The Role of Geographical Proximity and Industrial Relatedness in Dutch Domestic M&As

Abstract

Within economic geography and related fields geographical proximity has been identified as a driver of economic processes. Moreover, an increasing body of literature investigates the effects of industrial relatedness, which refers to similarity and complementarity of business activities. In the thesis I ask “Who acquires whom?” and show how and to what extent geographical proximity and industrial relatedness affect M&A partnering. 1,855 Dutch domestic deals that were announced between 2002 and 2008 are examined. One novelty of this study is its regional scale. It appears that geographical proximity not only drives domestic but even local deals, which are deals taking place within the same municipality or province. Another novelty is the estimation of not only the effect of geographical proximity but also the effect of industrial relatedness for every individual deal. The latter is based on a newly developed business activities co-occurrence measure. In addition, a logistic regression model shows that geographical proximity affects M&As independently from industrial relatedness.