Multinational firms' organisational dynamics: Competition intensity and the ownership decision under uncertainty

Leandro Navarro

VfS Annual Conference 2021 (Virtual Conference): Climate Economics from Verein für Socialpolitik / German Economic Association

Abstract: I analyse firms organisational choices when they face uncertainty about institutional conditions in foreign locations with heterogeneous final good producers and incomplete contracts. As firms learn about the conditions abroad, the increasing offshoring activity increases competition in the final goods market, leading to a progressive vertical disintegration of the supply chains. Initially, the firms that decide to explore offshoring potential choose integration. As competition in final good markets intensifies, the least productive ones among them switch sequentially to arm's length trade. In the fully domestic supply chains, the increasing competition promotes a sequential disintegration of the domestic intermediate input suppliers. I test for the predictions of the model using sectorallevel data for the US manufacturing sectors.

Keywords: Firm theory; multinational firms; incomplete contracts; global sourcing; uncertainty; sequential offshoring; information externalities; learning; competition; outsourcing; forward and backward integration; FDI (search for similar items in EconPapers)
JEL-codes: D21 D23 D81 D83 F14 F21 F23 L22 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-com and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/242389/1/vfs-2021-pid-49721.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc21:242389

Access Statistics for this paper

More papers in VfS Annual Conference 2021 (Virtual Conference): Climate Economics from Verein für Socialpolitik / German Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().