Corporate raiders don't cut investment in R & D

A focal point of the public debate over the effects of corporate mergers and acquisitions is their impact on the level of spending on long term projects. This study examines the pre-and post-merger levels of spending on R & D and the more general category of capital expenditures. Analysis of expenditures for a sample of firms drawn from the largest corporate mergers in the US during the late 1970s indicate that long term spending rises significantly in the post-merger environment. This supports the view that acquiring firms. whether hostile or friendly, recognize the relationship between such spending and firm value.     

When are acquisitions a viable catch-up strategy? Some empirical evidence from China

How emerging-market firms can catch up with forerunners from advanced economies is a key issue in the economic and technology literature. Research has suggested that acquisitions are a viable tool for firms in emerging markets to reduce the productivity gap with global leaders, but the empirical evidence on this matter is still far from conclusive. Contributing to this debate, this paper examines the impact of cross-border vs. domestic acquisitions on the labor productivity of firms across different sectoral environments. Studying the acquisitions pursued by Chinese listed firms over one decade, we find that cross-border acquisitions are positively associated with firms' labor productivity and that this effect is particularly strong in high-tech sectors and among leading firms. We also find that domestic acquisitions are positively associated with firms’ labor productivity and that this effect is particularly strong in low-tech sectors and among laggards. We further investigate the mechanisms underlying the acquisition–productivity link and contend that “technological innovation” is the primary mechanism by which acquisitions enhance firm productivity in high-tech sectors, whereas “enhancing operating efficiency” is the primary mechanism by which acquisitions enhance firm productivity in low-tech sectors.     

Board attributes and shareholder wealth in mergers and acquisitions: a survey of the literature

The question of whether a “good” corporate board structure can optimize performance and minimize conflicts between managers and shareholders has been widely debated. Because mergers and acquisitions represent major managerial investment decisions that are subject to board scrutiny, the effectiveness of a board’s structure is especially visible in the context of corporate acquisitions. With that in mind, in this paper, we examine the abundant literature in the fields of strategic management, economics, and finance in order to identify which board attributes contribute to the ability of corporate boards to create value through mergers and acquisitions. In particular, we discuss the impact of four board attributes: (1) board independence, (2) board size and director-specific attributes, (3) board ownership and compensation, (4) multiple directorships. As a result of our analysis, we conclude that the impact of board attributes on shareholder wealth in mergers and acquisitions is specific to each firm. Therefore, board regulations that do not reflect a firm’s specific needs may in fact hinder the creation of a board that is capable of responding effectively to the firm’s unique needs and circumstances.     

私营企业的企业家背景、多元化战略与企业业绩

本文运用"高阶理论"考察了私营企业的企业家背景、多元化战略选择以及企业业绩之间的关系.研究发现,与低学历的、年长的、创业前没有"企业负责人"经历的企业家相比,高学历的、年轻的以及创业之前曾担任过"企业负责人"的企业家更倾向于选择多元化战略.研究也发现,高学历、低年龄、"企业负责人"经历与高的销售额、资产额、资产增长率和净资产增长率正相关;多元化战略能够带来更大的资产规模、更高的资产增长率和净资产增长率,但对利润率没有显著的影响.同时,企业家的背景与多元化战略的交互作用同样影响着企业的业绩.创业前有过"企业负责人"经历的企业家采用多元化战略可以带来更好的业绩,而没有这种经历的企业家则会收到负面的效果.有意思的是,高学历和低学历的企业家采用多元化战略都提高了企业的销售额、资产额和净资产增长率,而中等学历的企业家采取多元化战略则带来了相反的效果.本文最后对该现象的可能原因进行了探讨.     

Die steuerliche Berücksichtigung von Refinanzierungsaufwendungen beim internationalen Unternehmenskauf

The possibility to deduct interest expenses resulting from financing international mergers & acquisitions for tax purposes affects the attractiveness of international mergers & acquisitions. Multinationals can use tax planning in order to achieve a tax favored deduction of such interest expenses. On the one hand multinationals can achieve a tax effective deduction of such interest expenses in the country of residency of the target firm using an acquisition vehicle in combination with group taxation or a merger. On the other hand multinationals can try to deduct such interest expenses in the subsidiary within the multinational group being subject to the highest tax rate. The deduction of interest expenses resulting from international mergers & acquisitions should not violate the economic principle of neutral taxation. Following this principle, the deduction of such interest expenses should be granted at exactly the tax rate, at which the profits of the acquired firm are subject to taxation.     

The growth of acquisitions in services

Service firms account for 55% of all mergers and acquisitions deals which were done in the 1980s, so it is essential that we understand better the benefits they seek and the challenges they encounter. This study identifies the specific benefits sought and challenges encountered in the mergers and acquisitions as reported by the CEOs of 174 major firms operating across five service sectors. The study also identifies the management's choice of strategies for entering international markets. Clear differences exist among these service sectors in the benefits sought, the challenges encountered and their international market entry strategies. However, merging different cultures and integrating different staffing policies were identified as major challenges in all the sectors.     

Corporate Political Activity and Firm Performance: The Moderating Effects of International and Product Diversification

Prior research has found that corporate political activity (CPA) can both positively and negatively impact firm performance. Combining agency theory with the resource-based view, we examine the relationship between domestic lobbying (a key form of CPA) and firm performance by explicating the moderating effects of international and product diversification. We argue that expansion into international and product markets increases a firm's resources and reduces agency costs in domestic lobbying. Our results, based on a sample of 737 firms, show that lobbying is positively associated with performance for firms that are diversified in both international markets and along product-lines; whereas lobbying is counter-productive for purely domestic and undiversified firms. Our results contribute to the literature on the firm performance implications of corporate political activity by highlighting the roles of international and product diversification.     

企业集团并购的能量效率最优战略

本文引用动物捕食的最优方法的观点,分析了企业集团并购的能量效率最优问题,提出了最优战略。首先,本文给出了模型的基本假设;接着,分别建立起并购上、下游企业的最优战略模型,并且给出了提高能量效率的充分条件;最后,建立起横向兼并模型,也给出了提高能量效率的充分条件,并且举例说明了如何进行决策。本文的结论可以应用到中国企业集团并购实践中。     

Technological Diversification and Organizational Divisionalization: The Moderating Role of Complementary Assets

This study uses data on 582 electronics and information technology firms in Taiwan for the period 1997–2005 to investigate the hypothesis that technological diversification increases the extent of organizational divisionalization under firm growth. This study applies competence‐based theory to argue that firms spread the technological competence base to achieve firm growth. However, in the face of firm growth, managers of multi‐technology firms often utilize a multi‐division structure to manage their various technologies based on their operating characteristics or needs. Furthermore, the findings of this study indicate that complementary assets moderate the negative relationship between technological diversification and organizational divisionalization. For firms with specialized complementary assets, multi‐technology firms may be observed to consolidate related‐technology activities into fewer divisions, facilitating the utilization of these complementary assets in conjunction with other divisions.     

How Do Mutual Dependence and Power Imbalance Condition the Effects of Technological Similarity on Post-acquisition Innovation Performance Over Time?

This study investigates how mutual dependence and power imbalance, which have been differentiated by recent studies adopting the theoretical lens of resource dependence theory (RDT) as two distinct forms of interdependence, change the effect of technological similarity between the acquiring firm and the target firm on post-acquisition innovation across times. The analysis of panel data on mergers and acquisitions undertaken by US firms reveals that in the short-run, mutual dependence strengthens the effect of technological similarity on post-acquisition innovation, whereas power imbalance weakens it. However, the effect of mutual dependence persists over time, while that of power imbalance declines over time. These findings extend the RDT to the context of technological acquisition and innovation and offer important implications for research and practice.     

The effect of mergers and acquisitions on productivity: An empirical application to Spanish banking

Mergers and acquisitions are frequently justified in terms of value creation or efficiency improvements. Nevertheless, the evidence is not consistent with the existence of benefits in terms of the costs, productivity, profitability or market value of the firms involved. A distinguishing feature of extant research is that it focuses on the assessment of the consequences of mergers around the time in which the operation takes place, limiting the possibility of observing a complete integration between the merged firms. In this context, the objective of this paper is to evaluate the effects of mergers and acquisitions on the long-run productivity of Spanish savings banks. Our results show that productivity improvements can be found in only half of the mergers that take place during the period analyzed.     

Technological alliance portfolio configuration and firm performance

Firms pursuing technological alliances to gain competitive advantages have become a ubiquitous phenomenon in today’s business environment. This article examines which technological alliance portfolio configuration is better for focal firm performance using a portfolio rather than a dyadic perspective. To assess technological alliance portfolio effects on Korean pharmaceutical and biotechnology firms, we adopted three explanatory variables—number of alliances, number of partners, and spanning structural holes. The growth rate of revenue and the growth rate of profit are used as dependent variables. We identify two characteristics of technological alliance portfolios from the two-step generalized method of moments estimates. First, we find that between two firms with the same number of alliances, the firm with the larger number of partners would have a better performance. This result is unlike those in previous studies because it distinguishes between the number of alliances and number of partners based on the network theory. Second, we find that spanning structural holes affects firm performance rather like a double-edge sword—it positively affects the growth rate of profit but negatively affects the growth rate of revenue of firms. In short, spanning structural holes is simultaneously beneficial for firm profitability and unfavorable for firm growth. This result differs from those of earlier studies because it shows that a firm spanning structural holes among alliance partners produces either a positive or a negative effect, suggesting that a firm should vary its strategy depending on whether it prioritizes profitability or growth.     

International Diversification,Business Group Affiliation and Firm Performance: Empirical Evidence from India*

We investigate the impact of business group affiliation on the relationship between international diversification and firm performance for emerging economy firms. We develop the theoretical arguments based on an integration of the literature on international diversification with the institutional theory perspective. We argue for a U‐shaped relationship between international diversification and firm performance, and suggest that a firm's affiliation to a business group moderates the relationship between international diversification and firm performance. Based on a sample of Indian firms, we find that firm performance is positively related to the degree of internationalization, while business group affiliation reduces the positive effect of internationalization on firm performance.     

The micro-foundations of industrial diversification through foreign acquisitions: The multifaceted role of CEO experience

This paper examines the micro-foundations of cross-border industrial diversification strategies. We study the impact of observable CEO experience attributes on the propensity to acquire foreign target firms in unrelated (versus related) industries. Our findings, based on a sample of UK-based firms that engaged in cross-border acquisitions between 2010 and 2016, support an inverted U-shaped relationship between life experience of the CEO and the likelihood of engaging in unrelated foreign acquisitions. Further, we find that CEOs' broad-based work experience, across countries or industries, is associated with a higher propensity to engage in unrelated foreign acquisitions. Finally, CEOs’ education experience in MBA-type qualifications is associated with a preference for related foreign acquisitions. We discuss the theoretical implications of these findings and outline directions for future research in the context of micro-foundations in international business, strategic leadership, and upper echelons theory.     

Achieving Post-Acquisition Success: The Role of Corporate Entrepreneurship

Corporate entrepreneurship can play a central role in the integration of mergers and acquisitions. This paper describes a study spanning seven years for six mergers and acquisitions that involved UK, US and Swedish acquisitions of East German firms. The authors used the respective strengths of corporate entrepreneurship to predict the likely success or failure of each M&A, with very accurate results when they revisited the companies in 2001. The authors draw further lessons from the study by linking corporate entrepreneurship to the learning organisation and providing practical lessons for managers.     

Product diversification through licensing: Empirical evidence from Chinese firms

Anecdotal evidence suggests that manufacturing firms are able to engage in product diversification through external technology acquisitions, such as technology licensing. However, there is little empirical evidence regarding this proposition to link inward technology licensing and firms’ product diversification or to suggest when and under what conditions the effect of diversification through this channel may be mitigated or augmented. The current study aims to address this research gap through an empirical investigation of a sample of 141 Chinese manufacturing licensee firms. The results indicate that inward technology licensing is positively related to a firm’s diversification and that this relationship is further moderated by a licensee firm’s R&D expenditure and technological distance relative to the licensor firm.     

Planning acquisitions and mergers

This article considers the problems and opportunities associated with acquisitions and mergers. The author argues that despite the low level of activity in this area at the present time, growth oriented companies should be considering their related long-term objectives. An appropriate acquisition may successfully project a company on a growth path which it could not hope to achieve by organic growth alone. On the other hand ill-conceived acquisitions may just as speedily drive a company to disaster. The failure rate in acquisitions can be reduced by a planned approach. This article aims to explore the steps which a company ought to take from the time it decides to expand by acquisition to the time when the acquisition is integrated into the film.     

Directors’ human capital,firm strategy,and firm performance

Ideally, corporations are directed by boards whose directors provide valuable human capital that match the firms’ strategy. We investigate how directors’ human capital (international experience, industrial know-how, CEO experience, and financial know-how) affects firm performance including the firm’s strategy (diversification and internationalization) and how human capital is related to acquisition strategies (non-diversifying and international acquisitions). Our sample consists of 560 firm-year observations in Switzerland. We find empirical evidence that directors’ human capital affects firm performance and that this relationship depends on the firm’s strategy. Furthermore, human capital is also correlated with acquisition strategy. The study shows that focusing on board independence and compliance issues may be unrewarding in board research and practice.     

Equity Ownership in Cross‐border Mergers and Acquisitions by British Firms: An Analysis of Real Options and Transaction Cost Factors

The authors investigate the factors influencing the share of equity ownership sought in cross‐border mergers and acquisitions (CBM&As). Drawing on real options theory and transaction cost economics (TCE), they address and hypothesize key factors linked to commitment under exogenous uncertainty and the separation of desired and non‐desired assets’ influence on share of equity sought by acquiring firms in CBM&As. Empirical analysis based on 1872 CBM&As undertaken by British firms in both developed and emerging economies shows that British MNEs are more likely to pursue a partial acquisition in a target foreign firm when those foreign firms are from culturally distant countries. Further, findings support the view that the high cost of separating desired assets from non‐desired assets motivates firms to make a partial acquisition rather than acquire the target completely. This is one of the first studies to use real options theory to address the cost of commitment under exogenous uncertainty, as well as TCE logic to address the separation of desired and non‐desired assets in the target firm while analysing equity ownership sought in CBM&As. Empirically, this paper contributes by examining CBM&As by British firms in both developed and emerging markets.     

Scale-up modes: Profiling activity configurations in scaling strategies

Scale-ups, or scaling firms, provide an important contribution to the economy. However, there is little understanding of the characteristics of their scaling strategies, compared to the high-growth strategies of start-ups and mature firms. To address this, we build on the Penrosean view of firm growth and the literature on high-growth firms to identify the critical growth-enabling activities of scaling firms with digital business models: financing, innovation, digitization, and acquisitions. Using cluster analysis of a sample of 184 Unicorn and emerging Unicorn scale-ups with digital business models, we identify four distinct activity configurations, or scale-up modes: network growers, focused scalers, organic innovators, and constricted scalers. We discuss the theoretical implications for the literature on scaling firms, Penrose's theory of firm growth in the digitization era, and firm growth research more generally.