Mergers along the Global Supply Chain: Information Techonologies and Routine Tasks

Abstract

This paper empirically analyses how the adoption of Information Technologies (IT) has changed the organization of global supply chains. We focus on international mergers, which are a growing and important component of foreign direct investment. We use data on North&-South mergers and acquisitions (M&As). We show that the effect of IT adoptionon the number of vertical M&As is decreasing with the routine intensity of the industry. Our interpretation is that the IT revolution enabled new monitoring mechanisms. This allowed Northern headquarters to better monitor suppliers, especially those in less routine-intensive industries &-which were harder to monitor before.