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Escaping political instability and corruption: Emerging market multinational enterprises' controlling ownership in cross-border acquisitions

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  • Faifman, Leon
  • Liou, Ru-Shiun
  • Ellis, Kimberly

Abstract

Utilizing a sample of 1103 cross-border acquisitions by 792 EMNEs from 27 emerging economies, this study examines how home-country institutional constraints influence ownership strategy in international expansion. We find that political instability and corruption exert opposing effects on EMNEs' pursuit of controlling ownership — while political instability deters control, corruption motivates it. Drawing on the institutional escapism perspective, we show that EMNEs proactively adjust ownership structures to navigate institutional adversity. Moreover, firm-level political ties (e.g., government ownership) moderate these effects, especially under political instability, constraining firms' ability to escape. We further explore how military ties between home and host countries shape ownership decisions amid rising geopolitical tensions. By examining how home-country institutional constraints interact with firm-level political ties and cross-national military relationships, this study contributes to a more nuanced understanding of EMNE ownership strategy through the lens of institutional theory and international business strategy in politically complex environments.

Suggested Citation

  • Faifman, Leon & Liou, Ru-Shiun & Ellis, Kimberly, 2025. "Escaping political instability and corruption: Emerging market multinational enterprises' controlling ownership in cross-border acquisitions," Journal of International Management, Elsevier, vol. 31(6).
    • Handle: RePEc:eee:intman:v:31:y:2025:i:6:s1075425325000833
    DOI: 10.1016/j.intman.2025.101305
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