Cross-border acquisitions in the Dutch pharmaceutical industry: a poison pill for the regional host economy? An evolutionary approach to the impact of cross-border acquisitions on the degree of territorial embeddedness of subsidiaries in their regional host environment

Abstract

This thesis is about cross-border acquisitions (CBAs) in the Dutch pharmaceutical industry and focuses on the territorial embeddedness of foreign subsidiaries. This thesis particularly sheds light on the evolution of a firm’s territorial embeddedness after the acquisition. Thereby focusing on the dynamic- and evolutionary interaction between the subsidiary and regional actors. During this process it is also important to gain insights into the key drivers of territorial embeddeness. By concentrating on the degree of embeddeness of acquired Dutch pharmaceutical firms, this thesis can contribute to the answer of the important policy and social question; i.e. what are the economic effects of cross-border acquisitions in the pharmaceutical industry? Observations are gathered by interviewing six representatives of acquired pharmaceutical firms, five expert interviews and secondary resources. The interviews have revealed characteristics of the evolution of the acquired firms, and their territorial embeddedness in their regional host environment. All six surveyed subsidiaries witnessed an evolution of their activities. Two out of the six interviewed subsidiaries became less embedded after the acquisition. The remaining four surveyed subsidiaries became more embedded (albeit marginally) in their regional host environments after the acquisition. The locational decisions stemming from the dialogue between the subsidiary and its headquarters, resulted in a greater degree of territorial embeddedness. A number of factors are likely to determine the degree of territorial embeddedness of the subsidiary in its regional host environment including: the motivation or rationale of the acquisition, the evolution of the subsidiary, autonomy of the subsidiary, corporate culture, the possession of unique business activities and the regional host environment (comprising both the static characteristics and relational assets of this environment).