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TitleForeign acquisition and internal organization
Author(s)Bastos, Paulo
Monteiro, Natália P.
Straume, Odd Rune
KeywordsForeign direct investment
Internal organization
Wage inequality
Information technologies
Issue date1-Sep-2018
PublisherElsevier Science BV
JournalJournal of International Economics
Abstract(s)We study the effect of foreign takeovers on firm organization. Using a comprehensive data set of Portuguese firms and workers spanning two decades, we find that foreign acquisitions lead to: (1) an expansion in the scale of operations; (2) a higher number of hierarchical layers; and (3) higher wage inequality between the top and bottom layers. These results accord with a theory of knowledge-based hierarchies in which foreign takeovers lead to improved productivity, higher demand, or reduced internal communication costs, and thereby induce the acquired firms to reorganize. Evidence from auxiliary survey data reveals that acquired firms are more likely to use information technologies that reduce internal communication costs. (C) 2018 Published by Elsevier B.V.
AccessEmbargoed access (2 Years)
Appears in Collections:NIPE - Artigos em Revistas de Circulação Internacional com Arbitragem Científica

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