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Friends, foes, or “frenemies” : intercountry relations and cross‐border acquisitions
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Bilgili, Tsvetomira V., Bilgili, Hansin, Allen, David G., Loncarich, Holly, Kedia, Ben L. and Johnson, Jonathan L. (2023) Friends, foes, or “frenemies” : intercountry relations and cross‐border acquisitions. Global Strategy Journal, 13 (2). pp. 349-390. doi:10.1002/gsj.1460 ISSN 2042-5791.
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Official URL: http://dx.doi.org/10.1002/gsj.1460
Abstract
Research Summary:
We draw on the political institutions approach and relational embeddedness perspective to advance a relational theory of policy risk. We argue that policy risk negatively affects acquisition completion, but the strength of the effect is dependent on home-host country relations. Home-host country relations underpin host governments' motivation to commit to policies and influence foreign acquirers' perceptions of the credibility of such commitments. Using longitudinal event data on intercountry interactions, we measure the valence and strength of home-host country relations and examine the relationship between policy risk and cross-border acquisition (CBA) completion under cooperative, conflictive, and ambivalent relations. In a sample of 26,124 CBAs, we find that the relationship is negative and strong under conflictive relations, weaker under cooperative relations, and weakest under ambivalent relations.
Managerial Summary:
We examine whether acquirers can use intercountry relations to infer and predict host governments' credibility of commitment to policies and evaluate the risk of arbitrary or opportunistic policy changes. Results show that policy risk decreases the likelihood of CBA completion, but the effect depends on home-host country relations. The negative effect of policy risk is strongest under conflictive intercountry relations, weaker under cooperative relations, and weakest under ambivalent relations. Executives' evaluations of home-host country relations in high policy risk environments can help assess the risk associated with completing CBAs and develop appropriate strategies to address potential issues.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HG Finance J Political Science > JZ International relations |
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Divisions: | Faculty of Social Sciences > Warwick Business School > Entrepreneurship, Innovation & Management Faculty of Social Sciences > Warwick Business School |
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Library of Congress Subject Headings (LCSH): | Investments, Foreign -- Government policy, International relations | ||||||||
Journal or Publication Title: | Global Strategy Journal | ||||||||
Publisher: | John Wiley & Sons Ltd. | ||||||||
ISSN: | 2042-5791 | ||||||||
Official Date: | May 2023 | ||||||||
Dates: |
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Volume: | 13 | ||||||||
Number: | 2 | ||||||||
Page Range: | pp. 349-390 | ||||||||
DOI: | 10.1002/gsj.1460 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Reuse Statement (publisher, data, author rights): | This is the peer reviewed version of the following article: Bilgili, T. V., Bilgili, H., Allen, D. G., Loncarich, H., Kedia, B. L., & Johnson, J. L. (2022). Friends, foes, or “frenemies”: Intercountry relations and cross-border acquisitions. Global Strategy Journal, 1– 42., which has been published in final form at https://doi.org/10.1002/gsj.1460. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions. This article may not be enhanced, enriched or otherwise transformed into a derivative work, without express permission from Wiley or by statutory rights under applicable legislation. Copyright notices must not be removed, obscured or modified. The article must be linked to Wiley’s version of record on Wiley Online Library and any embedding, framing or otherwise making available the article or pages thereof by third parties from platforms, services and websites other than Wiley Online Library must be prohibited. | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 1 September 2022 |
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