Multinational Networks and Trade Participation

Paola Conconi, Fabrizio Leone, Glenn Magerman () and Catherine Thomas

No 2025-03, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: This paper provides a new explanation for the dominance of multinational corporations (MNCs) in international trade: after being acquired by an MNC, firms face lower entry frictions in countries in which their global parent already has a presence. We provide a model of firms’ export and import choices that delivers firm-level gravity regressions to isolate these “MNC network effects” from other channels through which multinationalownership can affect firms’ trade participation. We estimate the model combining rich administrative data for Belgium with data on MNCs’ global affiliate networks. Event study results reveal that acquired firms are more likely to start exporting to and importing from countries that belong—or that are exogenously added—to their parental network. The effects are stronger when new affiliates are geographically and culturally close to their direct parent, which can facilitate transfer of information about the global parent’s network. Combining the structure of our model with the empirical estimates, we find that MNC network effects have a large impact on firm growth. The effects of MNC ownership extend beyond the boundaries of the multinational: new affiliates are also more likely to start trading with countries that are geographically and culturally close to the MNC network, even if their parent has no affiliates there.

Pages: 51 p.
Date: 2025-03
References: Add references at CitEc
Citations:

Published by:

Downloads: (external link)
https://dipot.ulb.ac.be/dspace/bitstream/2013/3893 ... _MAGERMAN_THOMAS.pdf Œuvre complète ou partie de l'œuvre (application/pdf)

Related works:
Working Paper: Multinational networks and trade participation (2025)
Working Paper: Multinational Networks and Trade Participation (2025)
Working Paper: Multinational networks and trade participation (2024)
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:eca:wpaper:2013/389310

Ordering information: This working paper can be ordered from
http://hdl.handle.ne ... lb.ac.be:2013/389310

Access Statistics for this paper

More papers in Working Papers ECARES from ULB -- Universite Libre de Bruxelles Contact information at EDIRC.
Bibliographic data for series maintained by Benoit Pauwels ().