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What drives global product integration? An empirical update

Author

Listed:
  • Heather Berry

    (Georgetown University)

  • Aseem Kaul

    (University of Minnesota, Carlson School of Management)

Abstract

In this paper, we revisit the industry-level drivers of global product integration, i.e., cross-border product flows within multinationals. While traditional explanations for these flows have focused on benefits from R&D intensity and scale at the parent level, we examine a more comprehensive set of factors, incorporating recent theoretical advances as well as the changing nature of global competition, and considering both the level and direction of integration. Using comprehensive data from the Bureau of Economic Analysis (BEA) over the 1999–2019 period, we argue and show that while factors that increase the returns to aggregation or decrease the returns to adaptation tend to raise the overall level of global product integration, factors that increase the returns to arbitrage have a directional impact, raising flows from foreign affiliates. Finally, we make available in this paper our industry-level data on intra-firm product integration, which we call the Global Product Integration Index (GPII), thus offering a valuable resource for future research.

Suggested Citation

  • Heather Berry & Aseem Kaul, 2024. "What drives global product integration? An empirical update," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 55(2), pages 252-269, March.
    • Handle: RePEc:pal:jintbs:v:55:y:2024:i:2:d:10.1057_s41267-023-00640-z
    DOI: 10.1057/s41267-023-00640-z
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