Which partners become targets? The role of location in partner acquisitions

This paper seeks to explain how location affects the likelihood of partner acquisition. We develop a novel framework that (i) emphasizes the decoupling between a firm's headquarters and its alliance-making division and their roles regarding alliance management and partner acquisition decisions and (ii) highlights that these decisions are contingent on location-related factors that shape the structural configuration of alliances. Findings from a comprehensive study of 20,165 alliances and 1838 subsequent majority acquisition events reveal that the acquisition likelihood tends to be higher in cross-border alliances than in domestic ones. We further find that increasing national cultural distance between the headquarters of the two partnering organizations attenuates this effect. In contrast, the co-location of the focal firm's alliance-making division and its headquarters further increases the likelihood of acquiring a cross-border partner. We provide a distinct explanation of partner acquisition, placing the interface of location and alliance structure centerstage to explain which alliance partners become acquisition targets. More generally, our findings inform research on strategic decision-making in areas where location is key, such as firm boundary configuration.