Publication Type

Journal Article

Publication Date

4-2016

Abstract

This article explores how within-country diversity of both language and religion influences the ownership structure of foreign acquisitions. Commentators have acknowledged the potential importance of “within-country diversity,” but to date this issue has received minimal empirical attention. We propose that diversity plays two distinct roles. Namely, diversity within the host country may be an additional source of behavioral uncertainty and information asymmetry, over and above the effects arising from cross-national differences. Moreover, diversity within the home country may increase the cognitive complexity of the decision makers, moderating the firm’s response to the distance and diversity of the host country. Results based on foreign acquisitions across 67 acquirer and 69 target countries confirm both of these roles. While the main focus of this article is on the role that within-country diversity plays in international business decisions, it also makes contributions in terms of expanding the range of dimensions of distance investigated in the cross-border acquisition literature, in highlighting a potentially positive role that diversity might play in such acquisitions, and in providing a potential explanation for asymmetries in distance – that is, differences in cognitive complexity.

Keywords

international acquisitions;foreign entry;language (language design, silent language, translation);religion;diversity

Discipline

International Business | Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Journal of International Business Studies

Volume

47

Issue

3

First Page

319

Last Page

346

ISSN

0047-8210

Identifier

10.1057/jibs.2016.7

Publisher

Palgrave Macmillan

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org/10.1057/jibs.2016.7

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