Multinational M&A in Upstream Industry and Organizational Change

36 Pages Posted: 2 Jul 2018

See all articles by Misato Sato

Misato Sato

Okayama University - Economics

Date Written: June 19, 2018

Abstract

This study explores the boundary response of domestic firms faced with increased openness to new foreign multinational M&A in an intermediate-input market in a host country. We develop a theoretical framework to study the impact of new foreign multinational M&A on the wholesale price of intermediate inputs as a key market condition in the host country and explore how the intermediate-input prices affect the organizational choice of domestic firms between domestic vertical integration and outsourcing. We find that new foreign multinational M&A raises the intermediate-input prices and facilitates the firms' choice of domestic vertical integration.

Keywords: Foreign M&A; Upstream Industry; Outsourcing; Vertical integration

JEL Classification: F23; L22; L23; L42

Suggested Citation

Sato, Misato, Multinational M&A in Upstream Industry and Organizational Change (June 19, 2018). Available at SSRN: https://ssrn.com/abstract=3196999 or http://dx.doi.org/10.2139/ssrn.3196999

Misato Sato (Contact Author)

Okayama University - Economics ( email )

Japan

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