Vertical Integration and Supplier Finance

Holger Görg and Erasmus Kersting ()

VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy from Verein für Socialpolitik / German Economic Association

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.

JEL-codes: F20 F23 G32 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-int
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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)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc14:100281

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