Session 88

Managing Firm Boundaries: Growth, Divestitures and Networks

Track F

Date: Monday, October 8, 2012

 

Time: 13:30 – 14:45

Common Ground

Room: Terrace 2


Facilitator:

  • Aseem Kaul, University of Minnesota

Title: A Case of Stock Market Prejudice? Reverse Mergers in the Chinese Bubble

Authors

  • Ivana Naumovska, Northwestern University
  • Edward Zajac, Northwestern University
  • Peggy Lee, Arizona State University

Abstract: This study analyzes the factors that drive negative spillover effects to an organizational population. Specifically, we examine the role of population susceptibility to deviance, organizational membership in multiple categories, and the role of media and regulatory bodies. We test our hypotheses using the empirical context of Chinese firms that acquired public status in the US from 2004 to 2011, and in so doing, seek to contribute to our understanding of crisis management, category membership, and organizational ecology

Title: Cannot Study One without the Others: An Examination of the Interdependencies among Strategic Means

Authors

  • Ithai Stern, INSEAD
  • Razvan Lungeanu, Pennsylvania State University

Abstract: This paper demonstrates the importance of accounting for interdependencies among strategic means. We analyze acquisition, alliance and in-house R&D data from 30 pharmaceutical firms over the period 1992 – 2006. Our findings reveal that (a) firms pursue their goals using a multiplicity of R&D means simultaneously and that (b) firms’ experience with one strategic means decreases its likelihood of using alternative means. The results show that a firm’s choice of means depends on its relative experience with each alternative means.

Title: Magnifying Offending Initiative and Minifying Vulnerability: Leveraging Internal and External Resources

Authors

  • Chih-Yi Su, National Tsing Hua University
  • Bou-Wen Lin, National Tsing Hua University

Abstract: The competition is becoming increasingly fierce today, and accelerates the engagement among firm’s strategic actions, resulting both positive and negative impacts on firm performance. While a firm enjoys the benefits through taking the offending initiative, it does also encounter the risks of vulnerability. In this light, this paper aims to analyze how firms utilize the characteristics of internal resources and leverage external resources to strengthen the effectiveness of competitive actions as well as to mitigate the threats of attacks. Based on 20 years of data collected in the communication equipment industry, our results show that a lower crowding technological network and diversify technological portfolios magnify the strength of firms’ offending initiative, whereas inbound open innovation plays a critical role in minifying the threats of vulnerability.

Title: Seeking Uniqueness through Divestments: CEO Succession and the Effect of Demographic Similarity on the Divestment of Predecessor\'s Investments

Authors

  • Thomas Hutzschenreuter, Technical University of Munich
  • Ingo Kleindienst, Aarhus University
  • Claas Greger, WHU - Otto Beisheim School of Management

Abstract: This study introduces individuals’ need for uniqueness to explain CEO behavior after succession events. We argue that as a reaction to high demographic similarity to their predecessors, successors will take actions to establish a sense of uniqueness. In particular, they do so by means of easily observable actions that do not put their own reputation at risk and at the same time demonstrate dissimilarity to their predecessors: the divestment of subsidiaries their predecessors had invested in. We test our hypotheses on a sample of 108 CEO successions in 65 German diversified companies. Our findings reveal that functional and industry similarity significantly increase the probability of successors to divest subsidiaries their predecessor had invested in.

Title: Short-term Performance Outcomes of International Divestment Decisions

Authors

  • Miriam Zschoche, WHU - Otto Beisheim School of Management

Abstract: Goal of this study is to examine the short-term performance effects of a multinational corporation’s decision to divest foreign affiliates that are part of an integrated international production network. Building on the concept of operational flexibility, we expect that the benefits of divesting unprofitable production locations will not suffice to outweigh the costs that arise from withdrawal in the short-run. Divesture, therefore, leads to an immediate decline in performance of the remaining network. If divestments, however, cause efficiency gains due to more favorable average labor cost conditions and a higher potential to exploit cost differentials across the remaining locations, negative performance effects are less pronounced. The panel analysis of 631 foreign production networks maintained by German manufacturing firms supports our hypotheses.

Title: The Role of Resource Complementarity and Co-specialization in Explaining Firm Boundary Choices: A Mediation Model

Authors

  • Werner Hoffmann, WU-Vienna
  • Gerhard Speckbacher, WU-Vienna

Abstract: This paper combines resource based arguments with transaction cost reasoning to explain the choice between entering a new business segment by internal business development or by collaborative arrangement with an external partner. We argue and find evidence that firms who expect high and sustainable synergies from combining their established resource base with the resources and capabilities needed in the new business segment are more likely to choose internal business development instead of collaborative entry. In part, this association is explained by rent appropriation concerns resulting from the need for inter-connecting and co-specializing resources when exploiting synergies from complementary resources. However, we argue and find evidence that there is also a direct effect of resource complementarity on integration which is not explained by appropriation concerns.

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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