TURF WAR: SINO-US GEOPOLITICAL COMPETITION, CROSS-BORDER MERGERS AND ACQUISITIONS AND THE BELT AND ROAD INITIATIVE

The nationality of multinationals affects the firms’ cross-border activities in the context of growing geopolitical competition between great powers, which remains widely unexplored in mainstream international business (IB) discipline. This study aims to explore the impact of Sino-US geopolitical competition on the cross-border mergers and acquisitions (CMAs) of Chinese and American firms and whether and how the belt and road initiative (BRI) framework affects the relation between Sino-US geopolitical competition and both Chinese and American firms’ legitimacy when acquiring CMAs in the host nations? Contextualized in the growing geostrategic rivalry between Beijing and Washington along the belt and road (B&R) routes from 2009 to 2019, we get 5168 sample of CMAs, and the study uses weighted average method to measure geopolitical influence, and Euclidean distance calculation to measure host-country institutional fragility. Because the explained variable is a dummy, the study applies econometric methodology, specifically the logistic regression models, to demonstrate our hypotheses. For augmenting the validity of our empirical model, the study employs heteroskedasticity-robust standard error to further demonstrate the results. We find that the bid is more likely to be acquired by Chinese firms if the target country is more geopolitical aligned with China. Additionally. The BRI framework plays a mediating role in the effect of geopolitical influence, that is, the relative geopolitical influence of China over the US determines the extent of engagement of host nations, which influences the legitimacy of both Chinese and US multinationals. Moreover, from the theory of institutional comparative advantages, host-country institutional quality negatively moderates the effect of geopolitical influence as Chinese geopolitical influence are conceived as ‘low legitimacy’ in current US-led international governance systems. According to varied geopolitical sensitivity among different industries we uncover that the effect of geopolitical influence on the nationality of acquirers is more positive in high-technology industry than non-high-tech industries. Besides, “Road”countries are more geopolitically important for “Belt” country from the perspective of economic prospect and geographic value. We further show some limitations and future 
agenda for future exploration. 

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