Mergers and acquisitions & trade: A global value chain analysis

Abstract

The present paper deals with how the insertion in international trade and global value chains (GVCs) of countries affects their capacity of attracting foreign mergers and acquisitions (M&As). To this end, we combine data for bilateral M&As and trade in value added for the period 2001–15 and estimate an augmented gravity equation. Results indicate that trade openness per se does not favour M&As. Nevertheless, bilateral free trade agreements, heterogeneity of destinations (sources) for exports (imports) of intermediate and final goods, and position and participation in global value chains are relevant for explaining bilateral M&As. Moreover, their role is significantly different depending on the level of development of the home and host countries.

How important is GVC participation to export upgrading?*

“…A measure of a country's overall involvement in GVC is, therefore, best captured by a metric that simultaneously accounts for a country's engagement in GVC through backward and forward participation. Consequently, we follow extant literature (see Amendolagine et al., 2019; Banh et al., 2020; Carril‐Caccia & Pavlova, 2020; Foster‐McGregor et al., 2015; Kummritz et al., 2017; UNCTAD, 2013; Wang et al., 2019) to define the extent of GVC participation of country c in sector s and period t as:where is the share of foreign value‐added used in a country's export in a sector, is the share of a country's domestic value‐added that enters as inputs in the exports of other countries and is country c gross export in sector s . Larger values of the index indicate more intensive participation in the GVC.…”

“…A measure of a country's overall involvement in GVC is, therefore, best captured by a metric that simultaneously accounts for a country's engagement in GVC through backward and forward participation. Consequently, we follow extant literature (see Amendolagine et al, 2019;Banh et al, 2020;Carril-Caccia & Pavlova, 2020;Foster-McGregor et al, 2015;Kummritz et al, 2017;UNCTAD, 2013;Wang et al, 2019) to define the extent of GVC participation of country c in sector s and period t as:…”

“…(2013) that infers quality from an empirical demand function. Following the extant literature (see Amendolagine et al., 2019; Banh et al., 2020; Carril‐Caccia & Pavlova, 2020; Foster‐McGregor et al., 2015; Kummritz et al., 2017; UNCTAD, 2013; Wang et al., 2019), our measure of GVC participation is computed as the sum of the share of foreign value‐added used in a country's exports (we call this backward GVC participation) and the share of country's domestic value‐added that enters as an intermediate input in the value‐added exported by other countries (we call this forward GVC participation).…”

Operational and strategic change during temporary turbulence: evidence from the COVID-19 pandemic

“…Building on the value chain, researchers have developed new frameworks to enhance our understanding of value chain governance (Gereffi et al 2005 ), value chain length and “upstreamness” (Wang et al 2017 ), degree of participation in the value stream (Knez et al 2021 ), and producer-driven versus buyer-driven value chains (Gereffi 1994 ). The value chain has also been used as a lens through which to examine other topics such as innovation (Koc and Bozdag 2017 ), mergers and acquisitions (Carril-Caccia and Pavlova 2020 ), and business models (Strakova et al 2021 ).…”

The Impact of Environmental Regulation on Location’s Choice of Cross-Border Mergers and Acquisitions

“…Ekholm et al, 2007;Hanson et al, 2005;Krautheim, 2013). Accordingly, FDI is positively related to the formation of global value chains (Carril-Caccia & Pavlova, 2020;Contractor et al, 2020;Martinez-Galan & Fontoura, 2019). On the other hand, in the context of horizontal FDI type, bilateral trade liberalization is expected to have a negative impact on FDI, since trade and FDI substitute each other as alternative strategies to serve a foreign market (e.g.…”