Session 62

Acquiring competitive success? Mergers and acquisitions

Track E

Date: Tuesday, October 9, 2012

 

Time: 15:45 – 17:00

Paper

Room: North Hall


Session Chair:

  • Shlomo Yedidia Tarba, University of Birmingham

Title: Corporate Deal Programs of Newly IPOed Firms: Benefits of Variety in the Prior Deal Experience

Authors

  • Asli Musaoglu Arikan, Kent State University

Abstract: Are there forces that compel firms to pursue specific types of corporate strategy programs? If so, should we care? Building on the extant literature, this study empirically investigates the heterogeneity in corporate strategy programs in general and performance implications of specialization versus mixture of alliances and acquisitions in corporate deals of all firms that became public via IPOs in 1988-1999. We find that the increased probability of pursuing a mixed deal program increases performance by 15% while unobservable firm-characteristics that derive firms to specialize only on alliances or acquisitions decrease performance by 46.5%. Our findings suggest that there is a positive performance effect of pursuing mixed deal corporate programs, which signify that developing dynamic corporate capabilities through learning-by-doing both acquisitions and alliances is of value.

Title: Do Managers Face a Uniqueness Paradox in Crafting Corporate Strategy within Strategic Factor Markets: Evidence from Mergers and Acquistions

Authors

  • Lubomir Litov, Washington University - St. Louis
  • Todd Zenger, University of Utah

Abstract: Using mergers and acquisitions as a testing ground we examine whether managers face conflicting incentives in selecting the uniqueness of their corporate strategy. We argue that firms that pursue strategies which assemble commonly-bundled assets in strategic factor markets may pay more for these assets, perhaps as a reflection of the greater degree of competition among rivals for them. On the other hand, firms that pursue such common business strategies may receive more favorable stock market response to these asset acquisitions, as market participants may possess greater information about the value to assign to these asset acquisitions. We find evidence supportive of these predictions. Overall we interpret our results to suggest a paradox between the market perception for the degree of uniqueness of corporate strategy and the subsequent corporate performance in mergers & acquisitions.

Title: Dynamic Capabilities and Merger Success: A Laboratory Experiment

Authors

  • Jutta Wollersheim, Technical University of Munich
  • Koen Heimeriks, Aalto University

Abstract: This study explores the component elements of dynamic capabilities in the context of mergers. We use a laboratory experiment to study the effect of a group’s ability to adjust routines on merger success. Featuring an extended version of the Cohen and Bacdayan (1994) cardgame, the experimental design allows subjects to develop routines after which groups of subjects are “merged”. As expected, dynamic capability has a positive effect on merger success. Our results not only suggest the ability to adjust routines is crucial directly after the merging of two firms, but also shed novel light on the component elements of dynamic capabilities in the context of mergers.

Title: Learning to do what? How Acquisition Experience Shapes Performance in the Private Equity Industry

Authors

  • Raffaele Conti, Catholic University of Portugal
  • Francesco Castellaneta, Lisbon Catholic School of Business and Economics

Abstract: We study the mechanisms through which experience accumulation might enhance the performance of strategic tasks, such as the acquisitions of companies in the private equity industry. We discriminate between two distinct organizational capabilities: an ex ante capability to identify the true value of a target based on some signal, versus an ex-post capability to add value to the chosen target through managerial competences. Both these capabilities are potentially fed by experience, which can transform firms into good “scouts” or, alternatively, into good “coach”. Using a proprietary database of 6,922 buyouts realized between 1973 and 2008, we find that the prior stock of deals increases the probability of selecting extremely profitable new deals, reduces the future number of deals, and, at the same time, also reduces the number of business analysts. These results suggest that experience affects performance mainly by enhancing firm capability to pick ex-ante exceptionally valuable deals.

All Sessions in Track E...

Sun: 08:00 – 09:15
Session 270: New Frontiers in the Computational Approaches to Strategy and Organization
Sun: 09:30 – 10:45
Session 271: Competing for Innovation
Sun: 11:15 – 12:30
Session 272: Unified Theory of Industry Evolution
Sun: 15:15 – 16:30
Session 52: Networks and competition
Session 66: Competitive strategies in transition
Mon: 08:00 – 09:15
Session 55: Risk, uncertainty and competitive advantage
Session 64: Diverse strategies: Diversification and the evolution of competition
Mon: 09:30 – 10:45
Session 65: Resourceful competitors: Competitive strategies and the resource based view
Mon: 13:30 – 14:45
Session 54: The dynamics of dynamic capabilities
Mon: 16:30 – 17:45
Session 57: Finding your niche: Niche Strategies and Competitive Advantage
Session 245: Competitors, strategy, and competitive dynamics
Tue: 08:00 – 09:15
Session 56: Competitive dynamics meet competitive strategy
Session 254: Capital Markets and Efficiency
Tue: 11:00 – 12:15
Session 58: Innovation and competitive strategy
Tue: 14:15 – 15:30
Session 60: The sustainability of competitive advantage
Session 61: Value creation and value capture
Tue: 15:45 – 17:00
Session 62: Acquiring competitive success? Mergers and acquisitions
Tue: 17:30 – 18:45
Session 59: Tempus fugit? Competitive strategy over time


Strategic Management Society

Prague