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Who acquires whom? The role of geographical proximity and industrial relatedness in Dutch domestic M&As between 2002 and 2008

  • Nils Ellwanger

    ()

  • Ron Boschma

    ()

In economic geography, geographical proximity has been identified as a key driver of M&A activity. In this context, little attention has yet been drawn to the effect of industrial relatedness, which refers to the similarity and complementarity of business activities. We examine 1,855 domestic M&A deals announced between 2002 and 2008 in the Netherlands, and we assess the extent to which geographical proximity and industrial relatedness affect M&A partnering. Our study shows that geographical proximity drives domestic M&A deals, even at very detailed spatial scales like the municipality level. We also found evidence that companies that share the same or complementary industries are more likely to engage in an M&A deal. Logistic regressions show that the effect of industrial relatedness is stronger than the effect of geographical proximity.

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File URL: http://econ.geo.uu.nl/peeg/peeg1319.pdf
File Function: Version October 2013
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Paper provided by Utrecht University, Section of Economic Geography in its series Papers in Evolutionary Economic Geography (PEEG) with number 1319.

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Length: 40 pages
Date of creation: Oct 2013
Date of revision: Oct 2013
Handle: RePEc:egu:wpaper:1319
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  1. Fritsch, Michael & Schilder, Dirk, 2006. "Does venture capital investment really require spatial proximity? An empirical investigation," Freiberg Working Papers 2006,07, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
  2. Anju Seth & Kean P Song & Richardson Pettit, 2000. "Synergy, Managerialism or Hubris? An Empirical Examination of Motives for Foreign Acquisitions of U.S. Firms," Journal of International Business Studies, Palgrave Macmillan, vol. 31(3), pages 387-405, September.
  3. Russell Hillberry & David Hummels, 2003. "Intranational Home Bias: Some Explanations," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1089-1092, November.
  4. Frank Neffke & Martin Henning & Ron Boschma, 2011. "How Do Regions Diversify over Time? Industry Relatedness and the Development of New Growth Paths in Regions," Economic Geography, Clark University, vol. 87(3), pages 237-265, 07.
  5. Jung-Chin Shen & Jeffrey Reuer, 2005. "Adverse Selection in Acquisitions of Small Manufacturing Firms: A Comparison of Private and Public Targets," Small Business Economics, Springer, vol. 24(4), pages 393-407, 05.
  6. Michael H. Grote & Marc Umber, 2006. "Home biased? A spatial analysis of the domestic merging behavior of US firms," Working Paper Series: Finance and Accounting 161, Department of Finance, Goethe University Frankfurt am Main.
  7. Kevin Morgan, 2004. "The exaggerated death of geography: learning, proximity and territorial innovation systems," Journal of Economic Geography, Oxford University Press, vol. 4(1), pages 3-21, January.
  8. MC. Di Guardo & E. Marrocu & R. Paci, 2013. "The Concurrent Impact of Cultural, Political, and Spatial Distances on International Mergers and Acquisitions," Working Paper CRENoS 201308, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  9. Keith Chapman, 2003. "Cross-border mergers/acquisitions: a review and research agenda," Journal of Economic Geography, Oxford University Press, vol. 3(3), pages 309-334, July.
  10. Levy, David T & Reitzes, James D, 1992. "Anticompetitive Effects of Mergers in Markets with Localized Competition," Journal of Law, Economics and Organization, Oxford University Press, vol. 8(2), pages 427-40, April.
  11. Manski, Charles F & Lerman, Steven R, 1977. "The Estimation of Choice Probabilities from Choice Based Samples," Econometrica, Econometric Society, vol. 45(8), pages 1977-88, November.
  12. Andrés Rodríguez-Pose & Hans-Martin Zademach, 2006. "Industry Dynamics In The German Merger And Acquisitions Market," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 97(3), pages 296-313, 07.
  13. King, Gary & Zeng, Langche, 2001. "Explaining Rare Events in International Relations," International Organization, Cambridge University Press, vol. 55(03), pages 693-715, June.
  14. Joshua D. Coval & Tobias J. Moskowitz, 1999. "Home Bias at Home: Local Equity Preference in Domestic Portfolios," Journal of Finance, American Finance Association, vol. 54(6), pages 2045-2073, December.
  15. Emanuela Marrocu & Ron Boschma & Raffaele Paci, 2014. "Symmetric and asymmetric effects of proximities. The case of M&A deals in Italy," ERSA conference papers ersa14p76, European Regional Science Association.
  16. Ron Boschma, 2005. "Proximity and Innovation: A Critical Assessment," Regional Studies, Taylor & Francis Journals, vol. 39(1), pages 61-74.
  17. Fabian Homberg & Katja Rost & Margit Osterloh, 2009. "Do synergies exist in related acquisitions? A meta-analysis of acquisition studies," Review of Managerial Science, Springer, vol. 3(2), pages 75-116, July.
  18. Huberman, Gur, 2001. "Familiarity Breeds Investment," Review of Financial Studies, Society for Financial Studies, vol. 14(3), pages 659-80.
  19. Koen Frenken & Frank Van Oort & Thijs Verburg, 2007. "Related Variety, Unrelated Variety and Regional Economic Growth," Regional Studies, Taylor & Francis Journals, vol. 41(5), pages 685-697.
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