If large companies buy small dynamic enterprises, and move them to the headquarters. location or elsewhere, the process could suppress regional, or dependent, economy income and productivity. We investigate this hypothesis by analysing around 2 million observations of the UK enterprise- level Business Structure Database. Contrary to the experience of large firms, more productive small businesses are more subject to takeover. In addition, SMEs that have been acquired are also more likely to both exit and relocate to another region. This last finding however cuts both ways; a peripheral region or country may receive post-merger companies as well as lose them. With the exception of the core of London and the South East, British regions achieve an approximate numerical balance of relocations from SME takeovers.
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Paper provided by Cardiff University, Cardiff Business School, Economics Section in its series Cardiff Economics Working Papers with number
E2008/9.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Boyan Jovanovic & Peter L. Rousseau, 2002.
"The Q-Theory of Mergers,"
NBER Working Papers
8740, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Carl Davidson & Ben Ferrett, 2007.
"Mergers in Multidimensional Competition,"
Economica,
London School of Economics and Political Science, vol. 74(296), pages 695-712, November.
[Downloadable!] (restricted)