacy-based view of political risk to study the influence of political animosity – defined as misalignment of the host-home countries’ national interests – on the EMNCs’ market and nonmarket strategy in a developed market. Design/methodology/approach: In this paper, we examine all EMNCs that made cross-border acquisitions of the USA targets from 2005 to 2011. The final sample consists of 252 acquisitions originating from 25 emerging markets. This paper used Tobit regression analysis to test the direct and moderating hypotheses. Findings: Facing a high level of political animosity between their home country and the host developed economy, EMNCs use a market strategy by acquiring less ownership stake in the developed market, as well as engage in a nonmarket strategy by increasing lobbying activities. In addition, because of the heightened legitimacy concerns of developed market shareholders, cross-listed EMNCs have a greater tendency than non-cross-listed EMNCs to improve their legitimacy through their market and nonmarket strategy. Originality/value: The current paper sheds light on EMNCs’ international strategy in developed markets by examining both market and nonmarket actions. EMNCs are shown to be strongly motivated to engage in acquisitions in developed markets so they can acquire invaluable strategic resources, such as brands and distribution channels, to compete with the developed market multinationals. A sophisticated ownership strategy and corporate political activities are invaluable for EMNCs to catch up with developed market multinationals.

Original languageEnglish (US)
Pages (from-to)451-475
Number of pages25
JournalMultinational Business Review
Issue number4
StatePublished - Nov 9 2021


  • Corporate political activity
  • Cross-border acquisitions
  • Cross-listing
  • Emerging market multinational corporations (EMNCs)
  • Market strategy
  • Nonmarket strategy

ASJC Scopus subject areas

  • Business and International Management
  • Business, Management and Accounting(all)


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