The Location of Cross-Border and National Mergers and Acquisitions within the United States
Brakman, Steven; Garretsen, Harry; van Marrewijk, Charles; van Witteloostuijn, Arjen
(2023) Journal of Economics and Management Strategy, volume 32, issue 1, pp. 177 - 206
(Article)
Abstract
Research on the location choice of foreign direct investment (FDI) focuses on the choice between countries. The within-country location choice is either not analyzed at all or restricted to greenfield investments only. The majority of FDI, however, takes the form of cross-border mergers and acquisitions (M&As). We develop and test
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a pair of hypotheses regarding location-target selection for both cross-border and national M&As across the United States, expecting differences in line with the liability of foreignness argument. Using a detailed firm-level data set for M&As in the period 1985–2012, we compare location choices of cross-border versus national M&As. We find that cross-border M&As are more spatially concentrated, and tend to sort into larger agglomerations than national M&As. This finding holds both for urban agglomerations in isolation, as well as for agglomerations that take the economic geography of the United States into account.
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Keywords: Agglomeration economies, Assignment models, Comparative advantage, Fdi, Foreign direct-investment, Geographic concentration, Manufacturing-industries, Multinational firms, Performance, Subnational region matter
ISSN: 1058-6407
Publisher: Wiley
Note: Funding Information: We would like to gratefully thank the editor, coeditor, and three anonymous referees for their very useful comments and suggestions. We also thank Julia Swart for assistance with the Thomson data, and Sjoerd Beugelsdijk, Cristian Bogmans, Marius Brülhart, Keith Head, Peter Neary, Enrico Pennings, Klaus DeSmet, Mark Partridge, Bart Los, Alexander Whalley, and participants at various conferences and seminars for their useful feedback. Please send all correspondence to j.g.m.vanmarrewijk@uu.nl, Utrecht University, PO Box 80125, 3508 TC, Utrecht, The Netherlands. Publisher Copyright: © 2022 The Authors. Journal of Economics & Management Strategy published by Wiley Periodicals LLC.
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