TY - JOUR
T1 - Cross-border mergers and domestic-firm wages
T2 - Integrating "spillover effects" and "bargaining effects"
AU - Clougherty, Joseph A.
AU - Gugler, Klaus
AU - Sørgard, Lars
AU - Szücs, Florian W.
N1 - Funding Information:
We wish to thank ESMT-Berlin for institutional support, Claudia Baldermann for research assistance, and Sørgard thanks the Norwegian Research Council for financial support through the project “improving competition policy” on SNF. We greatly appreciate comments and suggestions by our editor (Ram Mudambi), Ragnhild Balsvik, Tomaso Duso, anonymous referees, and during presentations at the 2010 EARIE in Istanbul, University of Stavanger in March 2011, 2011 IIOC in Boston, 2012 AIB in DC, and the 2012 JIBS special issue conference on the “Multinational in Geographic Space”.
PY - 2014/5
Y1 - 2014/5
N2 - Two literatures exist concerning cross-border merger activity's impact on domestic wages: one focusing on positive spillover effects; the other focusing on negative bargaining effects. Motivated by scarce theoretical scholarship spanning these literatures, we nest both mechanisms in a single conceptual framework. Considering the separate phenomena of inward and outward cross-border merger activity, our theoretical model generates three formal propositions: cross-border mergers can lead to wage increases via positive spillover effects; and negative bargaining effects are relatively more dominant when union market power is high, and when merging firms exhibit relatedness. Employing US firm-level panel data on wages combined with industry-level data on unionization and merger activity (covering 1989-2001), we find support for our propositions as inward and outward cross-border merger activity generate positive spillovers to wages, but are more likely to generate firm-level wage decreases when unionization rates are high and when cross-border merger activity is characterized as horizontal. Accordingly, future research on how cross-border mergers affect domestic wages should be mindful that both spillover and bargaining effects are at play, and that the degree of union market power and the relatedness of cross-border merger activity are critical in determining which effect dominates.
AB - Two literatures exist concerning cross-border merger activity's impact on domestic wages: one focusing on positive spillover effects; the other focusing on negative bargaining effects. Motivated by scarce theoretical scholarship spanning these literatures, we nest both mechanisms in a single conceptual framework. Considering the separate phenomena of inward and outward cross-border merger activity, our theoretical model generates three formal propositions: cross-border mergers can lead to wage increases via positive spillover effects; and negative bargaining effects are relatively more dominant when union market power is high, and when merging firms exhibit relatedness. Employing US firm-level panel data on wages combined with industry-level data on unionization and merger activity (covering 1989-2001), we find support for our propositions as inward and outward cross-border merger activity generate positive spillovers to wages, but are more likely to generate firm-level wage decreases when unionization rates are high and when cross-border merger activity is characterized as horizontal. Accordingly, future research on how cross-border mergers affect domestic wages should be mindful that both spillover and bargaining effects are at play, and that the degree of union market power and the relatedness of cross-border merger activity are critical in determining which effect dominates.
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U2 - 10.1057/jibs.2014.2
DO - 10.1057/jibs.2014.2
M3 - Article
AN - SCOPUS:84901030409
SN - 0047-2506
VL - 45
SP - 450
EP - 470
JO - Journal of International Business Studies
JF - Journal of International Business Studies
IS - 4
ER -