Title
When Individual Locations Affect the Choice of Multi-Location Acquisition Targets
Publication Date
12-1-2012
Document Type
Article
Abstract
When examining how geographic location affects acquisitions, existing research has largely overlooked that many acquired firms operate in multiple locations. We examine the role of inter-firm and intra-firm agglomeration effects through the use of acquisitions of multi-location targets in knowledge-intensive industries, focusing on the importance of knowledge transfer. We argue that in such settings, acquirers value specific location characteristics of multi-location firms and not aggregate location characteristics. We hypothesize that in knowledge-intensive industries, an acquirer is more likely to select a multi-location target the higher the knowledge intensity of its most knowledge-intensive location. We also hypothesize that in knowledge-intensive industries, an acquirer is more likely to select a multi-location target the more locations their operations overlap because it facilitates internal knowledge transfer in the combined firm. Using a sample of multi-location acquisitions of US manufacturing firms between 2002 and 2004 and employing a discrete choice methodology, we find support for these predictions. Our results highlight the importance that specific locations play in the choice of multi-location acquisition targets.
Comments
Ramos, M. A., & Shaver, J. M. (2013). When individual locations affect the choice of multi-location acquisition targets. Strategic Organization, 11(2), 125–155. https://doi.org/10.1177/1476127012466649