Multinational M&A in Upstream Industry and Organizational Change

　This study explores the boundary response of domestic firms faced with increased openness to new foreign multinational M&A in an intermediate-input market in a host country. We develop a theoretical framework to study the impact of new foreign multinational M&A on the wholesale price of intermediate inputs as a key market condition in the host country and explore how the intermediate-input prices affect the organizational choice of domestic firms between domestic vertical integration and outsourcing. We find that new foreign multinational M&A raises the intermediate-input prices and facilitates the firms’ choice of domestic vertical integration.