Going global? CEO political ideology and the choice between international alliances and international acquisitions

Drawing on upper echelons theory and political science research, we investigate how CEO political ideology influences a firm’s choice between international alliances and international acquisitions as an entry mode into foreign markets. Due to their ideological differences, we find that firms led by...

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Bibliographic Details
Published inJournal of international business studies Vol. 54; no. 8; pp. 1441 - 1470
Main Authors Chandler, Jeffrey A., Kim, Yeongsu (Anthony), Waddingham, Jacob A., Hill, Aaron D.
Format Journal Article
LanguageEnglish
Published London Palgrave Macmillan UK 01.10.2023
Palgrave Macmillan
Subjects
Acquisition
Acquisitions & mergers
Alliances
Business and Management
Business Strategy/Leadership
Chief executive officers
Chief executives
Executives (Business)
Ideology
International Business
Management
Market entry
Markets
Organization
Political alliances
Political ideologies
Political science research
Preferences
Presidents
Vigilantes
international acquisitions
international alliances
foreign market entry choices
CEO political ideology
upper echelons theory
board vigilance
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Summary:Drawing on upper echelons theory and political science research, we investigate how CEO political ideology influences a firm’s choice between international alliances and international acquisitions as an entry mode into foreign markets. Due to their ideological differences, we find that firms led by more liberal CEOs are more likely to use international alliances when entering a foreign market while firms led by more conservative CEOs are more likely to use international acquisitions as an entry mode choice. We also examine how these political preferences of CEOs can be mitigated by more vigilant boards. We find that the effect of CEO political ideology on the choice between international alliances and international acquisitions is mitigated by greater board independence and greater independent director shareholdings in the firm. However, contrary to our expectations, we find that separating the CEO and board chair positions has no effect on this relationship, suggesting that CEOs’ political preferences shape such choices regardless of whether CEOs are also the chair of the board. In general, our findings indicate the importance of CEO political values as a predictor of a firm’s approach to foreign market entry strategies.
ISSN:0047-2506
1478-6990
DOI:10.1057/s41267-023-00607-0