Emerging market multinational corporations' cross‐border mergers and acquisitions and political distance: Does corporate political activity matter?

Abstract

Due to rising anti‐globalization sentiment, emerging market multinational corporations (EMNCs) face additional challenges in conducting cross‐border mergers and acquisitions, particularly in the developed markets. Built on institutional theory, we specifically examine how political distance, representing host–home country differences in various attributes in the political environment, influences the speed of approval for EMNC acquisition in the United States. The findings suggest that a larger political distance between the United States and EMNCs home country reflects challenges for EMNCs to gain legitimacy in the United States, resulting in the longer time required for acquisition approval. The EMNCs' corporate political activity moderated this relationship in that more corporate political activity improves the legitimacy perception of EMNCs among political actors, decreasing the time required for acquisition approval.