Generating a Scandal: Non-market Activity to Stop a Cross-Border Merger and Acquisition

Yapici N., Hudson B. A.

JOURNAL OF INTERNATIONAL MANAGEMENT, vol.26, no.3, 2020 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 26 Issue: 3
  • Publication Date: 2020
  • Doi Number: 10.1016/j.intman.2020.100759
  • Journal Name: JOURNAL OF INTERNATIONAL MANAGEMENT
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, Business Source Elite, Business Source Premier, INSPEC
  • Keywords: Cross-border M&A, Emerging market firm M&A, Incompletion, Scandal, Non-market activity, Institutional maintenance, CORPORATE POLITICAL STRATEGY, INTERNATIONAL-BUSINESS, INSTITUTIONAL PERSPECTIVES, ECONOMIC NATIONALISM, FOREIGN SUBSIDIARIES, MARKET, COMPLETION, PERFORMANCE, DETERMINANTS, ENTERPRISES
  • Middle East Technical University Affiliated: Yes

Abstract

In this manuscript, we present three controversial cross-border merger and acquisition (CBMA) deals that failed to be consummated after public announcement. Our cross-case analysis reveals that scandal, which causes the controversy surrounding these deals, is a non-market activity, whose main concern is to ensure the status quo in the target country through generation of executive and legislative action favoring the target country threatened actor. Scandal is a last resort act that makes the deal widely salient through transformation of the bid into a national threat. Target country actors threatened by the CBMA skillfully use scandal, along with their corporate political activities (CPA), to hinder deals that they could not have stopped otherwise. It is mainly the inadequacy of the CPA efforts that lead to emergence of scandal. Once condemned of wrongdoing, the acquirers instantly become persona non grata, even in the cases where the government is supportive of the deal.