Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/90628
Authors: 
Kersting, Erasmus
Görg, Holger
Year of Publication: 
2014
Series/Report no.: 
Kiel Working Paper 1894
Abstract: 
We investigate the financial implications of a multinational firm's choice between outsourcing and integration from the perspective of the supplier. Using a simple model, we explore the extent to which an integrated supplier's access to finance, as well as its sources of funding, change relative to a firm supplying a multinational at arm's-length. The model predicts that integrated firms have better access to finance and cover a larger share of their costs using internal funds. Furthermore, improvements in a host country's level of financial development have less of an impact on the financial situation of integrated suppliers. We present empirical evidence from firm-level data for over 60 countries broadly supporting the predictions.
Subjects: 
Vertical Integration
Financial Constraints
Multinational companies
JEL: 
F23
G32
Document Type: 
Working Paper

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