Do cross‐border mergers and acquisitions reflect participations into global value chains?

This study investigates whether companies operating in industrial sectors characterized by a higher participation in global value chains (GVC) are more likely to be involved in cross-border mergers and acquisitions (M&A). We focus on firms acquired in the EU27 during the period 2008–2020 implementing a gravity model. Results show that cross-border investments are indeed associated with sectoral GVC participation, in particular the dependence on intermediates supplied by other countries (i.e., backward GVC participation) of the target country-sector, which is positively correlated with M&A flows. This evidence is confirmed when the acquired firm operates in high-tech sectors, and when the investor is based in OECD countries. In addition, we find that companies from non-OECD countries supplying inputs to other countries (i.e., higher forward GVC participation) are more likely to pursue a cross-border acquisition.

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Global value chains and inward FDI: An empirical investigation of European firms

Imbruno,

Pittiglio,

Reganati

et al. 2024

World Economy

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This paper empirically investigates whether and how the level of GVC integration of a given market may explain the presence of foreign‐owned firms. Using firm‐level data from 28 European Union countries during the period 2008–2014, we provide evidence that a greater country‐sector‐level GVC participation, via both backward and forward linkages, exerts a positive effect on a firm's likelihood to receive FDI. These findings appear particularly strong for new EU Member States and services industries when looking at the differences across countries and sectors. Interestingly, when exploring the role of country‐sector position along the GVC, we find that FDI gains from backward GVC integration are more prominent if the markets are associated with the final stages of the supply chain, whereas those from forward GVC integration are greater when the markets are associated with the initial stages, in line with the smile curve hypothesis.

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Do cross‐border mergers and acquisitions reflect participations into global value chains?

Cited by 3 publications

References 57 publications

Non-trade issues in preferential trade agreements and global value chains

Non-trade issues in preferential trade agreements and global value chains

Participation in global value chains and M&A flows

Global value chains and inward FDI: An empirical investigation of European firms

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