Emerging economies firms' expansion in the European Union: acquisitions vs. alliances

We examine how regulatory and normative institutional factors influence the choice of acquisitions vs. alliances by Brazil, Russia, India and China (BRIC) firms in the European Union (EU). Using a sample of 228 acquisitions and 48 alliances established by BRIC firms in the EU in the period 2001-2005, we find regulatory but not normative effect on the choice of acquisitions vs. alliances. Specifically, we find that BRIC firms are more likely to acquire rather than ally when the target host country has a more restrictive regulatory environment. We do not find any cultural distance impact on this choice. Various implications are discussed.