Session 160

Emerging Strategies in Acquisition

Track E

Date: Monday, October 12, 2009

 

Time: 15:45 – 17:00

Paper

Room: Meeting Room 4


Session Chair:
Maurizio Zollo, Bocconi University

Title: M&A and Innovation Strategy: A Competitive Dynamics Perspective

Authors

  • Giovanni Valentini, IESE Business School
  • Sara Sgubbi, McKinsey & Company

Abstract: In this study, we combine the literature on competitive dynamics, M&A, and technology management to study the impact of M&A on the patenting output and impact of the competitors of the firms involved in the deals. Using data from the pharmaceutical sector, we find that M&A deals have conflicting effects on competitors’ patenting output and patents’ impact. While they exert a negative effect on the number of patents a firm applies for, they increase patents’ (average) impact. These results indicate that M&A carried out by competitors change organizational incentives, shifting them towards the pursuit of more radical innovations. Further, we find that technological relatedness between merging and non-merging firms plays a relevant moderating role.

Title: Self-organized Criticality in Gibrat’s Law: Evidence from Merger Waves

Authors

  • Jason Park, City University of Hong Kong
  • Benoit Morel, Carnegie Mellon University
  • Ravi Madhavan, University of Pittsburgh

Abstract: Our research seeks to understand better the persistence of Robert Gibrat’s power-law distribution for firm sizes by examining the structure of merger waves. While extant wave theories are generally unilevel, reductionist, and Gaussian, we argue that waves are multilevel, holistic and Paretian. Using complexity theory, we argue that waves return a self-organized critical economy to dynamic equilibrium. A power law distribution for U.S. merger waves from 1895-2008 suggests that waves are emergent expressions of an adaptive ecology of firms in an underlying dynamic of recurrent instability, like that of avalanches or earthquakes. Observing this empirical regularity found in many natural, biological and social science phenomena leads to a better understanding of Gibrat’s legacy through a more holistic and integrative account of waves.

Title: The Complexity of Learning in Acquisitions: Advisor Effects

Authors

  • Alexander Sleptsov, University of Illinois
  • Carmen Weigelt, Tulane University

Abstract: This paper studies the acquisition performance as a function of the interaction between the experience levels of acquirer and its advisor. We suggest that whether an acquirer can benefit from its advisor’s prior acquisition experience depends on both the type of experience and the acquirer’s own experience level. We find that acquirers with well-performing prior acquisitions tend to experience a “clash of wills” effect with experienced advisors that interferes with the acquirer’s ability to use the advisor’s experience effectively. In contrast, acquirers with experience in complex acquisitions benefit from their advisor’s experience with complex transactions, suggesting an important role of the acquirer’s absorptive capacity. The empirical context is 1827 acquisitions that 928 acquirers completed with investment bank advisors between 1986 and 2007.

Title: The Impact of Strategic Disclosure and Geographic Distance on Target Selection

Authors

  • Miguel Ramos, University of Texas-El Paso
  • Sharon James, Arkansas State University

Abstract: The active role of the target in the target selection process has been/remains largely unexamined. This paper explores the effect of potential targets' voluntary strategic disclosure on the likelihood of their selection. Because strategic disclosure tends to be credible, we argue that voluntary disclosure reduces adverse selection in the market for intangibles, thereby increasing the likelihood the likelihood of selection of disclosing firms. Building on prior research, which has shown that the likelihood of acquisition decreases with geographic distance between the acquirer and the target, we further argue that voluntary disclosure mitigates the effect of geographic distance. We test these predictions on a sample of R&D intensive firms in the chemicals, computer, communications equipment and pharmaceutical industries.

All Sessions in Track E...

Sun: 10:00 – 11:30
Session 256: Discipline Based Theories: What Do Theories of the Firm Say About Organizational Dynamics
Sun: 13:00 – 14:30
Session 257: Applying Theories: What Does Strategy & Organization Say About Health Care?
Sun: 15:00 – 16:30
Session 258: Integrating Theories of Problem Formation
Sun: 16:30 – 17:30
Session 309: Competitive Strategy, IG Meeting
Mon: 12:45 – 14:00
Session 159: Strategic Factor Markets: Antecedents, Consequences and Dynamics
Session 166: Competitive Strategy and the Business of Science
Mon: 15:45 – 17:00
Session 160: Emerging Strategies in Acquisition
Session 220: Contemporary Challenges to Organization Theory
Mon: 17:15 – 18:30
Session 157: Managerial Cognition and Dynamic Capabilities at the Crossroads: Current Issues and Novel Strands of Development
Session 222: Challenging Traditional Notions of Competitive Strategies and Competitive Advantage
Tue: 10:00 – 11:15
Session 161: Demand-based Approaches to Strategy: The Role of Customers and Communities
Session 163: Resources and Capabilities to Strengthen Alliance Formation and Execution
Tue: 11:30 – 12:45
Session 164: Competitive Strategy and Firm Performance
Session 165: Emerging Organizational Solutions for Exploration Strategies
Tue: 14:30 – 15:45
Session 158: Strategic Change and Dynamic Capabilities
Session 169: Unpacking Sources of Heterogeneity: Market Frictions, Firm Resources, Strategic Actions
Wed: 10:00 – 11:15
Session 216: Industry Evolution and Resource Architecture
Session 217: Designing Organizations to Sustain Performance
Wed: 11:30 – 12:45
Session 214: Managerial Capabilities and the Microfoundations of Strategy


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