Session 41

International M&A as an Entry Mode Strategy

Track G

Date: Tuesday, October 9, 2012

 

Time: 11:00 – 12:15

Paper

Room: North Hall


Session Chair:

  • Luis Vives, Ramon Llull University

Title: Do Genetic Biases Impact Inter-Firm Relationships? Evolutionary Perspectives on Risk Management in International Acquisitions

Authors

  • Steven Dionne, Georgia State University

Abstract: The objective of this research is to examine trust in the context of mergers and acquisitions, a largely unexplored area. We posit that genetic differences in the underlying populations of countries materially impact the strategies acquiring firms utilize to mitigate risk in international transactions. Evolutionary perspectives suggest that trust and reciprocity are directed towards individuals who share similar genes. Alternatively, a genetically polarized society may be more prone to rent-seeking behaviors. Using a sample of 1,669 transactions, the results show that genetic distance across countries decreases the use of risk-sharing mechanisms in integration, while increasing arms-length arrangements. We also find that genetic fractionalization within the target country increases the use of reciprocal, risk-sharing mechanisms, while decreasing arms-length arrangements.

Title: Exploitation, Exploration, and Ambidexterity in Acquisitions

Authors

  • Paulina Junni, BI Norwegian Business School
  • Riikka Sarala, University of North Carolina-Greensboro
  • Shlomo Yedidia Tarba, University of Birmingham

Abstract: This paper examines the outcomes and antecedents related to exploration, exploitation and ambidexterity in mergers and acquisitions (M&As). More specifically, we develop a typology of acquisition modes based on whether the focus is on exploitation, exploration, both (ambidexterity), or neither. By conducting variance analyses on data from acquisitions conducted by Finnish firms, we explore how these acquisition modes differ based on strategic acquisition dimensions identified in the previous literature (acquisition motive, knowledge characteristics, post-acquisition integration, and post-acquisition performance). The paper contributes to the literature on M&A value creation by establishing key differences in antecedents and outcomes related to acquisitions pursuing exploration, exploitation, ambidexterity or neither, and by reflect on the managerial implications of the acquisition typology.

Title: Ownership and Premium in Foreign Acquisitions: Impact of Geographic Distance and Payment Method

Authors

  • Ajai Gaur, Rutgers University
  • Shavin Malhotra, University of Waterloo

Abstract: This paper examines the effect of geographic distance and payment method on equity participation and premium payment decisions in cross border acquisitions. Drawing on insights from information economics, we propose that firms seek flexible ownership arrangements by way of lower equity position, and make a premium payment when faced with a high level of information asymmetry. Further, stock-based payment method creates a bonding arrangement, minimizing the problems of adverse selection and moral hazard in high asymmetric information environments. There is, however, a significant cost of such bonding arrangements. The premium that firms pay in high asymmetric environment is significantly higher if firms use stock payments as compared to cash.

Title: The Interaction Effects Among the Three Institutional Pillars on Cross-Border Ownership Strategies: Evidence From Emerging Economies

Authors

  • Mirko Benischke, Erasmus University Rotterdam
  • Siah Hwee Ang, Victoria University of Wellington
  • Jonathan Doh, Villanova University

Abstract: Institutional theory has been increasingly leveraged to inform cross-border international business phenomenon. In this paper, we explore a longstanding question of whether – and how firms respond to institutional pressures in their choice of entry mode. Departing from prior research, we explicitly test for the interactions among the three institutional pillars and firms’ tendency to mimic their competitors in their choice of entry mode. We find support for the core argument that firms tend to follow the entry mode choice of their predecessor firms in the same industry and country market, and that as regulative distance between the home and host country increases, this mimicking effect is strengthened.

All Sessions in Track G...

Sun: 08:00 – 09:15
Session 129: Strategy Implementation: Global Challenges
Sun: 09:30 – 10:45
Session 130: Practicing Strategy in Transition Economies: Reframing, Rethinking and Renewing
Sun: 11:15 – 12:30
Session 131: Global Strategies in the Service Sector
Sun: 15:15 – 16:30
Session 29: Strategy and Outsourcing
Mon: 08:00 – 09:15
Session 32: The Dynamics of Internationalization
Mon: 09:30 – 10:45
Session 34: Emerging Market/Advanced Market Strategic Interactions
Mon: 13:30 – 14:45
Session 33: Internationalization, Diversification & Performance
Mon: 16:30 – 17:45
Session 35: Entry Modes, Exit and Outcomes
Session 39: Global Strategies
Tue: 08:00 – 09:15
Session 37: Subsidiary Strategy
Tue: 11:00 – 12:15
Session 41: International M&A as an Entry Mode Strategy
Tue: 14:15 – 15:30
Session 30: Politics, Institutions, Political Risk & Global Strategy
Tue: 15:45 – 17:00
Session 40: Knowledge, Innovation and Global Strategy
Session 42: A Q&A with Pilsner Urquell: Strategy from a Small Nation
Tue: 17:30 – 18:45
Session 38: Global Managers and Managing Globally


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