Intellectual Property Rights Regime and Ownership Decisions in Cross-border Acquisitions by Emerging Market Multinationals

The ownership decision in cross-border acquisitions (CBAs) is a critical strategic consideration for emerging market multinational enterprises (EMNEs), particularly when acquisitions involve countries with stronger intellectual property rights (IPR) regimes than their home country. Drawing on transaction cost economics and institutional theory, this study argues that EMNEs are more likely to pursue higher ownership stakes in such contexts to manage power dynamics and maximize strategic asset transfer. However, this relationship is negatively moderated by the degree of disparity between the home and host countries’ IPR systems. Larger disparities may prompt EMNEs to opt for lower ownership stakes to mitigate risks and costs associated with institutional misalignment. The study further introduces a three-way moderation effect, suggesting that state-owned enterprises (SOEs) are less influenced by IPR disparities. SOEs often maintain higher ownership stakes, even in countries with stringent IPR regimes, due to their institutional backing and strategic priorities. This research provides valuable insights into EMNE ownership strategies in CBAs, highlighting how institutional and firm-specific factors interact. It advances understanding of how EMNEs deal with complex international environments and adapt their strategies to differing institutional contexts.