Group Affiliation and Location of Indian Firms’ Foreign Acquisitions

Pradhan, Jaya Prakash and Singh, Neelam (2010): Group Affiliation and Location of Indian Firms’ Foreign Acquisitions.

Abstract

Notwithstanding the extensive literature on emerging markets OFDI, generally led by Business Groups (BG), there is scant evidence on the differential patterns of OFDI by BG-affiliated and standalone firms. Employing data on the Indian overseas acquisitions during 2000–2008, this study examines their host-country related locational determinants, also separately for the BG-affiliated and other firms. The BG-affiliates have a relatively wider spread of international acquisitions and greater preference for Europe over North America. The censored Poisson estimates indicate the general attraction of host country market size and double-taxation-avoidance treaty. However, unlike the standalone firms, the overseas acquisitions location for BG-affiliates is significantly favourably influenced also by the host country growth rate, liberal inward-FDI regime and bilateral investment treaty, and is getting attracted to geographically distant nations. Again, only the standalone firms’ foreign acquisitions are significantly impacted by the cultural proximity and the quantitative relative importance, to the host nation, of imports from India. Thus, given their derived resources and parental networks, the BG-affiliated EMNEs (can) decide the OFDI host location in a broader and less restrained framework.

• Item Type: MPRA Paper
• Language: English
• Keywords: Cross-border M&As; OFDI Location; Business Groups; Standalone Firms; Emerging Multinationals.
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance; F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure

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