Economic nationalism, network-based coordination, and the market for corporate control: Motives for political resistance to foreign takeovers

Why does political resistance to foreign takeovers vary across countries and over time? Rational choice accounts of economic nationalism fail to provide an answer. The present article proposes an institutionalist amendment in the 'Varieties of Capitalism' tradition. While politicians everywhere face incentives to favor local stakeholders over anonymous shareholders, stakeholder opposition to foreign takeovers depends on how much of a threat foreign owners pose to network-based coordination. Networks are worth fighting for only where they are actually in use. In so-called outsider systems of corporate governance, including the UK, coordination takes place mainly through market-based mechanisms, and even domestic owners do not rely on networks. Political mobilization is weaker under these conditions. A comparison of Britain and France from the 1970s onward illustrates the argument.