Chilton, Milner & Tingley: Public Opposition to Foreign Acquisitions of Domestic Companies – Evidence from the United States and China

Abstract:

The flow of capital across borders is one of the core subjects of International Political Economy research, but there has been little research into the determinants of support for and opposition to inward foreign direct investment (FDI) flows. This is an important oversight because cross border investments are a growing area of international economic activity, and increasingly the subject of important international negotiations. In order to study this topic, we embedded a conjoint experiment in a survey that we fielded in the United States and China. Our experiment asked respondents to evaluate hypothetical acquisitions of domestic companies by foreign firms, and produced several important results. First, Chinese respondents were less opposed to foreign acquisitions of domestic firms than American respondents. Second, reciprocity matters; respondents were consistently more likely to oppose foreign acquisitions when the foreign firm’s home country does not provide reciprocal market access. Third, in both countries, economic factors had a smaller influence on the levels of opposition to foreign acquisitions than non-economic factors.

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