Cross‐border networks and knowledge spillovers for foreign entry

This paper studies cross‐border networks formed in firms' prior destinations in the context of cross‐border mergers and acquisitions (M&A). An acquirer owns a subsidiary in a prior destination, and the subsidiary's domestic network forms the cross‐border network of the acquirer due to...

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Bibliographic Details
Published in:Economic inquiry 2022-10, Vol.60 (4), p.1730-1756
Main Authors: Chan, Jackie M. L., Hsieh, Chih‐Sheng
Format: Article
Language:English
Subjects:
Borders
cross‐border mergers and acquisitions
cross‐border networks
Destinations
International economics
learning from neighbors
Mergers
Ownership
prior destinations
spatial spillovers
Spillover effect
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Summary:This paper studies cross‐border networks formed in firms' prior destinations in the context of cross‐border mergers and acquisitions (M&A). An acquirer owns a subsidiary in a prior destination, and the subsidiary's domestic network forms the cross‐border network of the acquirer due to their ownership link. We focus on the subsidiary's network of neighboring firms in a location within the prior destination. Using rich data on cross‐border M&A, we show that knowledge spillovers from this cross‐border network have a positive impact on the acquirer's likelihood of entering a new destination. Our results highlight the global externalities of multinationals' international economic activities.
ISSN:0095-2583
1465-7295
DOI:10.1111/ecin.13086