Person:
Skousen, Bradley

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Bradley
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Skousen
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IE University
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IE Business School
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Entrepreneurship
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End date: 2021 × Start date: 2020 ×

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    The efficiency and market-power interpretations of the multinational enterprise: Two out of three ain't bad
    (John Wiley and Sons Inc, 2021) Clougherty, Joseph; Skousen, Bradley; https://ror.org/02jjdwm75
    Research Summary: We contend that contemporary scholarship must embrace the foundational approach in global business and strategy to consider the relevance of both efficiency and market-power effects in factoring the implications of multinational activity. We empirically test the degree to which efficiency and market-power effects manifest in a comprehensive sample of 4,370 cross-border acquisitions materializing between 1986 and 2010. Specifically,we employ three different measurement approaches to distinguish efficiency enhancing from market-power increasing cross-border acquisitions. Empirical results indicate that efficiency enhancing transactions manifest in two-thirds and market-power increasing transactions manifest in one-third of our sampled activities. Accordingly,our results affirm the literature's focus on efficiency effects,yet market-power effects are sufficiently sizable to merit scholarly attention. Managerial Summary: Contemporary wisdom generally considers multinational activities to be characterized by efficiency properties. While it is understood that market power may manifest in multinational activity,most observers implicitly assume that anti-competitive effects are dominated by more-healthy efficiency effects. Yet,the justification behind the prior that efficiency effects dominate market-power effects is not evident,as multinational activities conceivably involve substantial market power. Accordingly,we test the received wisdom regarding the dominance of efficiency effects in an extensive sample of cross-border investments. Our empirical results affirm prevailing assumptions as efficiency enhancing transactions constitute the majority of cross-border investment activities. However,market-power increasing transactions manifest as a sizable minority of cross-border investments; thus,market-power effects should not be neglected. © 2019 The Authors. Global Strategy Journal published by John Wiley & Sons Ltd on behalf of Strategic Management Society.