Horizontal, Vertical, and Conglomerate Cross Border

Abstract

By using data on cross-border acquisitions (CBAs), this paper explores the dis- tribution of alternative strategies pursued when multinational enterprises integrate a foreign subsidiary into their organizational structure. Based on a measure of vertical re- latedness, each of the 165,000 acquisitions in our sample covering 31 source and 58 host countries can be classi ed as horizontal, vertical, or conglomerate. Three novel features of CBAs are highlighted. First, horizontal and vertical CBAs are relatively stable over time. Second, a considerable part of CBAs are conglomerate acquisitions whereby the nancial sector is an important, though by far not the only, segment involved. Third, the wave-like growth of CBAs arises primarily from changes in conglomerate activity.