Scandinavian Working Papers in Economics

Papers in Innovation Studies,
Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy

No 2014/30: Who acquires whom? The role of geographical proximity and industrial relatedness in Dutch domestic M&As between 2002 and 2008

Nils Ellwanger () and Ron Boschma ()
Additional contact information
Nils Ellwanger: APE BV, Den Haag
Ron Boschma: Center for Innovation and Research and Competence in the Learning Economy (CIRCLE), Lund University, Sweden, and Utrecht University,Urban and Regional research centre Utrecht (URU), The Netherlands

Abstract: In economic geography, geographical proximity has been identified as a key driver of M&A activity. In this context, little attention has yet been drawn to the effect of industrial relatedness, which refers to the similarity and complementarity of business activities. We examine 1,855 domestic M&A deals announced between 2002 and 2008 in the Netherlands, and we assess the extent to which geographical proximity and industrial relatedness affect M&A partnering. Our study shows that geographical proximity drives domestic M&A deals, even at very detailed spatial scales like the municipality level. We also found evidence that companies that share the same or complementary industries are more likely to engage in an M&A deal. Logistic regressions show that the effect of industrial relatedness is stronger than the effect of geographical proximity and that the effect of geographical proximity is stronger in unrelated than related target selection.

Keywords: Mergers and acquisitions; Netherlands; geographical proximity; home bias; industrial relatedness

JEL-codes: O18; R00; R11

39 pages, December 15, 2014

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201430_Ellwanger_Boschma.pdf PDF-file 

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