How do firm political connections impact foreign acquisitions? The effects of decision makers' political and firm embeddedness
Journal
Global Strategy Journal
Type
journal article
Date Issued
2018-02-22
Author(s)
Abstract
We examine how firm political connections established through the political embeddedness of senior decision makers affect firms' foreign acquisition strategies. We argue that such political embeddedness affects the mental models of decision makers and, in turn, influences their preferences for particular strategies. We propose that political embeddedness leads to the formation of mental models that favor foreign acquisition strategies. We further argue that the firm embeddedness of politically embedded decision makers alters their mental models, thereby mitigating their inclination for such strategies. We find evidence consistent with our mental models explanation using a sample of foreign acquisitions made by French publicly traded firms during the 2009–2014 period. Overall, this study contributes to a better understanding of the mechanisms through which political connections impact global strategy.
Keywords
foreign acquisitions
French firms
mental models
nonmarket strategies
political connections
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Wiley
Volume
8
Number
3
Start page
421
End page
446
Subject(s)
Division(s)