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The takeover selection decisions of multinational enterprises: empirical evidence from European target firms

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  • Andrea Ascani

Abstract

This article studies the selection patterns of takeover decisions taken by multinational enterprises (MNEs) by analysing the characteristics of acquisition targets. Drawing on the evolutionary economic geography and the international business literatures, our conceptual framework emphasises key micro-level factors influencing cross-border takeovers, such as the global search of MNEs for novel firm-specific knowledge, their cost-reduction behaviour and the heterogeneity of routines among potential target firms. The mediating role of the technological and the regional institutional contexts of target firms is also considered. Using data on a large sample of European target firms for 1997–2013, our results support a process of selection whereby MNEs acquire underperforming firms that developed valuable organisational and cognitive routines, as a strategy to access novel knowledge bases while reducing the cost of purchasing foreign assets.

Suggested Citation

  • Andrea Ascani, 2018. "The takeover selection decisions of multinational enterprises: empirical evidence from European target firms," Journal of Economic Geography, Oxford University Press, vol. 18(6), pages 1227-1252.
    • Handle: RePEc:oup:jecgeo:v:18:y:2018:i:6:p:1227-1252.
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    File URL: http://hdl.handle.net/10.1093/jeg/lbx035
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    Citations

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    Cited by:

    1. Eliasson, Kent & Hansson, Pär & Lindvert, Markus, 2020. "Foreign acquisitions – A shortcut to higher productivity and expansion in smaller firms?," Working Papers 2020:4, Örebro University, School of Business.
    2. Jin, Zhi & Yang, Yinan & Zhang, Liguang, 2021. "Geographic proximity and cross-region merger and acquisitions: Evidence from the opening of high-speed rail in China," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    3. Jonas Kleineick & Andrea Ascani & Martijn Smit, 2020. "Multinational investments across Europe: a multilevel analysis," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 40(1), pages 67-105, April.
    4. Viktor Kvĕtoň & Aleš Bĕlohradský & Jiří Blažek, 2020. "The variegated role of proximities in acquisitions by domestic and international companies in different phases of economic cycles," Papers in Regional Science, Wiley Blackwell, vol. 99(3), pages 583-602, June.
    5. Xiaodong Huang & Godfrey Yeung & Debin Du, 2024. "Does Technological Intensity Matter for Global Cross‐Border Mergers and Acquisitions in Manufacturing, 1998–2018?," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 115(2), pages 302-323, April.
    6. Duanmu, Jing-Lin & Norbäck, Pehr-Johan & Lu, Jane Wenzhen & Clegg, Jeremy, 2022. "Contraction under minimum wages? Operational and financial advantages of multinational subsidiaries in China," International Business Review, Elsevier, vol. 31(2).
    7. Guo, Yue & Yang, Yu & Wang, Chang, 2021. "Global energy networks: Geographies of mergers and acquisitions of worldwide oil companies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 139(C).
    8. Ralf Bebenroth & Pao-Lien Chen, 2018. "Cherry Picking versus Lemon Grabbing: Target Selection of Cross-Border and Domestic Acquisitions in Japan," Discussion Paper Series DP2018-13, Research Institute for Economics & Business Administration, Kobe University.
    9. Ascani, Andrea & Bettarelli, Luca & Resmini, Laura & Balland, Pierre-Alexandre, 2020. "Global networks, local specialisation and regional patterns of innovation," Research Policy, Elsevier, vol. 49(8).
    10. Andrea Ascani & Simona Iammarino, 2018. "Multinational enterprises, service outsourcing and regional structural change," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 42(6), pages 1585-1611.

    More about this item

    Keywords

    Cross-border acquisitions; multinational enterprises; globalisation;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F60 - International Economics - - Economic Impacts of Globalization - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;

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