© 2017 The Department of Economics, University of Oxford and John Wiley & Sons Ltd.
OXFORD BULLETIN OF ECONOMICS AND STATISTICS, 80, 2 (2018) 0305–9049
Mergers Along the Global Supply Chain: Information
Technologies and Routine Tasks*
Sergi Basco† and Mart
†Universidad Carlos III, Getafe, Spain (e-mail: firstname.lastname@example.org)
‡Northwestern University, Northwestern, Evanston, USA (e-mail: marti.mestieri@north
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 adoption
on 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.
The Information Technologies (IT) revolution has changed the organization of the ﬁrm.
has been argued that IT have allowed headquarters to better monitor suppliers, as the next
quote from the New York Times (19 March 2011) illustrates.
supply lines are longer and far more complex than in the past. The ability to manage
these complex networks, experts say, has become possible because of technology – Internet
communications, RFID tags and sensors attached to valued parts, and sophisticated software
for tracking and orchestrating the ﬂow of goods worldwide.”
This paper provides a ﬁrst attempt to empirically study how the adoption of these IT
has affected the international organization of the supply chain of Northern ﬁrms. We focus
on Mergers and Acquisitions (M&As), which are an important and growing fraction of
JEL Classiﬁcation numbers: F23, F14, D23, L22.
*A previous version of this paper was circulated under the title ‘Deconstructing International Mergers: Information
Technologies and Routineness’. We thank Daron Acemoglu, Pol aNTR`as, Paula Bustos, Nicholas Bloom, Alessandro
Bonatti, Thomas Chaney, Rosario Crin`o, Arnaud Costinot, Klaus Desmet, Gino Gancia, Francine Lafontaine, Mar
Reguant, Steve Tadelis and seminar participants at MIT, TIGER Forum, Toulouse School of Economics and UC3M,
the editor and two anonymous referees for useful comments and suggestions. Basco acknowledges ﬁnancial support
from the Spanish Ministry of Science and Innovation, grant MDM 2014-0431. Mestieri acknowledges ﬁnancial
support from the Agence Nationale de la Recherche. The remaining errors are our own.
See, for example, Bloom et al. (2014) for an empirical analysis of the impact of ICT technologies on the
organization of Northern ﬁrms. The fall in communication costs has also expanded the range of jobs that are being
offshored. See, among others, Blinder (2006), Crin`o (2010), Ebenstein et al. (2014) and Oldenski (2011).