Vertical integration and supplier finance

Erasmus Kersting () and Holger Görg

No 1894, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: We investigate the financial implications of a multinational firm's choice between outsourcing and integration from the perspective of the supplier. Using a simple model, we explore the extent to which an integrated supplier's access to finance, as well as its sources of funding, change relative to a firm supplying a multinational at arm's-length. The model predicts that integrated firms have better access to finance and cover a larger share of their costs using internal funds. Furthermore, improvements in a host country's level of financial development have less of an impact on the financial situation of integrated suppliers. We present empirical evidence from firm-level data for over 60 countries broadly supporting the predictions.

Keywords: Vertical Integration; Financial Constraints; Multinational companies (search for similar items in EconPapers)
JEL-codes: F23 G32 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/90628/1/776824619.pdf (application/pdf)

Related works:
Journal Article: Vertical integration and supplier finance (2017)
Journal Article: Vertical integration and supplier finance (2017)
Working Paper: Vertical integration and supplier finance (2014)
Working Paper: Vertical Integration and Supplier Finance (2014)
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:ifwkwp:1894

Access Statistics for this paper

More papers in Kiel Working Papers from Kiel Institute for the World Economy Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().