This article has been reviewed according to Science X's editorial process and policies. Editors have highlighted the following attributes while ensuring the content's credibility: A new study co-authored by Tang Yinuo, a tenured associate professor at Peking University HSBC Business School (PHBS), reveals that conservative communities in the U.S. are more likely to resist mergers and acquisitions (M&As) by Chinese companies due to perceived threats and uncertainties. The paper, titled "Global meets local: Community political ideology and Chinese cross-border M&As in the U.S.," was published in the Journal of International Business Studies.
The study analyzes 267 acquisition deals initiated by 173 publicly listed Chinese companies between 2002 and 2021. As geopolitical competition intensifies, international business is increasingly affected by tariffs, sanctions, investment restrictions and political tensions. While previous research has largely focused on how national politics affects multinational companies, fewer studies have explored how political attitudes within local communities influence foreign investment.
To address this gap, the researchers examined whether differences in community political ideology in the U.S., measured along the liberal-conservative spectrum, could help explain variations in Chinese acquisition completion rates across U.S. counties. Using Republican presidential vote shares as a measure of local conservatism, the researchers found that Chinese acquisitions were less likely to be completed in more conservative U.S. counties. A one-standard-deviation increase in community conservatism was associated with a decline in acquisition completion probability from approximately 62% to 42%.
This suggests a substantial relationship between local political attitudes and acquisition outcomes. The negative relationship was especially pronounced in industries subject to heightened scrutiny by the Committee on Foreign Investment in the United States (CFIUS), where national security concerns may amplify community resistance. Similarly, communities experiencing higher unemployment showed a stronger negative relationship between conservatism and acquisition completion, suggesting that local economic insecurity may further intensify concerns about foreign investment.
Together, these findings highlight how political and economic differences within a host country can shape international business outcomes. The findings offer companies a more detailed perspective on the political factors that can affect cross-border acquisitions, particularly during the early stages of investment planning. Understanding local attitudes, economic concerns and industry sensitivity may help companies identify potential obstacles and develop more effective strategies for engaging with communities.
The researchers also emphasize the importance of building trust with local communities. Companies can communicate the potential benefits of their investments, particularly through job creation and economic development, while maintaining transparent operations and collaborating with local institutions. Making meaningful contributions to local communities may further help reduce resistance and strengthen relationships with stakeholders.
Extract — continue reading at the source.
