Foreign Ownership and Market Entry

When a firm wishes to sell in a foreign market, it can do so either by exporting to that market or by investing in a local production unit. The latter mode of servicing a foreign market is referred to as a foreign direct investment (FDI). International production has increased rapidly during the last two decades, and particularly since the second half of the 1980s. This paper describes the facts, explains why firms choose FDI, and evaluates FDI in terms of impact on host economies. Particular emphasis is placed on firms’ choice between the two types of foreign investment; “greenfields”, which involves the establishment of a new production facility, and cross-border mergers and acquisitions, which involves taking over an existing production unit in a foreign market. The paper also contains a fairly extensive discussion of the consequences of economic integration on market entry.

Assessing Canada's Ability to Compete for Foreign Direct Investment

The main purpose of this report is to assess Canada’s performance in attracting foreign direct investment inflows. The study reviews the literature on the benefits of FDI, analyses global and Canadian trends in FDI, identifies various factors affecting the inflow of FDI, and details how Canada ranks relative to other major OECD countries on the most influential factors. Canada’s share of world FDI has fallen markedly since 1980. The report finds that this development reflects the opening of other countries to FDI rather than a hostile climate for FDI in this country. Indeed, there is no one factor that can be identified as seriously impeding the flow of FDI to Canada. The report identifies a number of areas where Canada can potentially improve its attractiveness to FDI, including possible changes to FDI regulation, a more competitive tax regime, better infrastructure, and certain improvements in the human capital area.Foreign Direct Investment, Business climate, taxation, infrastructure, human capital

Organizational and Systems Factors Leading to Systems Integration Success after Merger and Acquisition

Mergers and acquisitions (M&A) are a common technique used by companies to grow and enter new markets. The success rate of these transactions continues to be less than desired. Information Systems (IS) have been proven to be a key component influencing the success of mergers. While numerous factors have been found to lead to systems integration success, the studies have not analyzed the fit that is required when two organizations and systems are joined. This research focuses on the match between organizational variables of competencies and processes of two merging companies, as well as the match between systems variables of capabilities and technology. The results of this study attempt to show which factors impact systems integration success. Utilizing secondary data sources, measures were gathered for US companies that have experienced M&A between 2008 and 2012. Data points at the time of merger were collected for both the target company and the acquirer, and then transformed into proxy measures for competencies, processes, capabilities, and technology. Each pair was regressed against the measure of systems integration success to measure fit and impact. With statistical outputs, the hypothesis related to technology was found to be partially supported. The study extends the current knowledge on factors impacting M&A success. Determining the most significant variables provides valuable insight to practitioners, as to what factors to focus on for successful integration

FDI protectionism is on the rise

Over the past two decades or so, countries have liberalized their FDI regulatory frameworks and have put in place an international investment law regime that provides various protections for international investors. In the past few years, however, there are signs that countries are reevaluating their approach toward such investment. As a result, FDI protectionism is on the rise, with screening of inward M&As becoming more frequent. Typically, this is being done under the guise of"national interest"or similar concepts, often linked to strategic sectors and national champions. While the international investment law regime faces a challenge to find the right balance between the rights and responsibilities of governments and investors, care needs to be taken that the rise of FDI protectionism does not endanger a rules-based approach to FDI. An independent FDI Protectionism Observatory to monitor new protectionist measures and name and shame countries that take them is therefore needed.Debt Markets,Emerging Markets,Investment and Investment Climate,,Trade and Regional Integration

Implications of Technological Uncertainty on Firm Outsourcing Decisions

Outsourcing inherently considers what activity needs to reside within a given firm. The difficulty of exchanges between firms in the face of uncertainty affects where work on developing and producing new products is performed. Theory is developed and explored using a case study that explains firm sourcing decisions as a response to uncertainty within the context of industry structure and related transaction costs. Viewing outsourcing broadly results in a better delineation of outsourcing options. Implications for management research and practice are identified

Evaluating Information Technology (IT) Integration Risk Prior to Mergers and Acquisitions (M&A)

Corporate mergers and acquisitions (M&A) are considered significant, from both a strategic and an economic point of view, across almost all sectors of the economy.1 M&A is a complex process involving risk that ranges from financial and legal matters to sales and marketing challenges and everything in between. Despite well-established benefits of strategically driven expansion and integration of businesses through M&A, the consolidated organization exposes itself to a number of anticipated, unknown and unintended risk factors. The risk concerns the overall organizational integration of some or all of the previously distinct and interdependent assets, structures, business processes, technologies, systems, people and cultures of the two firms into a unified whole.

Determinants of firm-size

Overzicht van theoretische factoren die belangrijk zijn bij het verklaren van schaalgrootte van bedrijven en verschillen in schaalgrootte tussen vergelijkbare bedrijven. Naast de theoretische factoren worden enkele relevante trends beschreven en wordt gekeken naar de impact van deze trends op de mechanismen die schaalgrootte beïnvloeden. Terwijl het aantal overnames en fusies de laatste jaren sterk is toegenomen, is ook het aantal startende bedrijven sterk gegroeid. Per saldo is het gemiddelde bedrijf in Nederland licht in omvang afgenomen. De mechanismen die schaalgrootte en verdeling van schaalgrootte beïnvloeden, zijn bekeken op het niveau van de bedrijven zelf en op het niveau van sectoren. Bij het bedrijfsniveau gaat het bijvoorbeeld om schaal- en scopevoordelen, transactiekosten, ?agency-costs? en de levenscyclus van bedrijven. Mechanismen die belangrijk zijn op het niveau van sectoren of clusters zijn bijvoorbeeld externe schaal- en scope-effecten en netwerkeffecten. Overigens is er veel overlap tussen al deze mechanismen. Trends die belangrijk zijn voor schaalgrootte zijn met name globalisering, technologische ontwikkeling en deregulering.