Multinationals, Spillover Networks and International Takeovers

Posted: 10 Feb 1997

See all articles by Maria-Angels Oliva

Maria-Angels Oliva

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Luis A. Rivera-Batiz

Universidad de Puerto Rico - Graduate School of Business Administration

Date Written: Undated

Abstract

This paper presents a synergy-based model of foreign investment and international takeovers in industrial countries. Takeovers of (or mergers with) firms abroad are used to appropriate local technology spillovers requiring geographical proximity, exploit intra-firm technology transfers, and respond strategically to a multinational rival. The takeover fee is a positive function of market size and seller's bargaining power, and tends to increase with the strength of local spillovers. With no greenfield investments, the distribution of bargaining power between sellers and buyers affects the gains' allocation but not the investment decision. Foreign investment stimulates research but could reduce multinationals' profits.

JEL Classification: C78, D43, F23, G34, O32

Suggested Citation

Oliva, Maria-Angels and Rivera-Batiz, Luis A., Multinationals, Spillover Networks and International Takeovers (Undated). Available at SSRN: https://ssrn.com/abstract=8093

Maria-Angels Oliva

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

Luis A. Rivera-Batiz (Contact Author)

Universidad de Puerto Rico - Graduate School of Business Administration ( email )

Ponce De Leon Avenue
00931-3300
Puerto Rico

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