Session 328

New Angles of Examining Acquisition Strategies

Track F

Date: Tuesday, September 23, 2014

 

Time: 11:00 – 12:15

Common Ground

Room: Luxemburgo


Facilitator:

  • Jiatao Li, Hong Kong University of Science and Technology

Title: Acquisition Experience, Attribution Bias, and Organizational Learning

Authors

  • Jiatao Li, Hong Kong University of Science and Technology
  • Lisa Lin, Hong Kong University of Science and Technology

Abstract: How does a firm’s acquisition experience influence the performance of its future acquisitions? Success and failure experience at both the firm and industry levels was investigated to show how different types of acquisition experience affect subsequent acquisition performance. Insights from attribution theory were integrated with organizational learning theory to argue that managers may develop different causal attributions for their acquisition successes or failures depending on success and failure experience in the industry in general. The joint effect influences the performance of their subsequent acquisitions. Data on the acquisitions of American biotechnology and computer firms during the period 1980–2010 suggest that industry-wide acquisition success helps alleviate managers’ attribution biases, improving the performance of subsequent acquisitions. However, industry-wide acquisition failures amplify managers’ attribution biases in their own acquisition successes, impairing the performance of subsequent acquisitions.

Title: Acquisition in Family Firms: How Does the Heterogeneity of Family Firms Influence Their Preference for Acquisition?

Authors

  • Xiwei Yi, Rice University

Abstract: Prior studies generally argue that family firms are less likely to engage in acquisition because they fear to lose social-emotional wealth (SEW). However, this argument overemphasizes one kind of SEW, the family control, while ignoring other types of SEW. In this study, I examine how the heterogeneity of family SEW influences the firms’ attitudes towards acquisitions. I propose that control-oriented family firms will adopt the acquisition-averse attitude due to the concern of losing family control; dynasty-oriented family firms will adopt the acquisition-neutral attitude due to their long-term orientation; identification-oriented family firms will adopt the acquisition-seeking attitude since acquisition will largely enable the firm to attract eyeball from media and public and hence enhance the family’s visibility and status. In addition, I examine how the stock market would react differently to the acquisition by different types of family firms.

Title: Building a Network Perspective on M&As: Inter-Organizational Attention Forcefields as Drivers of Post-Acquisition Integration

Authors

  • Dries Faems, University of Groningen
  • Taco Reus, Erasmus University-Rotterdam

Abstract: Based on an embedded case study of two acquisitions by a single entrepreneurial firm, we build theory on how the inter-organizational network, in which acquired units and acquiring firm are embedded, influences post-acquisition integration strategies, processes and outcomes. We identify the inter-organizational network as an attention forcefield that can pull apart acquired and acquiring units (i.e. distributed attention forcefield), but can also force them together (i.e. focused attention forcefield). We illuminate the importance of considering attention forcefields to better understand (i) the choices between different types of post-acquisition integration strategies and (ii) the connections between post-acquisition integration strategies and processes.

Title: Competitive Dynamics: An Explanation for Parity in Acquisition Performance

Authors

  • Svante Schriber, Stockholm Business School
  • David King, Iowa State University

Abstract: Research generally assumes that acquisitions can achieve improved performance for acquiring firms. Against this backdrop, the poor performance of acquisitions is often interpreted as failure. We challenge this conception by arguing that competitive pressures likely result in acquisitions maintaining parity with prior performance. In other words, acquisitions are more likely to result in temporary rather than sustained competitive advantage. This is supported by a theoretical development on the ex-ante environment where acquisitions occur, and ex post competitive responses to them. Developed theory is consistent with extant research finding acquisitions do not increase acquirer performance.

Title: Deal or No Deal? The Effect of Shared Director Interlocks on Acquisition Abandonment

Authors

  • Suho Han, University of Texas at Austin
  • Ram Ranganathan, University of Texas at Austin

Abstract: We focus on shared director interlocks, or the instance when directors of both acquiring and target firms serve on the same board of a third-party organization, and how such overlap affects the likelihood of acquisition abandonment. Moreover, we examine how prior acquirer experience in completed acquisitions affects acquisition abandonment. In a sample of 32,780 unique acquisitions consisting of 8,873 acquirers and 46,866 targets, we find that greater shared director interlocks increases the likelihood of acquisition abandonment. Moreover, we find that for acquiring firms, experience in completed acquisitions decreases the likelihood of abandonment. We contribute to the acquisition literature by examining abandonment, an overlooked yet important outcome. Also, we contribute to the director interlock literature by highlighting the effects of shared director interlocks on acquisition outcomes.

Title: How Do Firms Use Non-Market Strategies to Influence the Regulatory Control Over Their Market Strategies?

Authors

  • Asli Kozan, IPAG Business School
  • Birgul Arslan, Koc University

Abstract: This paper investigates whether political ties might serve as means through which firms achieve favorable outcomes such as merger or acquisition (M&A) approvals from antitrust bodies, an intermediary step to eventual superior firm performance. In doing so, this paper aims at contributing to the literature by uncovering one of the mechanisms through which the firm might effectively use non-market strategies to achieve firm-specific benefits in the market environment. We look into 321 M&A deals by domestic public acquirers announced and investigated by the Office of Trading (OFT) in the UK between 2003 and 2011. The preliminary results confirm a negative correlation between political tie and antitrust holdup, pointing to the existence of firm influence on regulatory bodies through ties with politicians.

All Sessions in Track F...

Sun: 08:00 – 09:15
Session 400: Teaching Corporate Strategy: Insights and Opportunities
Sun: 11:15 – 12:30
Session 401: Research Synergies in Corporate Strategy and Entrepreneurship
Sun: 15:45 – 17:00
Session 398: Corporate Strategy and Corporate Finance: Continuing the Research Conversation
Sun: 17:15 – 18:30
Session 602: Corporate Strategy IG Business Meeting
Mon: 08:00 – 09:15
Session 308: How do firms grow? Canvasing Different Perspectives
Session 316: Acquisitions and Divestures: Antecedents and Consequences
Mon: 11:00 – 12:15
Session 319: International Corporate Strategy
Mon: 14:45 – 16:00
Session 437: Corporate Structure, Resource allocation, and Portfolio planning
Mon: 16:30 – 17:45
Session 325: Product Scope Strategy in Different Empirical Contexts
Tue: 08:00 – 09:15
Session 327: Market Response to M&A
Tue: 11:00 – 12:15
Session 328: New Angles of Examining Acquisition Strategies
Tue: 15:30 – 16:45
Session 399: The Role of Industry/Environmental Conditions in Corporate Strategy
Tue: 17:15 – 18:30
Session 318: The Boundary of the Firm


Strategic Management Society

Madrid