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
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.
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.
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.
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.
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.
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
- 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