Clougherty, Joseph and Gugler, Klaus and Sørgard, Lars and Szücs, Florian. 2014. Cross-border mergers and domestic-firm wages: Integrating "spillover effects" and "bargaining effects" Journal of International Business Studies JIBS 45 (4): S. 450-470.


BibTeX

@ARTICLE{Clougherty2014,
title = {Cross-border mergers and domestic-firm wages: Integrating "spillover effects" and "bargaining effects"},
author = {Joseph Clougherty and Klaus Gugler and Lars Sørgard and Florian Szücs},
year = {2014},
doi = {http://dx.doi.org/10.1057/jibs.2014.2},
volume = {45},
number = {4},
language = {EN},
pages = {450-470},
journal = {Journal of International Business Studies JIBS},
abstract = {Two literatures exist concerning cross-border merger activity's impact on domestic wages: one focusing on positive spillover effects; the other focusing on negative bargaining effects. Motivated by scarce theoretical scholarship spanning these literatures, we nest both mechanisms in a single conceptual framework. Considering the separate phenomena of inward and outward cross-border merger activity, our theoretical model generates three formal propositions: cross-border mergers can lead to wage increases via positive spillover effects; and negative bargaining effects are relatively more dominant when union market power is high, and when merging firms exhibit relatedness. Employing US firm-level panel data on wages combined with industry-level data on unionization and merger activity (covering 1989-2001), we find support for our propositions as inward and outward cross-border merger activity generate positive spillovers to wages, but are more likely to generate firm-level wage decreases when unionization rates are high and when cross-border merger activity is characterized as horizontal. Accordingly, future research on how cross-border mergers affect domestic wages should be mindful that both spillover and bargaining effects are at play, and that the degree of union market power and the relatedness of cross-border merger activity are critical in determining which effect dominates.},
}

Abstract

Two literatures exist concerning cross-border merger activity's impact on domestic wages: one focusing on positive spillover effects; the other focusing on negative bargaining effects. Motivated by scarce theoretical scholarship spanning these literatures, we nest both mechanisms in a single conceptual framework. Considering the separate phenomena of inward and outward cross-border merger activity, our theoretical model generates three formal propositions: cross-border mergers can lead to wage increases via positive spillover effects; and negative bargaining effects are relatively more dominant when union market power is high, and when merging firms exhibit relatedness. Employing US firm-level panel data on wages combined with industry-level data on unionization and merger activity (covering 1989-2001), we find support for our propositions as inward and outward cross-border merger activity generate positive spillovers to wages, but are more likely to generate firm-level wage decreases when unionization rates are high and when cross-border merger activity is characterized as horizontal. Accordingly, future research on how cross-border mergers affect domestic wages should be mindful that both spillover and bargaining effects are at play, and that the degree of union market power and the relatedness of cross-border merger activity are critical in determining which effect dominates.

Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Journal of International Business Studies JIBS
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, MAN-A+, STRAT-A, VW-C, WH-A
Language English
Title Cross-border mergers and domestic-firm wages: Integrating "spillover effects" and "bargaining effects"
Volume 45
Number 4
Year 2014
Page from 450
Page to 470
Reviewed? Y
DOI http://dx.doi.org/10.1057/jibs.2014.2

Associations

People
Gugler, Klaus (Details)
Szücs, Florian (Details)
External
Clougherty, Joseph (University of Illinois at Urbana-Champaign, United States/USA)
Sørgard, Lars (Norwegian School of Economics, Norway)
Organization
Economics DP (Details)
Regulierungsökonomie FI (Details)
Quantitative Economics IN (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5370 Industrial economics (Details)
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