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Extending the home base perspective by considering investors' parent countries, this study examines the effect of economic freedom ( EF ) on emerging-market enterprises' ( EMEs ) overseas acquisition completion in developed countries. Using a large data set of 5,174 cross-border acquisition deals from ten major emerging markets ( EMs ) during 1985-2011, we fi nd that (1) the probability of deal completion is positively associated with the levels of EF of the acquirers' countries, the acquirers' parent and the target; (2) the EF of the countries of acquirers' parents has a substitutive effect on that of the acquirers' countries; (3) the difference of EF between the targets' countries and the countries of acquirers' parents negatively infl uences deal completion; and (4) the difference of EF between the targets' countries and the acquirers' countries negatively infl uences deal completion. These fi ndings FEATURE ARTICLE

T he China market continues to attract new foreign multinationals companies, in part because such major players as Motorola, Philips and Unilever have already been successful [1]. Philips, for instance, now has more than 50 alliances with Chinese companies. Many trade and service companies have entered the Chinese market in the tracks of their industrial counterparts. Medium-sized and smaller companies are about to follow their bigger colleagues. The question is whether China is really a genuine market or rather mostly an illusory one. The 381 managers of European and US multinational companies we surveyed have high expectations for China's growth potential[2]. With 1.3 billion consumers who have begun to demand more expensive consumer goods such as washing machines, CD players and cars, China looks more attractive than most other countries as a new market[3].But there is even more to lure businesses. China is also a source of relatively cheap, high quality raw materials and an excellent launching site for the export of inexpensive semi-®nished and ®nished products (think, for instance, of sports shoes such as Nike, Reebok, Adidas, Asics Tiger and Brooks). The growth of the Chinese market has been hovering around 8 percent annually for many years. So it is not unexpected to see that a true``run'' on China has occurred. At the moment, over 450,000 multinational companies are active in China, most of which operate via alliances [4].Foreign companies tend to believe they must simply have a presence in this market and only at later stage must they concentrate on the implications. Foreign companies that worked the Chinese market early on have managed to build up a nice lead in terms of knowledge and experience over the late entrants by now. Foreign companies that underestimated the market potential of this region until a short while ago regret this in mid-2003. Some nuances are in place, however. The average margins are still wafer-thin and most foreign companies still operate unpro®tably in the Chinese market. This is due to the complexity and obscure character of this market [5].Operating cost effectively is often an extraordinary feat. Even though many companies are in danger of drowning in a sea of red ®gures, they rarely consider giving up their positions. Most foreign companies are convinced that it is impossible and unwise to ignore the growth potential of the Chinese market. Many of them therefore look at the Chinese market as a long term investment and accept losses sustained in the short and the medium term (Box 1).

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The experience of Dutch international companies is that divestments in the 1980s and 1990s brought increased strategic focus to management and stock market favour.

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