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Organization of multinational activities and ownership structure

Author

Listed:
  • Mugele, Christian
  • Schnitzer, Monika

Abstract

We develop a model of a multinational firm serving a foreign market that needs to decide about the location of production and the optimal ownership structure. We study how the location decision and the ownership choice interact, how these decisions are affected by (cultural) distance and how they depend on industry characteristics. Our analysis shows that (i) distance leads to less integration in low tech, but tends to lead to more integration in high tech industries, (ii) distance may have a non-monotonous effect on the likelihood of horizontal investments as opposed to exports, and (iii) marketing intensive industries are relatively more likely to produce close to their customers.

Suggested Citation

  • Mugele, Christian & Schnitzer, Monika, 2008. "Organization of multinational activities and ownership structure," Munich Reprints in Economics 19200, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:19200
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    Citations

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    Cited by:

    1. Alireza Naghavi & Julia Spies & Farid Toubal, 2013. "IPR, Product Complexity and the Organization of Multinational Firms," Working Papers 2013-31, CEPII research center.
    2. P. Charnoz & C. Lelarge & C. Trevien, 2016. "Communication Costs and the Internal Organization of Multi-Plant Businesses: Evidence from the Impact of the French High-Speed Rail," Documents de Travail de l'Insee - INSEE Working Papers g2016-02, Institut National de la Statistique et des Etudes Economiques.
    3. Alireza Naghavi & Julia Spies & Farid Toubal, 2015. "Intellectual property rights, product complexity and the organization of multinational firms," Canadian Journal of Economics, Canadian Economics Association, vol. 48(3), pages 881-902, August.
    4. Hansen, Thorsten, 2010. "Innovation and the International Firm Structure: Theory and Evidence from German Firm-Level Data," Discussion Papers in Economics 11464, University of Munich, Department of Economics.
    5. Lommerud, Kjell Erik & Meland, Frode & Straume, Odd Rune, 2011. "Mergers and capital flight in unionised oligopolies: Is there scope for a "national champion" policy?," International Review of Economics & Finance, Elsevier, vol. 20(2), pages 325-341, April.
    6. Schindler, Dirk & Schjelderup, Guttorm, 2008. "Multinationals, Minority Ownership and Tax-Efficient Financing Structures," Discussion Papers 2008/19, Norwegian School of Economics, Department of Business and Management Science.
    7. Nakamura, Masao & Zhang, Anming, 2018. "Foreign direct investment with host country market structures, with empirical application to Japan," Journal of the Japanese and International Economies, Elsevier, vol. 49(C), pages 43-53.
    8. Leo A. Grunfeld & FRANCESCA SANNA-RANDACCIO, 2009. "Cross Border M&A: Who Buys Whom When Market Size and Technology Levels Differ?," DIS Technical Reports 2009-12, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".

    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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