Make Bilateral Relations Great Again: Effect of Political Affinity on Post-acquisition Performance

Emerging market multinational companies (EMNCs) are attracting increased attention as they play a greater role in the international business environment. These firms are especially noteworthy as they enter developed markets seeking the benefits of acquiring new customers and advanced business practices. Our study examines the influence of political affinity between nations on the success of EMNC’s cross-border acquisitions. Our results indicate a U-shaped relationship between political affinity and EMNC acquisition performance with benefits at the highest and lowest levels of political affinity. This relationship is moderated by EMNC firms’ decisions to cross-list their shares on stock exchanges in the developed market.