European Integration and International M&As: The Case of Poland

Abstract

This paper studies determinants of international mergers and acquisitions (M&As) in Poland using the predictions of the knowledge capital model of multinational enterprise. The empirical implementation of the theory is based on the negative binomial model and the bilateral dataset covering 143 countries over the period 1995–2015. Our estimation results indicate that M&As in Poland are explained by both differences in relative factor endowments and in market size which confirms the importance of both market seeking and efficiency seeking motives. Moreover, the efficiency seeking motive is losing its importance over time while the market seeking motive becomes more important.

Keywords:

• Count data
• M&As
• negative binomial model
• Poland

JEL Classification codes:

• F23
• P33

Notes

1 The Penn World Table is a large set of cross-country comparable data developed and maintained by scholars at the University of California, Davis and the Groningen Growth Development Centre of the University of Groningen. The details are explained in Feenstra, Inklaar, and Timmer (2015).

2 Summarizing this enormous literature goes beyond the scope of this paper. Therefore, only some recent examples of this strand in the literature are given.

3 Over time several formal theoretical studies attempted to derive the gravity equation directly from formal models of international trade. The examples of such studies include Deardorff (1998), Feenstra, Markusen, and Rose (2001), Evenett and Keller (2002), Anderson and van Wincoop (2003), Helpman, Melitz, and Rubinstein (2008) and Cieślik (2009). The development of this literature is summarized in Head and Mayer (2014).

4 The full definition of the KC model can be found in Markusen (2002), although elements of this model can already be found in several working papers in the mid-1990s that were left unpublished (Markusen 2013).

5 The calculated values of the correlations between the variables used in the empirical study are reported in Table A1 in the Appendix.