Title: Capital Injection in the Production Network

Location: Hybrid seminar - ELTE KRTK, Budapest, 1097 Tóth Kálmán utca 4. 4th floor, Room  T.4.23. and Zoom

Abstract: We study the effects of acquisitions on firms and their production networks in Türkiye using rich administrative firm-to-firm transaction data. Leveraging a staggered event-study design, we compare post-acquisition outcomes of target firms and their trading partners to matched controls. Acquisitions increase the intangible intensity of target firms but have no consistent effects on conventional measures of firm performance. A key finding is that the network consequences of acquisitions depend on the acquirer’s origin. Domestic acquisitions lead to tangible capital deepening and strengthen existing buyer–supplier relationships along the intensive margin, while foreign acquisitions tend to shift production toward outsourcing and diversify network connections. We argue that these differences stem from variation in firms’ relational capability: their ability to sustain productive links in a network governed by incomplete contracts. We formalize this intuition through a partial equilibrium model of input sourcing where intermediate inputs supplied by other firms are subject to unforeseeable shocks. Lower relational capability induces firms to diversify their supplier sets on the extensive margin, and depresses incentives to scale up investment in tangible capital.

Bio: Cagin Keskin is a Postdoctoral Fellow at the ELTE Centre for Economic and Regional Studies (ELTE-KRTK) in Budapest and a PhD candidate in Economics at CERGE-EI in Prague. His work focuses on firm dynamics, innovation and production networks, and more recently on heterogeneous AI adoption across firms. In particular, he studies how firms choose their scope across products and sectors, and how much they invest in intangibles, and how these choices affect their buyers and suppliers as well as productivity, markups, competition and economic growth. His job market paper, ‘Firm Scope and Innovation: The Role of Intangibles’, received the Best Paper Award at the Econometric Society Main Asia Meeting (AMES-CSW 2026).

Paper Link is  [here]

Personal Website is [here]