2013/12/12 by Sergio Mariotti, Lucia Piscitello, Stefano Elia · 23 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Business #Core (optical fiber) #Corporate Finance and Governance #Economic geography #Economics #Economies of agglomeration #Empirical evidence #Externality #Global trade and economics #Industrial organization #International Business and FDI #International trade #Liability #Microeconomics #Multinational corporation
paper · open access · doi:10.1111/ecge.12039
published in Economic Geography 90(2), 187-211 (Taylor & Francis)
openalex publication_date 2013/12/12 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/02
Abstract This article assesses the influence of spatial heterogeneity on the entry mode by multinational enterprises ( MNE s) in foreign markets. Focusing on acquisitions, we claim that the location of the target firm influences the MNE 's ownership choice. MNE s normally execute partial acquisitions to reduce their liability of foreignness and to preserve their target's inherent competencies, particularly in highly innovative and internationally competitive sectors. However, this phenomenon occurs less frequently if target firms are located in areas that are characterized by relevant externalities, such as core cities and industrial districts. In particular, core cities allow foreign MNE s to access a variety of information and knowledge as well as other externalities that are associated with international interconnectedness; industrial districts provide MNE s with easier access to industry‐specific agglomeration economies (a local pool of skilled labor, local input‐output linkages, and local knowledge spillovers). These locations provide substitutes for different aspects of the target firm's competences, thus reducing an MNE 's need to maintain a local partner. Empirical evidence from foreign acquisitions of local manufacturing firms that occurred in I taly during the 2001–10 period confirms these expectations.