The Concurrent Impact of Cultural, Political, and Spatial Distances on International Mergers and Acquisitions

Guardo, Maria Chiara Di; Marrocu, Emanuela; Paci, Raffaele

doi:10.1111/twec.12275

Cited by 36 publications

(13 citation statements)

References 62 publications

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“…Schildt & Laamanen ; Ragozzino ; Di Guardo et al . ) or US deals (Eun & Mukherjee ; Grote & Umber ; Chakrabarti & Mitchell ). Exceptions are studies for Finland (Böckerman & Letho ), Germany (Rodríguez‐Pose & Zademach ) and Italy (Boschma et al .…”

Section: Introductionmentioning

confidence: 99%

Who Acquires Whom? The Role of Geographical Proximity and Industrial Relatedness in Dutch Domestic M&As between 2002 and 2008

Ellwanger¹,

Boschma

2015

Tijd voor Econ & Soc Geog

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In economic geography, geographical proximity has been identified as a key driver of M&A activity. In this context, little attention has yet been drawn to the effect of industrial relatedness, which refers to the similarity and complementarity of business activities. We examine 1,855 domestic M&A deals announced between 2002 and 2008 in the Netherlands, and we assess the extent to which geographical proximity and industrial relatedness affect M&A partnering. Our study shows that geographical proximity drives domestic M&A deals, even at very detailed spatial scales like the municipality level. We also found evidence that companies that share the same or complementary industries are more likely to engage in an M&A deal. Logistic regressions show that the effect of industrial relatedness is stronger than the effect of geographical proximity and that the effect of geographical proximity is stronger in unrelated than related target selection.

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Section: Introductionmentioning

confidence: 99%

Who Acquires Whom? The Role of Geographical Proximity and Industrial Relatedness in Dutch Domestic M&As between 2002 and 2008

Ellwanger¹,

Boschma

2015

Tijd voor Econ & Soc Geog

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“… Di Guardo et al () also find that physical, cultural and political distances reduce M&A flows but do not consider GF flows. Azemar et al () point to market familiarity (a combination bilateral ties, experience with weak institutions and lack of international experience) as an important factor in FDI between developing countries. …”

mentioning

confidence: 99%

“…Note that this is a relevant comparison in line with the above model of firm choice where investment was a given. We might expect N , and therefore both GF and M&A, may decline with distance.10 DiGuardo et al (2013) also find that physical, cultural and political distances reduce M&A flows but do not consider GF flows Azemar et al (2012). point to market familiarity (a combination bilateral ties, experience with weak institutions and lack of international experience) as an important factor in FDI between developing countries.11 Note that this does not mean that GF does not benefit from tariff-jumping, but that M&A benefits from both tariff-jumping and reduced competition.…”

mentioning

confidence: 99%

Greenfield versus merger and acquisition FDI: Same wine, different bottles?

Davies

Desbordes

Ray

2018

Canadian J of Economics

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Relying on a large foreign direct investment (FDI) transaction level dataset, unique both in terms of disaggregation and time and country coverage, this paper examines patterns in greenfield (GF) versus merger and acquisition (M&A) investment. Although both are found to seek out large markets with low international barriers, important differences emerge. M&A is more affected by geographic and cultural barriers and exhibits opportunistic behaviours as it is more sensitive to temporary shocks such as a currency crisis. Further, M&A is more affected by destination factors such as financial development and institutional quality. GF, on the other hand, is relatively more driven by factors such as origin comparative advantage and destination taxes. These empirical facts are consistent with the conceptual distinction made between these two modes, i.e., M&A involves transfer of ownership for integration or arbitrage reasons while GF relies on firms’ own capacities, which are linked to origin country attributes. They also suggest that GF and M&A are likely to respond differently to policies intended to attract FDI.

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“…12. Di Guardo et al (2015) find that spatial distance has an adverse effect on the rate of recurrence of M&As. The effect is directly related to the transaction costs associated with the collection and interpretation of information regarding the potential target, including the costs of negotiation and other forms of personal interaction.…”

Section: Discussionmentioning

confidence: 98%

Broadening or jumping? An analysis of the first export market of European Union firms

Pinna¹,

Brau²,

Licio³

2015

Environ Plann C Gov Policy

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This paper explores the export activities of international firms from seven European countries with a special focus on the neighbourhoods of Europe, where 16 countries have been included in the neighbouring policy. Using a detailed dataset of the internationalisation activities of nearly 15,000 companies, we focus on the best export destinations of European Union firms. In 2008, only 6% of exporters had at least one neighbouring country in their top three export destinations. We subsequently model the export/no-export activity of each firm and the location of the first export destination by means of a nested logit model and find that this process is driven primarily by geography. No reduction (or even an increase) of the strength of the distance effect can be detected for a firm when exporting outside Europe to nearby countries, meaning that European Union firms do not have any particular advantage in exporting their goods in countries near their borders with respect to all the other possible destinations in the world. The ‘repulsive force’ of distance is alleviated only when moving outside of neighbourhoods where the size of the destination market becomes stronger

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The Concurrent Impact of Cultural, Political, and Spatial Distances on International Mergers and Acquisitions

Cited by 36 publications

References 62 publications

Who Acquires Whom? The Role of Geographical Proximity and Industrial Relatedness in Dutch Domestic M&As between 2002 and 2008

Who Acquires Whom? The Role of Geographical Proximity and Industrial Relatedness in Dutch Domestic M&As between 2002 and 2008

Greenfield versus merger and acquisition FDI: Same wine, different bottles?

Broadening or jumping? An analysis of the first export market of European Union firms

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