Session 80

Acquisition Experience, Intensity and Performance

Track F

Date: Tuesday, October 9, 2012

 

Time: 08:00 – 09:15

Paper

Room: Club B


Session Chair:

  • Jerayr Haleblian, University of California, Riverside

Title: Content Design of Acquisition Streams: Balancing Exploration and Exploitation

Authors

  • Johannes Luger, University of Geneva; University of St. Gallen
  • Alexander Zimmermann, University of St. Gallen
  • Tomi Laamanen, University of St. Gallen

Abstract: While researchers have become increasingly interested in the performance consequences and external structural characteristics of acquisition streams, we know surprisingly little about the impact of their content design. In this study, we shed light on how strategic paradoxes, such as exploration and exploitation, may be manifested in the design of acquisition streams. Based on a sample of 21.264 acquisitions of 172 active U.S. acquirers during 21 years, we find that the integration and temporal separation of conflicting strategies within and across acquisition streams is beneficial for a firm’s subsequent performance. Moreover, we find, unexpectedly, that a parallel separation of paradoxical objectives yields negative performance effects. We discuss contributions for theory on acquisition streams, strategic paradoxes, and organizational ambidexterity.

Title: Performance Feedback and Corporate Acquisition Intensity: The Direct and Moderating Effects of In-the-Money CEO Stock Options

Authors

  • Elizabeth Lim, Georgia State University

Abstract: While agency theory suggests stock options grants induce risky corporate acquisitions, behavioral agency theory argues different types of stock options elicit varying risk preferences. This study contributes by developing nuanced theory predicting the differential direct and interaction effects of in-the-money unexercisable and exercisable CEO stock options with performance feedback on acquisition intensity. Controlling for endogeneity in a panel dataset, the results showed unexercisable and exercisable options values respectively have positive and negative effects on acquisitions. In the context of negative deviation from prior performance, the discounting effect of high unexercisable options values that pay off only in the future strengthens acquisition intensity, while the endowment of high exercisable options values into CEO personal wealth weakens acquisition intensity. No interaction effects were observed for positive deviation.

Title: Sequence Patterns of Firms’ Holistic Diversification Moves and Their Performance Implications

Authors

  • Stefan Weih, University of Erlangen-Nuremberg
  • Martin Weiss, University of Erlangen-Nuremberg
  • Harald Hungenberg, University of Erlangen-Nuremberg
  • Susanne Fleischhacker, University of Erlangen-Nuremberg

Abstract: Diversification performance studies are at the heart of corporate strategy research. However, investigations on interaction effects of product and international diversification moves on firm performance have received little attention and yielded inconsistent empirical results. In extension of current literature, we take an evolutionary path perspective on holistic diversification – defined as the interaction of both diversification dimensions. Our approach defines sequences as a set of diversification moves along both diversification dimensions across an 11-year period from 2000 to 2010. For a global sample of 302 firms we will develop a taxonomy of sequence patterns by applying optimal matching techniques and clustering analysis. Through multivariate analysis we will unveil performance differentials across the identified diversification sequence clusters.

Title: The Effects of Accumulated Related Industry Prior Alliance Experience on Acquisition Performance

Authors

  • Ian P.L. Kwan, University of Navarra
  • Shlomo Yedidia Tarba, University of Birmingham

Abstract: We study how accumulated related industry prior alliance (ARIPA) experience gained in a focal firm’s alliance network interacts with its general alliance experience to affect acquisition performance. While most studies on this topic have investigated the effects of dyad-level or partner-specific characteristics that increase relative absorptive capacity between partner firms involved in an acquisition, this study is unique in that it studies firm-level or firm-specific characteristics, namely ARIPA and general alliance experience, which increase each focal firms’ (absolute) absorptive capacity independent of other firms. We find empirical support that the interaction between ARIPA and general alliance experience positively affects acquisition performance. Our results reveal a mechanism, as yet unstudied, by which firm-level experience gained from prior alliances affects the subsequent (focal) acquisition performance.

All Sessions in Track F...

Sun: 08:00 – 09:15
Session 123: Capabilities and Corporate Strategy
Sun: 09:30 – 10:45
Session 124: Corporate Strategy and the Role of the Manager
Sun: 11:15 – 12:30
Session 125: Publishing Strategic Management Research
Mon: 08:00 – 09:15
Session 256: Resource Sources and Corporate Strategy: Location, Funding and Advisors
Mon: 09:30 – 10:45
Session 79: Diversification Strategy and Firm Performance
Mon: 13:30 – 14:45
Session 88: Managing Firm Boundaries: Growth, Divestitures and Networks
Mon: 16:30 – 17:45
Session 77: Transformation, Renewal and Corporate Strategy
Tue: 08:00 – 09:15
Session 80: Acquisition Experience, Intensity and Performance
Tue: 11:00 – 12:15
Session 257: Acquisition Performance
Tue: 14:15 – 15:30
Session 86: Corporate Strategy: Expanding Understanding and Knowledge
Tue: 15:45 – 17:00
Session 253: New Insights into Relatedness and Performance


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