Cross‐border networks and knowledge spillovers for foreign entry

Abstract

This paper studies cross‐border networks formed in firms' prior destinations in the context of cross‐border mergers and acquisitions (M&A). An acquirer owns a subsidiary in a prior destination, and the subsidiary's domestic network forms the cross‐border network of the acquirer due to their ownership link. We focus on the subsidiary's network of neighboring firms in a location within the prior destination. Using rich data on cross‐border M&A, we show that knowledge spillovers from this cross‐border network have a positive impact on the acquirer's likelihood of entering a new destination. Our results highlight the global externalities of multinationals' international economic activities.

Industrial Policy’s Effect on Cross-Border Mergers’ Decisions—Theoretical and Empirical Analysis

“…As a result of the policy burdens, SOEs' business decisions often need to cooperate with government actions. When making cross-border M&A decisions, SOEs have to consider their functional positions, and their M&A motives need to be in line with the "national will", and if there is a post-merger national security threat, SOEs will be reluctant to undertake overseas M&As [86].…”