AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
Organizing Production across Borders in a Time of Uncertainty
AEA Papers and Proceedings
(pp. 635–639)
Abstract
Intensifying geopolitical turmoil has revealed the fragility of international production networks. This paper demonstrates how multinational firms are redefining their organizational boundaries by examining cross-border mergers and acquisitions (M&A’s) as a lever for restructuring global production networks in turbulent times. Combining comprehensive data from cross-border M&A transactions and US input-output tables, the paper provides robust evidence that rising economic policy uncertainty compels firms to deepen vertical integration by acquiring targets situated at more distant stages of the value chain. Regression estimates suggest that heightened disruption risk is significantly associated with multinational firm integration patterns.Citation
Alfaro, Laura, Anusha Chari, and Haruka Takayama. 2026. "Organizing Production across Borders in a Time of Uncertainty." AEA Papers and Proceedings 116: 635–639. DOI: 10.1257/pandp.20261116Additional Materials
JEL Classification
- D81 Criteria for Decision-Making under Risk and Uncertainty
- F23 Multinational Firms; International Business
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- I12 Health Behavior
- L14 Transactional Relationships; Contracts and Reputation; Networks
- L22 Firm Organization and Market Structure
- L23 Organization of Production