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Please use this identifier to cite or link to this item: https://hdl.handle.net/2445/116368
Which firms are involved in foreign vertical integration? [WP-IEB]
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Abstract
In line with the literature that considers that transaction costs, asset specificity and incomplete contracts play a key role in the “make or buy decision”, this paper seeks to discriminate the characteristics of firms that make them more or less likely to integrate their activities in a foreign country. We draw on firm level data for Spanish manufacturing firms from the Survey on Business Strategies (ESEE), which enable us to identify whether their imports are intra-firm (related party) or at arm’s-length (non-related party). Our results show that candidates for vertical integration are the most productive firms and those that receive a large share of their inputs from headquarters. We also demonstrate that international experience and product differentiation favor foregin integration even after controlling for other characteristics of the firm.
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PELEGRÍN SOLÉ, Àngels and GARCIA-QUEVEDO, Jose. Which firms are involved in foreign vertical integration? [WP-IEB]. IEB Working Paper 2012/38. [consulted: 9 of June of 2026]. Available at: https://hdl.handle.net/2445/116368