Protectionism and Cross-Border Mergers and Acquisitions Undertaken by US Multinational Enterprises: The Moderating Role of Intellectual Property Rights Protection

Abstract

This paper examines the impact of protectionism and intellectual property right (IPR) protection in host markets on cross-border mergers and acquisitions (CB M&As). CB M&As have become important vehicles for firms to expand into foreign markets and acquire strategic assets. In recent years, the topic has attracted significant scholarly interest. Recently, many countries have enacted protectionist measures to protect local firms and jobs. Consequently, the impact such measures have on economic activities is under debate in the literature. This study leverages the vital context of CB M&As undertaken by US multinational enterprises (MNEs) between 2011 and 2017 in 49 host countries. The findings indicate that host country IPR protection has a much more substantial and positive impact on CB M&A activities undertaken by USA MNEs than the protectionist policies of the host country by itself. The findings further suggest that, although local protectionism, by itself, does not play a significant role in CB M&As, its presence strengthens the positive effect of IPR protection on CB M&A activities in the host country, thereby supporting the contingent role of such protection. These findings have important implications for research, practice, and policy.