This paper empirically analyzes how the adoption of Information Technologies (IT) has changed the organization of global supply chains. We focus on international mergers, which are a growing and important component of foreign direct investment. We use data on North-South vertical mergers and acquisitions for all manufacturing industries. We show that the effect of IT adoption on the number of vertical mergers and acquisitions is decreasing with the “routineness” of the industry. Our interpretation is that the IT revolution has enabled new monitoring mechanisms. This has allowed Northern headquarters to better monitor suppliers, specially those in less routine-intensive industries –which were harder to monitor prior to the IT revolution.
Mergers and Acquisitions; Information Technologies; Routine Intensity;
- D23: Organizational Behavior • Transaction Costs • Property Rights
- F14: Empirical Studies of Trade
- F23: Multinational Firms • International Business
- L22: Firm Organization and Market Structure
TSE Working Paper, n. 13-428, July 2013, revised November 2013