How foreign multinationals benefit from acquiring domestic firms with political experience

Do foreign multinational corporations (MNCs) utilize the political experience of domestic firms that they have acquired? If so, why? Little is known about the ways in which foreign MNCs gain political influence outside their home countries. And yet, foreign MNCs that acquire or merge with politically active domestic firms may inherit host country- and firm-specific political influence mechanisms on day-one of entry. To test this idea, I assemble novel panel datasets of all American firms that completed mergers and acquisitions (M &A) while connected to an active Political Action Committee (PAC) or reported to lobby the U.S. government between 1997 and 2018. With these data, I show that the survival rates of connected PACs and lobbying relationships post-M &A are significantly higher for firms with a new foreign owner, compared with those with a new American owner. In addition, newly foreign-owned firms tend to maintain – or even increase – the intensity of political activities post-M &A. Finally, following cross-border M &A, I observe a greater lobbying emphasis on issue areas of interest to foreign MNCs such as trade, intellectual property rights, and telecommunications. One implication of this study is that MNCs may gain political leverage in other countries by acquiring politically active domestic firms.