The Location of Cross-Border and National Mergers and Acquisitions within the United States

Steven Brakman; Harry Garretsen; Charles van Marrewijk; Arjen van Witteloostuijn

doi:10.1111/jems.12501

The Location of Cross-Border and National Mergers and Acquisitions within the United States

Steven Brakman, Harry Garretsen, Charles van Marrewijk, Arjen van Witteloostuijn

Research output: Contribution to journal › Article › Academic › peer-review

Abstract

Research on the location choice of foreign direct investment (FDI) focuses on the choice between countries. The within-country location choice is either not analyzed at all or restricted to greenfield investments only. The majority of FDI, however, takes the form of cross-border mergers and acquisitions (M&As). We develop and test a pair of hypotheses regarding location-target selection for both cross-border and national M&As across the United States, expecting differences in line with the liability of foreignness argument. Using a detailed firm-level data set for M&As in the period 1985–2012, we compare location choices of cross-border versus national M&As. We find that cross-border M&As are more spatially concentrated, and tend to sort into larger agglomerations than national M&As. This finding holds both for urban agglomerations in isolation, as well as for agglomerations that take the economic geography of the United States into account.

Original language	English
Pages (from-to)	177-206
Number of pages	30
Journal	Journal of Economics and Management Strategy
Volume	32
Issue number	1
DOIs	https://doi.org/10.1111/jems.12501
Publication status	Published - 1 Jan 2023

Bibliographical note

Funding Information:
We would like to gratefully thank the editor, coeditor, and three anonymous referees for their very useful comments and suggestions. We also thank Julia Swart for assistance with the Thomson data, and Sjoerd Beugelsdijk, Cristian Bogmans, Marius Brülhart, Keith Head, Peter Neary, Enrico Pennings, Klaus DeSmet, Mark Partridge, Bart Los, Alexander Whalley, and participants at various conferences and seminars for their useful feedback. Please send all correspondence to [email protected], Utrecht University, PO Box 80125, 3508 TC, Utrecht, The Netherlands.

Publisher Copyright:
© 2022 The Authors. Journal of Economics & Management Strategy published by Wiley Periodicals LLC.

Keywords

Agglomeration economies
Assignment models
Comparative advantage
Fdi
Foreign direct-investment
Geographic concentration
Manufacturing-industries
Multinational firms
Performance
Subnational region matter

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1111/jems.12501Licence: CC BY-NC-ND

Economics Manag Strategy - 2022 - Brakman - The location of cross‐border and national mergers and acquisitions within theFinal published version, 4.75 MBLicence: CC BY-NC-ND

Cite this

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title = "The Location of Cross-Border and National Mergers and Acquisitions within the United States",

abstract = "Research on the location choice of foreign direct investment (FDI) focuses on the choice between countries. The within-country location choice is either not analyzed at all or restricted to greenfield investments only. The majority of FDI, however, takes the form of cross-border mergers and acquisitions (M\&As). We develop and test a pair of hypotheses regarding location-target selection for both cross-border and national M\&As across the United States, expecting differences in line with the liability of foreignness argument. Using a detailed firm-level data set for M\&As in the period 1985–2012, we compare location choices of cross-border versus national M\&As. We find that cross-border M\&As are more spatially concentrated, and tend to sort into larger agglomerations than national M\&As. This finding holds both for urban agglomerations in isolation, as well as for agglomerations that take the economic geography of the United States into account.",

keywords = "Agglomeration economies, Assignment models, Comparative advantage, Fdi, Foreign direct-investment, Geographic concentration, Manufacturing-industries, Multinational firms, Performance, Subnational region matter",

author = "Steven Brakman and Harry Garretsen and \{van Marrewijk\}, Charles and \{van Witteloostuijn\}, Arjen",

note = "Funding Information: We would like to gratefully thank the editor, coeditor, and three anonymous referees for their very useful comments and suggestions. We also thank Julia Swart for assistance with the Thomson data, and Sjoerd Beugelsdijk, Cristian Bogmans, Marius Br{\"u}lhart, Keith Head, Peter Neary, Enrico Pennings, Klaus DeSmet, Mark Partridge, Bart Los, Alexander Whalley, and participants at various conferences and seminars for their useful feedback. Please send all correspondence to [email protected], Utrecht University, PO Box 80125, 3508 TC, Utrecht, The Netherlands. Publisher Copyright: {\textcopyright} 2022 The Authors. Journal of Economics \& Management Strategy published by Wiley Periodicals LLC.",

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N2 - Research on the location choice of foreign direct investment (FDI) focuses on the choice between countries. The within-country location choice is either not analyzed at all or restricted to greenfield investments only. The majority of FDI, however, takes the form of cross-border mergers and acquisitions (M&As). We develop and test a pair of hypotheses regarding location-target selection for both cross-border and national M&As across the United States, expecting differences in line with the liability of foreignness argument. Using a detailed firm-level data set for M&As in the period 1985–2012, we compare location choices of cross-border versus national M&As. We find that cross-border M&As are more spatially concentrated, and tend to sort into larger agglomerations than national M&As. This finding holds both for urban agglomerations in isolation, as well as for agglomerations that take the economic geography of the United States into account.

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