- New Horizons in International Business series
Edited by Lorraine Eden and Wendy Dobson
Chapter 5: Assessing International Mergers and Acquisitions as a Mode of Foreign Direct Investment
5. Assessing international mergers and acquisitions as a mode of foreign direct investment* 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;...
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