Session 107

The Benefits of Experience: Vicarious and Otherwise

Track O

Date: Sunday, October 7, 2012


Time: 15:15 – 16:30


Room: Meeting Hall V

Session Chair:

  • Yu Zhang, China Europe International Business School

Title: Director Networks & Their Performance Reference Levels: An Examination of Director References & Strategic Influence


  • Geoffrey Martin, University of Melbourne
  • Remzi Gozubuyuk, Sabanci University

Abstract: This study examines the role of director networks in determining firm reference (or aspiration) levels of performance and ultimately firm risk behavior. We argue that the performance achieved at other firms in a director’s network provides a reference level that influences strategic decisions under risk at the focal firm. We find strong support for our prediction, and that the reference level provided by a director’s network is a stronger indicator of strategic behavior than an industry benchmark, which had previously been the common measure of reference levels in risk research. The reference level effect is moderated by director motivation to engage in strategic decision-making, as measured using director compensation structure.

Title: Executive Learning in Corporate Development: Evidence from Corporate Acquisitions


  • Philipp Meyer-Doyle, INSEAD

Abstract: Using micro-data on executives involved in acquisitions, this paper examines how executives' prior acquisition experience shapes the firm's future acquisition performance. I find that executives' acquisition experience positively impacts a firm's subsequent acquisition performance, even after controlling for the effect of firm experience, and for firm and individual fixed effects. This effect is largely driven by executives' firm-specific acquisition experience; however executives' outside experience becomes more valuable to the firm, if executives have worked in the firm for longer. Further, executive turnover lowers acquisition performance due to the disruption to executive team-dependent learned knowledge. I also examine the sources and manifestations of learning in acquisition. Overall, this paper contributes to the literature on learning in strategy as well as the micro-foundation literature in strategy.

Title: Learning from Others’ Small Losses and Big Failures of Acquisitions


  • Yan Gong, CEIBS
  • Yu Zhang, China Europe International Business School

Abstract: We exam whether different types of director experiences shape a firm’s learning from others’ acquisition failures. We envisioned a conditional learning process in a focal firm’s learning from failures. In learning from others’ small losses, a major learning barrier lies on the causal ambiguities of information associated with small losses; in contrast, in learning from others’ big failures, a major learning challenge points to the applicability of information collected on others’ disastrous acquisition failures. Our findings indicate that (1) directors’ generic experience of acquisition enhances a focal firm’s learning from others’ small losses and (2) directors’ firm-specific experience of acquisition enhances a focal firm’s learning from others’ big acquisition failures. Others’ failure events, as important inputs for a focal firm’s learning process, may not necessarily automatically lead to positive learning outcome.

Title: Well-Matched: Ownership Experience and IPO Success


  • Razvan Lungeanu, Pennsylvania State University
  • Edward Zajac, Northwestern University

Abstract: While the ownership – performance debate has benefited from recent scholarly interest in ownership heterogeneity, this interest typically addresses heterogeneous owner interests, rather than possible differences in owner capabilities. Our study addresses the heterogeneity in experience of firms’ owners. We offer a learning perspective to analyze when firms benefit from leveraging owners’ prior experience, and we develop a contingency approach to make normative predictions regarding the direction and magnitude of ownership effects on firm performance. We test our hypotheses using all private firms attempting to go public between 1997 and 2004 and all venture capital firms that invested in these private firms. The supportive findings suggest that the match between the prior experience of these owners and the private firm’s needs affects firm performance.

All Sessions in Track O...

Sun: 08:00 – 09:15
Session 119: Strategic Leadership
Sun: 09:30 – 10:45
Session 120: Corporate Governance
Sun: 11:15 – 12:30
Session 122: Strategic Leadership and Corporate Governance Complementarities: Why we Are an IG
Sun: 15:15 – 16:30
Session 107: The Benefits of Experience: Vicarious and Otherwise
Mon: 08:00 – 09:15
Session 106: Why do Firms do Bad Things and What Do We Know about It?
Mon: 09:30 – 10:45
Session 103: Reputation: Organizational and Individual Dimensions
Mon: 13:30 – 14:45
Session 112: CEO and TMT Turnover: Firm Implications
Session 214: CEOs and Leadership
Mon: 16:30 – 17:45
Session 113: Large Shareholders are Doing it for Themselves
Tue: 08:00 – 09:15
Session 115: Board Member Characteristics and Board Diversity
Session 137: CEO Human Capital: Take a Little off the Top
Session 254: Capital Markets and Efficiency
Tue: 11:00 – 12:15
Session 111: Why Boards Look the Way They Do: Director Selection
Session 117: Heterogeneous Owner Types and their Influence
Tue: 14:15 – 15:30
Session 108: CEOs Matter, Don\'t They?
Session 116: Discretion and Compensation
Tue: 15:45 – 17:00
Session 114: Adoption of a Practice and its Implications
Tue: 17:30 – 18:45
Session 118: The TMT as a Unit
Session 215: CEO Personality and Characteristics Influencing Decision Making

Strategic Management Society