Organization of Multinational Activities and Ownership Structure

Monika Schnitzer () and Christian Mugele

No 5592, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We develop a model in which multinational investors decide about the modes of organization, the locations of production, and the markets to be served. Foreign investments are driven by market-seeking and cost-reducing motives. We further assume that investors face costs of control that vary among sectors and increase in distance. The results show that (i) production intensive sectors are more likely to operate a foreign business independent of the investment motive, (ii) that distance may have a non-monotonous effect on the likelihood of horizontal investments, and (iii) that globalization, if understood as reducing distance, leads to more integration.

Keywords: Ownership structure; Multinational firms; Distance; Technology spillovers; Joint ventures (search for similar items in EconPapers)
JEL-codes: D23 F23 L22 L23 L24 (search for similar items in EconPapers)
Date: 2006-03
New Economics Papers: this item is included in nep-bec and nep-cse
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Organization of multinational activities and ownership structure (2008)
Working Paper: Organization of multinational activities and ownership structure (2008)
Working Paper: Organization of Multinational Activities and Ownership Structure (2006)
Working Paper: Organization of Multinational Activities and Ownership Structure (2006)
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