Session 126

Entry Mode & Cross-Border Acquisitions

Track G

Date: Monday, October 5, 2015

Track X

Time: 08:00 – 09:15

Common Ground

Room: Plaza Court 1


Facilitator:

  • TBD

Title: Distance And Within-Country Diversity Effects On Foreign Acquisitions

Authors

  • Ilya Cuypers, Singapore Management University
  • Douglas Dow, University of Melbourne
  • Gokhan Ertug, Singapore Management University

Abstract: We explore how within-country diversity influences the structure of foreign acquisitions. While the importance of “within-country diversity” has been commented upon, it has received minimal systematic attention. Our findings, based on a sample of 59,092 foreign acquisitions across 67 acquirer and 69 target countries, indicate that the diversity of languages and religions within the target’s home country are an additional source of internal uncertainty and information asymmetry, beyond those attributable to linguistic and religious distance. In contrast, the diversity of languages and religions within the acquirer’s home country acts as a source of tacit knowledge; firms from more diverse countries are more aware of the difficulties associated with diverse and distant countries, and in response, more strongly seek out remedies, such as lower equity shareholdings.

Title: Elucidating the “Hidden Costs” of Foreign Greenfields vs Foreign Acquisitions: Why Should We Care?

Authors

  • Sverre Tomassen, BI Norwegian Business School

Abstract: Most studies concerning the choice between foreign greenfields and foreign acquisitions have focused on the determinants of this choice. However, operating through foreign subsidiaries will seldom be the fundamental end-solution, but only a handful of studies have been occupied with what happens after the choice has been made. Hence, this paper addresses two important calls for future studies: (i) identification and measurement of management costs in greenfields and acquisitions; (ii) testing the effects of the entry mode choice on management costs. 145 MNE headquarters-subsidiary relations are studied and significant differences in management costs are observed, which might have important implications on how these subsidiaries should be managed.

Title: Experience Effects in Cross-Border Acquisitions and The Contribution of The Top Management Team

Authors

  • Riccardo Valboni, Erasmus University-Rotterdam
  • Taco Reus, Erasmus University-Rotterdam

Abstract: Prior studies have shown that the relation between acquisition experience and performance is by no means straightforward. In our work, we investigate the effect of prior acquisition experience on the performance of firms that expand abroad by acquiring foreign organizations. Our analyses on a sample of 624 cross-border M&A deals completed between 2000 and 2011 demonstrate that experience with cross-border acquisitions is positively related to deal performance, while prior experience with domestic acquisitions does not significantly influence the economic return of acquirors. We also find that functional diversity and pay dispersion in the top management team (TMT) moderate the relation between domestic acquisition experience and acquisition performance.

Title: Global Migration and the Entry Mode Choice of Global 500 Firms

Authors

  • Thomas Keil, University of Zurich
  • Markku Maula, Aalto University
  • Stevo Pavicevic, University of Zurich

Abstract: Global migration has recently been shown to facilitate transnational knowledge flows and thereby influence the location choices of internationalizing firms. We extend this research and argue that migration also influences the entry mode choice. In particular, we argue that knowledge about the host country that that can be gained through migrants leads to a higher likelihood of wholly-owned over jointly-owned entry modes. We further argue that these effects are reduced with increasing cultural and institutional distance since such distance makes it less likely that knowledge and information gained from migrants can replace first-hand knowledge with the potential partner and the country it operate in. We test these predictions using longitudinal data from Fortune Global 500 firms between 2000-2010 and find support for our hypotheses.

Title: Headquarters-Subsidiary Exchanges and the Quality of Headquarters-Subsidiary Relationship: The Moderating Roles of Organizational Identity, Parent’s Ownership, and Entry Mode

Authors

  • Jizhong Li, Curtin University
  • Fuming Jiang, Curtin University
  • Antonio Travaglione, Curtin University

Abstract: Through the lens of the social exchange theory, we developed and empirically tested a theoretical framework that contextualizes the effects of two levels of headquarters-subsidiary exchange on quality of headquarters-subsidiary relationship, and how subsidiary manager’s organizational identity, parent’s ownership in subsidiary, and subsidiary’s entry mode interact with these exchanges in shaping the quality of headquarters-subsidiary relationship. Survey data from 305 Chinese MNEs found that managerial and organizational exchanges have positive influences on the quality of headquarters-subsidiary relationship. It also found that the positive influence of managerial exchange is weakened when the subsidiary manager has a stronger organizational identity with subsidiary, and the positive influence of organizational exchange is weakened when subsidiary is wholly owned by parent and the subsidiary is established via greenfield entry mode.

Title: When Money Can't Buy Everything: A Study of Multiple Bidders Cross Border Acquisitions

Authors

  • Noman Shaheer, University of South Carolina
  • Sali Li, University of South Carolina
  • Yaqin Zheng, Unversity of South Carolina

Abstract: This paper studies cross border multiple bidder acquisitions in which multiple bidders compete to acquire a single target firm. We demonstrate that firms cannot win these competitive auctions just by outbidding their competitors. We extend knowledge based view and institutional theory to argue that the relative institutional or industry distances between bidders and target will decrease the victory chances despite high offer prices; whereas the relative bidders’ prior experiences increase the winning probabilities despite slightly lower prices. Our paper is first to introduce cross border auctions in management literature and to empirically demonstrate the applications of institutional theory and KBV in this novel context.

All Sessions in Track G...

Sun: 08:00 – 09:15
Session 32: Microfoundations of international strategic management: Opportunism, trust, and bounded reliability
Sun: 09:45 – 11:00
Session 279: Formal theory in strategy - A primer
Sun: 11:15 – 12:30
Session 33: Methodological challenges in publishing international strategy research
Sun: 16:15 – 17:30
Session 209: Institutions and Emerging Markets
Sun: 17:45 – 00:00
Session 315: Global Strategy Business Meeting
Mon: 08:00 – 09:15
Session 126: Entry Mode & Cross-Border Acquisitions
Mon: 11:15 – 12:30
Session 149: Management and Coordination of Multinationals
Mon: 13:45 – 15:00
Session 128: Emerging Markets
Mon: 16:45 – 18:00
Session 151: Networks and Collaborative Arrangements
Tue: 08:00 – 09:15
Session 129: Foreign Direct Investments
Tue: 11:00 – 12:15
Session 127: Institutional Context
Tue: 14:15 – 15:30
Session 266: Offshoring
Tue: 15:45 – 17:00
Session 130: International Diversification
Session 150: Location and Geography
Tue: 17:30 – 18:45
Session 208: Internationalization Strategies and Performance

All Sessions in Track X...

Sun: 08:00 – 09:15
Session 74: Open Strategy Workshops: Lessons Learned from Practising Strategizing
Sun: 09:45 – 11:00
Session 29: The Elephant in the Room: How public policy and institutions help drive innovation, entrepreneurship, and firm performance
Session 76: The evolution of the strategy as a profession and the field of strategy
Sun: 11:15 – 12:30
Session 12: Environmental Entrepreneurship: How and When do Entrepreneurs address Environmental Degradation?
Session 38: Big Game Hunting: Accessing and Interacting with Senior Executives for Empirical Research
Sun: 13:45 – 14:30
Session 307: Lifetime Achievement Award Recipient
Sun: 14:45 – 15:45
Session 7: New Frontiers in Technologies, Fields, and Business Models: Implications for Academic and Practice Knowledge Creation
Sun: 16:15 – 17:30
Session 61: The Institutional Level of Strategizing Activities
Session 261: Knowledge Creation and Sharing in Virtual Communities
Mon: 08:00 – 09:15
Session 72: External Influences: Audiences and Media
Session 126: Entry Mode & Cross-Border Acquisitions
Session 140: New Perspectives on the Outside Director Selection Process
Mon: 09:45 – 11:00
Session 8: Elevating our Understanding of Organizational Performance: Bridging the Frontiers of Business and Corporate Strategies
Mon: 11:15 – 12:30
Session 149: Management and Coordination of Multinationals
Session 220: Perspectives on CEO Compensation
Mon: 13:45 – 15:00
Session 16: Human Capital and Innovation
Session 37: Political Ties: Knots or Bows?
Session 63: Political and Material Aspects of Strategy Making
Session 97: Accelerators, corporate VCs and new venture creation
Session 258: Explainng CSR: External Factors
Mon: 15:15 – 16:15
Session 227: Mergers, Acquisitions and Divestitures: Reconfiguring Resource Bases for Value Creation and Growth
Session 308: Strategy Beyond the Firm: Creating and Capturing Value from External Resources
Session 310: When the Smoke Clears: The Emergence of the Cannabis Industry
Session 311: Theory Fragmentation in Strategic Management?
Session 312: Climate Change: Why and How Should Strategic Management Care?
Mon: 16:45 – 18:00
Session 42: The Word is Out! Stakeholder Responses to Public Signals of Firms' Behaviors
Session 112: Acquisitions - Before the Deal
Tue: 08:00 – 09:15
Session 309: Looking Good and Sounding Better: Impression Management by CEOs
Tue: 09:45 – 10:45
Session 9: Whatever Happened to Theory in Strategic Management?
Tue: 11:00 – 12:15
Session 70: CEO Characteristics: Microfoundations of Behavioral Strategy
Tue: 14:15 – 15:30
Session 116: Acquisitions - After the Deal
Tue: 15:45 – 17:00
Session 52: Entrepreneurial business models
Session 219: A Tough Crowd: Critical Examinations by Owners and Stakeholders
Session 262: Pioneering Knowledge
Tue: 17:30 – 18:45
Session 144: Board Structure: What Works Best?
Session 208: Internationalization Strategies and Performance


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