Rainer Frey

European market integration through technology-driven M&As

Merger and Acquisitions (M&As) have been an important tool for reorganizing the European market since the establishment of European Economic and Monetary Union. This article suggests that European integration helped and encouraged European firms to source technology across national borders in Europe, establishing European innovative firms. The figures confirm that, once barriers impeding the free movement of capital, goods and labour had fallen, European firms used M&As intensively to enter foreign European markets. Enhancing technology competencies is found to be one of the main motives for cross-border acquisitions in the 1990s but is not a factor in domestic acquisitions over the same period.

Same as it Ever Was? Europe's National Borders and the Market for Corporate Control

National borders continue to be strong barriers for mergers and acquisitions in Europe. Using regional data, we construct a gravity model and find that the restraining impact of national borders decreased by more than 17 percent between 1991 and 2007. However, no significant change has occurred since the mid-1990s (i.e., four years before the introduction of the euro). In comparison, we run a corresponding analysis in the United States using the 10 federal regions as country equivalents. The resulting ‘quasi-border’ effect in the United States is weaker than that in the European Union. Yet its decline by 43 percent is much stronger in the same period. We conclude that European integration policy has had little effect on fostering M&A cross-border transactions.