Institutional distance and ownership in foreign acquisitions

2022 ◽  
Vol 28 (2) ◽  
pp. 100917
Author(s):  
Ajai Gaur ◽  
Shavin Malhotra ◽  
PengCheng Zhu
Keyword(s):  
Institutional Distance ◽  
Foreign Acquisitions

Strong alien or weak acquaintance? The effect of perceived institutional distance and cross-national uncertainty on ownership level in foreign acquisitions

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fatemeh Askarzadeh ◽  
Hamed Yousefi ◽  
Mahdi Forghani Bajestani
Keyword(s):  
Multinational Enterprises ◽  
Mode Selection ◽  
Ordinary Least Squares ◽  
Institutional Distance ◽  
Least Squares Regression ◽  
Content Type ◽  
Foreign Acquisitions ◽  
Foreign Acquisition ◽  
Negative Effect

Purpose Focusing on the direction of foreign acquisition, this study aims to differentiate the effect of institutional distance on the level of ownership. The authors identify several theoretical and methodological issues that might account for the inconsistencies in the literature and provide remedies accordingly. Specifically, the authors propose perceived institutional distance as a conceptualization of distance that controls for asymmetric uncertainty. Design/methodology/approach The authors test the framework with ordinary least squares regression for a sample of 14,192 firm-entries in 115 target countries over 2007–2017. Findings The authors find that institutional distance shows a negative effect on equity ownership in all-inclusive global samples, while there are two imbalanced opposite effects if direction is considered. This casts doubt on the validity of studies that ignore direction. The authors suggest that multinational enterprises entering countries with lower-quality institutions tend to perceive more pronounced distance effects than those expanding the other way around. Hence, the authors argue that “perceived institutional distance” better explains the functional role of distance than simple distance. Practical implications This study better delineates the link between distance and uncertainty and enhances managerial insights for entry mode selection. For policy-making purposes, the authors also show that improvement in institutional quality has a different effect on foreign resource commitment in developed and developing countries. Originality/value To the best of authors’ knowledge, this is the first study that considers both directionality and imbalance in institutional distance and proposes a measure to control for non-linear asymmetric relationship between distance and ownership. The authors extend the institutional theory and show the superiority of perceived institutional distance in predicting ownership implications.

EMNCs ownership in foreign acquisitions: The impact of institutional distance and government support

2015 ◽  
Vol 2015 (1) ◽  
pp. 18129
Author(s):  
Claudia Frias Pinto ◽  
Christian Falaster ◽  
Renata Canela ◽  
Maria Tereza Leme Fleury
Keyword(s):  
Institutional Distance ◽  
Government Support ◽  
Foreign Acquisitions ◽  
The Impact

Institutional Distance as a Source of Arbitrage: Ownership Decisions in Foreign Acquisitions

2015 ◽  
Vol 2015 (1) ◽  
pp. 12449 ◽  
Author(s):  
Ajai S Gaur ◽  
Shavin Malhotra ◽  
Pengcheng Zhu
Keyword(s):  
Institutional Distance ◽  
Foreign Acquisitions

Stock market synchronization and institutional distance

2021 ◽  
pp. 101934
Author(s):  
Nian-zhi Guo ◽  
Anthony H. Tu
Keyword(s):  
Stock Market ◽  
Institutional Distance

Location capabilities, institutional distance, and start‐up survival

2021 ◽  
Author(s):  
Carla V. Bustamante ◽  
Sharon F. Matusik ◽  
Jose Miguel Benavente
Keyword(s):  
Institutional Distance ◽  
Start Up

Sustainability and the False Sense of Legitimacy: How Institutional Distance Augments Risk in Global Supply Chains

2016 ◽  
Vol 37 (4) ◽  
pp. 312-328 ◽  
Author(s):  
Christian Busse ◽  
Andrew P. Kach ◽  
Christoph Bode
Keyword(s):  
Supply Chains ◽  
Institutional Distance ◽  
Global Supply Chains ◽  
False Sense
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