Brownfield acquisitions: a reconceptualization and extension

Firms seeking specific complementary resources to pursue their growth strategy in emerging markets may use 'brownfield' acquisitions to provide access to resources that are embedded in existing firms. This strategy requires a fundamental restructuring of the acquired firm to replace many of its resources and organizational structures. In this paper, we review the concept of brownfield acquisition, establish its empirical relevance outside of transition economies, explore its theoretical and empirical antecedents, and discuss its implications for theorizing in international business. Our empirical results based on a six-country survey in emerging markets show that brownfield acquisitions are most likely for projects that are more integrated with the parent's global operations, and where local firms are weak and institutions are strong. The concept provides a focal point for research on the resource-based view by illuminating the process of resource combination in firm growth. It also provides an example of where different aspects of the institutional framework may have contrary effects on various elements of business strategy.