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

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Abstract

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.

Résumé

Nous appuyant sur la théorie des échelons supérieurs et la recherche en sciences politiques, nous étudions comment l'idéologie politique des PDGs influence le choix d'une entreprise entre les alliances internationales et les acquisitions internationales comme mode d'entrée sur les marchés étrangers. En raison de leurs différences idéologiques, nous observons que les entreprises dirigées par des PDGs plus libéraux sont plus susceptibles de recourir à des alliances internationales pour entrer sur un marché étranger, tandis que celles dirigées par des PDGs plus conservateurs sont plus susceptibles de faire appel à des acquisitions internationales comme mode d'entrée. Nous examinons également comment ces préférences politiques des PDGs peuvent être atténuées par des conseils d'administration plus vigilants. Nous constatons que l'impact de l'idéologie politique des PDGs sur le choix entre les alliances internationales et les acquisitions internationales est atténué par une plus grande indépendance du conseil d'administration et les participations plus importantes des administrateurs indépendants dans l'entreprise. Néanmoins, contrairement à nos attentes, nous trouvons que la séparation des postes de PDG et de président du conseil d'administration n'a aucun effet sur cette relation, ce qui suggère que les préférences politiques des PDGs influencent ces choix, qu’ils soient également président du conseil d'administration ou non. En général, nos résultats mettent en lumière l'importance des valeurs politiques du PDG en tant que prédicteur de l'approche d'une entreprise en matière de stratégies d'entrée sur les marchés étrangers.

Resumen

Basándonos en la teoría de los niveles superiores (o del escalón) y la investigación en ciencia política, investigamos como la ideología política del CEO (Director General) influencia la elección de una empresa entre las alianzas internacionales y las adquisiciones internacionales como una manera de entrada a los mercados extranjeros. Debido a sus diferencias ideológicas, encontramos que las empresas lideradas por CEOs más liberales son más propensas a usar alianzas cuando se entra en un mercado extranjero, mientras que las empresas lideradas por más CEOs más conservadores son más propensas a usar adquisiciones internacionales como modo de entrada. También examinamos como las preferencias políticas de los CEOs puede ser mitigada por juntas directivas más vigilantes. Encontramos que el efecto de la ideología política del CEO en la elección entre alianzas internacionales y adquisiciones internacionales es mitigado por una mayor independencia de la junta directiva, y una mayor participación de directores independientes en la empresa. Sin embargo, opuesto a nuestras expectativas, encontramos que separando las posiciones del CEP y la del presidente de junta directiva no tiene efectos en esta relación, lo que esto sugiere es que las preferencias del CEO moldean esas elecciones sin importar si el CEO es o no es el presidente de la junta directiva. En general, nuestros hallazgos indican la importancia de los valores políticos del CEO como un predictor del acercamiento de una empresa a las estrategias de entrada a mercados extranjeros.

Resumo

Com base na teoria de escalões superiores e na pesquisa em ciência política, investigamos como a ideologia política do CEO influencia a escolha de uma firma entre alianças internacionais e aquisições internacionais como modo de entrada em mercados estrangeiros. Devido a suas diferenças ideológicas, descobrimos que firmas lideradas por CEOs mais liberais são mais propensas a usar alianças internacionais ao entrar em um mercado estrangeiro, enquanto firmas lideradas por CEOs mais conservadores são mais propensas a usar aquisições internacionais como uma escolha de modo de entrada. Também examinamos como essas preferências políticas de CEOs podem ser mitigadas por conselhos de administração mais vigilantes. Descobrimos que o efeito da ideologia política do CEO na escolha entre alianças internacionais e aquisições internacionais é mitigado pela maior independência do conselho e maior participação acionária do conselheiro independente na empresa. No entanto, ao contrário de nossas expectativas, descobrimos que separar os cargos de CEO e presidente do conselho não tem efeito sobre essa relação, sugerindo que as preferências políticas de CEOs moldam tais escolhas, não importando se o CEO é ou não o presidente do conselho. Em geral, nossas descobertas indicam a importância dos valores políticos do CEO como um preditor da abordagem de uma empresa a estratégias de entrada no mercado estrangeiro.

摘要

借鉴上层梯队理论和政治科学研究， 我们调查了 CEO 的政治意识形态如何影响公司在作为国外市场进入模式的国际联盟和国际收购之间的选择。我们发现， 由于其意识形态的差异， 由更为自由的 CEO 领导的公司在进入国外市场时更有可能使用国际联盟， 而由更为保守的 CEO 领导的公司更有可能使用国际收购作为进入模式选择。我们还研究了CEO 的这些政治偏好如何能被更机警的董事会减轻。我们发现， CEO 政治意识形态对国际联盟和国际收购之间的选择的影响被董事会更大的独立性和独立董事在公司更大的持股所减轻。然而， 我们发现， 与我们的预期相反， 将 CEO 和董事会主席职位分开对这一关系没有影响， 这表明无论 CEO 是否也是董事会主席， CEO 的政治偏好都会塑造这样的选择。总的来说， 我们的发现表明 CEO 的政治价值观作为对公司外国市场进入战略的方法的预测具有重要意义。

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ACKNOWLEDGEMENTS

We thank Professor Jiatao (J.T.) Li and three anonymous reviewers for their thoughtful feedback and guidance throughout the review process.

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Authors and Affiliations

  1. Department of Management, G. Brint Ryan College of Business, University of North Texas, 1307 W. Highland St, Denton, TX, 76201, USA

    Jeffrey A. Chandler

  2. Department of Management, Gordon Ford College of Business, Western Kentucky University, 1906 College Heights Blvd, Bowling Green, KY, 42101, USA

    Yeongsu (Anthony) Kim

  3. Department of Management, McCoy College of Business, Texas State University, 601 University Dr, San Marcos, TX, 78666, USA

    Jacob A. Waddingham

  4. Department of Management, Warrington College of Business, University of Florida, 1384 Union Road Bryan Hall 100, Gainesville, FL, 32611, USA

    Aaron D. Hill

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  1. Jeffrey A. Chandler
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Accepted by JT Li, Area Editor, 31 December 2022. This article has been with the authors for four revisions.

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Chandler, J.A., Kim, Y., Waddingham, J.A. et al. Going global? CEO political ideology and the choice between international alliances and international acquisitions. J Int Bus Stud 54, 1441–1470 (2023). https://doi.org/10.1057/s41267-023-00607-0

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