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Economic nationalism and foreign acquisition completion : the case of China.

Zhang, Jianhong and He, Xinming (2014) 'Economic nationalism and foreign acquisition completion : the case of China.', International business review., 23 (1). pp. 212-227.

Abstract

Extending institutional theory, we incorporate a neglected but important component of formal institution, economic nationalism, into a model that specifies its effects on cross-border acquisition success. We suggest that economic nationalism has a dynamic nature and sees the interaction between protectionism and liberalism. As such, it exerts both positive and negative effects on foreign investments, contingent on how these investments are perceived as aligned with the national interests as reflected by national security considerations, foreign relations, and growth strategy. Using a data set containing 7275 announced cross-border acquisition deals in China during 1985–2010, the study finds that (1) when an acquisition activity targets essential industries or state-owned enterprises, it is less likely to be completed because of provoked national economic security concerns; and (2) when an acquirer brings technology and/or capital, or/and helps to restructure poorly-performing firms, or/and the acquirer comes from a country with good foreign relations with China, the acquisition is considered as safe and helpful for the country's development, and it is more likely to be completed.

Item Type:Article
Keywords:China, Cross-border acquisition, Economic nationalism, Foreign direct investment policy, Institutional theory.
Full text:(AM) Accepted Manuscript
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Status:Peer-reviewed
Publisher Web site:http://dx.doi.org/10.1016/j.ibusrev.2013.04.002
Publisher statement:NOTICE: this is the author’s version of a work that was accepted for publication in International business review. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version will subsequently be published in International business review, 23(1), 2014, 10.1016/j.ibusrev.2013.04.002
Date accepted:No date available
Date deposited:11 September 2013
Date of first online publication:February 2014
Date first made open access:No date available

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