Table of Contents

Governance, Multinationals and Growth

Governance, Multinationals and Growth

New Horizons in International Business series

Edited by Lorraine Eden and Wendy Dobson

In Governance, Multinationals and Growth, leading scholars celebrate and build upon the pioneering work of Edward Safarian on multinational enterprises and foreign direct investment. The book explores the linkages among multinationals and foreign direct investment, corporate and public governance, and economic growth. The contributors pay particular attention to emerging policy issues that include the behavior of individual governments, intergovernmental organizations and civil society. In addition, they address linkages among MNEs, their governance and economic growth, and generic policy realities (and innovations) in a small-to-medium-sized economy.

Chapter 5: Assessing International Mergers and Acquisitions as a Mode of Foreign Direct Investment

Steven Globerman and Daniel Shapiro

Subjects: business and management, international business, economics and finance, international economics


* Steven Globerman and Daniel Shapiro . . . we believe that it is possible to formulate a general paradigm of MNE activity which sets out a conceptual framework and seeks to identify clusters of variables relevant to an explanation of all kinds of foreign-owned output. (Dunning, 1993, p. 68) INTRODUCTION A major and long-standing focus of scholarly research in the international business area is the identification and evaluation of the determinants of the location of international production (Dunning, 1993; Caves, 1996). Most empirical studies in this area attempt to identify and evaluate the most significant variables associated with inward and outward FDI. The empirical studies are primarily carried out at the country and industry levels and generally concentrate on overall flows without distinguishing among different modes of FDI. Conclusions about FDI location choice drawn from the studies therefore largely ignore the possibility that some locations may be more attractive than others for specific modes of FDI (Lall, 2002). If there are significant mode-specific location advantages, and the relative importance of specific modes changes over time, existing empirical evidence on the location determinants of FDI may be misleading. Moreover, government policies designed to encourage FDI may not produce the anticipated results if mode-specific location determinants are ignored. In fact, the majority of aggregate FDI flows are created through crossborder merger and acquisition (M&A) activity (Kang and Johansson, 2000; Letto-Gillies et al., 2001; Chen and Findlay, 2002).1 However, there are relatively few empirical studies examining...

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