Lessons from the flipside: How do acquirers learn from divestitures to complete acquisitions?

We examine whether experience from prior divestitures is associated with higher completion likelihood in subsequent acquisitions. We argue that through divestitures, firms could extract meaningful knowledge that is helpful for completing their acquisitions, such as a general understanding of acquisition deal-making stages, and the stories and aims of the target in an M&A transaction. In addition, viewing divestitures as the flipside of acquisitions, we conjecture that the selling firm can observe how the divested component of their business is acquired, and vicariously learn from these observations. We also investigate the relative importance of learning from divestiture vis-à-vis acquisition experience in determining acquisition deal completion. Finally, we contend that the effect of learning from divestitures on acquisition deal completion depends on acquisition experience and deal value. We find evidence supporting our conjectures in a sample of 2164 M&A transactions from the worldwide computer and printing industries between 1991 and 2010.     

Supplier integration and firm performance: the moderating effects of internal integration and trust

This study proposes and empirically tests a model of the moderating effects of internal integration and trust on the impacts of information, process and strategic integration with suppliers on firm performance using structural equation modelling and data collected from 261 manufacturing firms in Vietnam. The results show that all three types of supplier integration positively associate with firm performance. Internal integration enhances the impact of process integration with suppliers on firm performance, but does not moderate the impacts of information and strategic integration with suppliers. Internal trust has insignificant, positive and negative influences on the effects of information, process and strategic integration with suppliers on firm performance. The findings show that internal integration and trust play different roles in moderating the positive effects of information, process and strategic integration with suppliers on firm performance, which elucidates a possible reason for previous mixed findings on the relationship between supplier integration and firm performance.     

Monitoring the monitor: Enabling strategic change when the former CEO stays on the board

Firms often retain their former CEOs on the board after succession to benefit from the former CEOs’ firm-specific expertise. However, their presence can inhibit successor CEOs from implementing meaningful strategic change, as the former CEOs seek to preserve their personal legacy and may see the strategic landscape differently, especially when the successor CEO is hired from outside the firm. Using a strategic leadership interface perspective, we propose that board members can alleviate this potential tension and enable strategic change. To test our theory, we focus on a subsample of succession events: when the former CEO stays on board as chair and the successor CEO is an outsider. This scenario is likely to result in strategic tension and cognitive differences between these two organizational leaders. We find that in such situations, boards with a higher proportion of outside directors experience greater post-succession strategic change; we find no effect in other succession scenarios. We isolate legacy conservation as a motivating factor by showing that the effect manifests for divestitures but not for acquisitions.     

Corporate divestiture and performance: an institutional view

In this study, we investigate how the institutional environment affects shareholders’ reaction to a firm’s announcement of divestitures. Traditionally, divestiture research has adhered to a financial economics perspective, in which shareholders anticipate certain economic outcomes from corporate divestitures and react accordingly. However, this research has not delivered a distinct understanding of the performance effects of corporate divestitures. To structure and integrate previous work, we apply a neo-institutional perspective of the stock market. We argue that at certain times, the institutional support for corporate diversification is relatively low. During these periods, there is a high rate of divestitures. The high divestiture activity legitimizes this corporate action and leads to a positive reaction of the stock market to new divestiture announcements. This means that individual evaluations of the possible performance outcomes of divestments are not the only factor determining the stock market reaction to a corporate divestiture announcement. Rather, investors might consider the perceived institutionalization of this corporate action when making their purchasing decisions. Using a meta-analytical technique, we find support for our prediction that different performance effects of divestitures, as revealed by previous studies, can be attributed to different conditions of the macro-economic environment. We discuss the implications of this result for research and management practice.     

CEO proactiveness,innovation, and firm performance

Chief Executive Officers (CEOs) are essential in driving firm innovation. However, despite existing research on CEO personality characteristics and firm innovation and performance, we know relatively little about how personality characteristics reflecting anticipatory action and strong outcome-oriented components, such as proactiveness, shape firm innovation and performance. We explore the relationship between CEO proactiveness and three facets of organizational innovation, as well as its impact on firm performance. We suggest that CEO proactiveness is manifested in different network-building, problem-solving, and feedback-seeking behaviors with different implications for exploratory innovation, exploitative innovation, and organizational ambidexterity, and that its effect on firm performance is partially mediated by organizational ambidexterity. By examining the influence of this important CEO personality characteristic on key firm strategic choices and performance, we extend research on strategic leadership and firm innovation and performance.     

CEOs’ temporal focus,firm strategic change,and performance: Insights from a paradox perspective

Recent research indicates that CEOs’ temporal focus (the degree to which individuals attend to the past, present, and future) is a critical predictor for strategic outcomes. Building on paradox theory and the attention-based view, we examine the implications of CEOs’ past and future focus for strategic change. Results from polynomial regression analysis reveal that CEOs who cognitively embrace both the past and the future at the same time engage more in strategic change. In addition, our results reveal that the positive strategic change−firm performance relationship is enhanced when CEOs’ past focus is high, whereas CEOs’ future focus mitigates the translation of strategic change into firm performance (when their past focus is low at the same time). In addition, supplemental analyses indicate that the impact of CEOs’ temporal focus turns out differently in stable and dynamic environments. Our study thus extends the literature on both individual’s temporal focus and strategic change.     

Strategic Corporate Social Responsibility and Value Creation among Large Firms: Lessons from the Spanish Experience

Can corporate social responsibility (CSR) be a source of good and a wellspring of innovation, competitive advantage and value creation for the firm? Although CEOs and government leaders insist in public that CSR projects create value for the firm, privately they admit that they do not know if CSR pays off. To address this question and drawing on experience for the Spanish context, we test one of the few efforts to model how the strategic management of CSR may contribute to improving firm profitability (Burke and Logsdon, 1996). To do this, we examine the impact of three strategic CSR variables – visibility, appropriability, and voluntarism – on value creation among large Spanish corporations. The conclusions from these findings suggest that managers need to understand how CSR is similar to and different from other traditional corporate market activities if they are to pursue value creation through CSR. We also suggest avenues for future research to explain how CSR may be integrated into firm processes to create resources (assets) and capabilities (routines) that may lead to competitive advantage and superior economic performance.     

Matching Managers to Strategy: Further Tests of the Miles and Snow Typology

This paper integrates prior research on strategic leadership by building on the concept of alignment to explain the performance impact of top managers. Using the Miles and Snow (1978) typology as a theoretical framework, several hypotheses are tested on a sample drawn from three distinct industries. The results show that organizations that are able to achieve an alignment between managerial characteristics and strategic direction perform better than firms where such an alignment is absent. Further, it was found that the strategy-manager match explains a greater proportion of variance in performance than industry membership, organizational age and firm size. Taken together, these findings provide persuasive evidence about the impact that an organization's leaders exert in driving performance outcomes and demonstrates the validity of the administrative dimension of the Miles and Snow typology.     

Process matters—The relevance of the decision making process for divestiture outcomes

We apply strategic decision making and organizational change theory to corporate divestitures and argue that key characteristics of the divestiture decision making process can contribute to explaining the variation in divestiture outcomes. We test our hypotheses in an empirical multi-source quantitative study and find evidence that analytical comprehensiveness in the evaluation of divestiture effects on the corporate portfolio has a positive impact on the effectiveness of divestiture choices, but analytical comprehensiveness at the focal business unit (BU) level does not enhance decision effectiveness. Our results further indicate that involvement of the affected BU management has a varying impact during the decision making process, with negative effects during the early phase and positive effects in the later phase.     

经营能力、协调治理与企业绩效:基于中国数据的实证研究

在解释企业绩效差异性时,无论是委托代理理论还是能力理论都存在一定的片面性。而结合治理机制与经营能力以探讨企业的竞争力,可以为深入理解企业的性质和成长差异性提供更为丰富的解释。本文立足于企业家要素,以能力理论和委托代理理论为基础,并基于国内283份企业数据,从经营能力和协调治理机制的单因素、多因素以及它们的相互作用三个方面统计检验了企业绩效差异性的渊泉。本文的研究结果表明,当对经营能力、协调治理分别进行考察时,这些因素的不同指标都在一定程度上影响到企业的绩效;当对这些因素进行综合考察时,经营能力的贡献则明显高于治理因子的作用;经营能力与协调治理之间存在较弱的互补性,并且这种作用主要体现为改进市场潜力而不是投资净收益。     

Shades of gray: effect of external work arrangements on firm performance under operational and strategic contingencies

This study builds on recent research on the external workforce by examining the effects of (1) temporary work (2) independent contracting, and (3) consulting on firm performance, considering the client firms’ tasks, the qualification requirements for carrying out these tasks, and its strategic context. The findings are based on a survey of 261 firms in the German manufacturing industry. At the operational level, the results indicate that the difficulty of the tasks to be performed by external workers influences their performance. Whilst temporary work and consulting are better suited for simple tasks with low qualification requirements, independent contracting increases firm performance when appointing individuals to perform complex tasks. At the strategic level we research effects by two strategic orientations; one generally increasing the internal innovation performance (innovation orientation), the other generally increasing the performance of external relationships (alliance orientation). The innovation orientation here reduces the negative effect of temporary work, whereas a high alliance orientation precipitates a positive effect of consulting on firm performance. This paper demonstrates that clients’ task requirements and their alignment towards innovation and alliances have a significant influence on the benefits to the firm conveyed by highly qualified externals.     

Only a matter of chance? How firm performance measurement impacts study results

Although strategic management research is well aware of the importance of construct measurement, surprisingly little rigor is applied regarding its core concept, firm performance. Using the example of the resource-based view (RBV), this paper demonstrates how divergence between theory-building and construct measurement regarding firm performance can produce misleading conclusions. The RBV seeks to explain value creation in the marketplace, yet empirical studies often measure various aspects of firm financial performance. Building on appropriation theory, I show that it is not possible to infer to changes in firm value creation from observed changes in firm financial performance measures and vice versa due to an omitted variable bias: the neglect of the relative bargaining power of stakeholders. This paper derives conclusions for research practice and suggests theoretically meaningful ways of bridging the gap between value creation and firm financial performance in the RBV framework.     

Production Competence and Business Strategy: Do They Affect Business Performance?

The purpose of this article is threefold. First, a comprehensive measure of production competence that assesses the level of support that manufacturing provides for the strategic objectives of a firm is developed. Second, hypotheses relating production competence to several financial measures of business performance are tested using data from a large sample of firms (n=65) in the furniture industry. Third, the impact of business strategy both directly on performance and as a moderating variable in relation to production competence is analyzed. The results of the study suggest that production competence may have more of an effect on business performance for certain strategies than for others.     

Too Big to Learn: The Effects of Major Acquisition Failures on Subsequent Acquisition Divestment

We examine whether firms learn from their major acquisition failures. Drawing from a threat‐rigidity theoretical framework, we suggest that firms do not learn from their major acquisition failures. Furthermore, we hypothesize that host‐country experience reinforces the negative effects of major acquisition failures. Our research hypotheses are tested using an event history analysis of 741 acquisitions undertaken by French listed and non‐listed firms in the USA between January 1988 and December 2008. We use failure divestment (divestment resulting from acquisition failure) as a proxy for acquisition performance. Consistent with our theoretical framework, we find that major acquisition failures have a negative impact on future acquisition performance. Furthermore, we find that such negative effects are reinforced by firms’ host‐country experience.     

The relative influence of country conditions, industry structure, and business strategy on multinational corporation subsidiary performance

Two competing theories of firm performance have been proposed in the business strategy literature, the industry structure view and the resource-based view of the firm. Empirical studies have estimated the relative contribution of industry structure, corporate, and business unit effects to business unit performance. These studies, however, have been restricted to using only single-country data. Missing from this debate is an international dimension that includes the relative importance of country conditions as a determinant of firm performance. The objective of this article is to fill this void by adding country characteristics to the analysis. Using cross-country data of four large multinationals in a single industry, we estimate the relative importance of country characteristics in addition to industry structure, corporate characteristics, and subsidiary strategy as determinants of subsidiary performance by using multiple regression analysis. This analysis also will contribute to the discussion on environmental determinism versus strategic choice. Country and industry characteristics are mainly outside the control of management, whereas corporate characteristics and subsidiary strategy are under management's control. Results show that country characteristics are by far the most important determinant of subsidiary performance, followed by industry structure, subsidiary strategy, and corporate characteristics. Thus, country conditions are a very important determinant of firm performance that so far has been overlooked in previous studies. These results indicate that subsidiary performance is determined mainly by conditions outside the control of subsidiary management. In terms of competing theories, these results support the environmental determinism view more than the strategic choice view and the resource-based view of the firm more than the industry structure view. These results also have important implications for multinational corporations' selection of countries for entry and investment and for performance evaluation of subsidiary management.     

Assessing the Height of Mobility Barriers: A Methodology and an Empirical Test in the UK Retail Grocery Industry1

A profitable niche will have few entrants if the presence of significant mobility barriers impedes entry and, hence, reduces the expected rents for entrants. Identifying sources of mobility barriers is critical in explaining how incumbents can sustain competitive advantage and obtain supranormal profits (excess rents). While much of strategic management research (and strategic group research, in particular) focuses on the pursuit of sustainable performance advantages, there is relatively little empirical research exploring the dynamics of firm movement and the impact of mobility barriers on performance. The paper analyses mobility dynamics and, most importantly, develops a method to identify the location and severity of mobility barriers. The method is illustrated on a database of large multiples in the UK retail grocery industry for the period 1982–1986. It appears that there are two dimensions of strategic change that facilitate movement into profitable niches. Implications for competition and profitability are discussed.     

TMT异质性、战略变革与绩效改善的关系研究——基于绩效下滑的非多元化企业的数据实证

本文基于高阶梯队理论,针对以往TMT研究的关键问题,探讨绩效下滑的非多元化企业CEO继任后,TMT异质性、战略变革和绩效改善的关系。本文选取了沪深两市2005-2013年相关数据为研究变量,对2008-2010期间发生CEO变更的145家绩效下滑的非多元化企业进行实证研究,结果表明,TMT任期异质性对战略变动有显著负向影响,战略变动对企业绩效变化没有显著影响,战略背离对企业绩效变化有显著负向影响。当我们探索性的测量战略变革的方向时,发现战略变动与企业绩效变化呈U型关系,战略背离与企业绩效变化呈倒U型关系。本研究不仅为绩效下滑的非多元化企业转型战略研究提供一个新的视角,而且为绩效下滑企业选择高管团队提供了决策的依据。     

Tying the Acquirer's Human Resource Management Quality to Cross‐Border Acquisition Divestment Probability: Curvilinear Connection with Slacklining

Cross‐border acquisitions are growing in volume and global economic importance, yet a considerable number end in failure. Many of these failures may be linked to people management‐related issues. We extend this stream of research by investigating the impact of the acquirer's aggregate human resource management (HRM) quality on cross‐border acquisition divestment. Our empirical analysis uses a panel database of 4128 cross‐border acquisition/year observations and an event history design. The findings confirm a curvilinear relationship and suggest that acquisition failures are not merely associated with poor HRM quality, but also with very high levels of HRM quality, that is, with both extremes. Moreover, our results show that financial slack has a significant moderating effect on the curvilinear relationship between HRM quality and the likelihood of acquisition divestment. Overall, our study reveals boundary conditions for the widely demonstrated positive relationship between HRM quality and organizational performance in an acquisition context.     

组内竞争与组间竞争对企业绩效的影响差异——基于移动壁垒分隔作用的研究

本文基于战略群组理论,通过实证研究探索了组内竞争、组间竞争对移动壁垒内外部企业具有的不同影响。以中国制药业上市公司为样本,采用阶层聚类分析中的Ward法进行战略群组划分,识别行业中的移动壁垒并将其保护功能作为调节变量,然后分别使用POLS和RE回归模型对两类竞争的效果进行了分析检验。研究发现,组内竞争对于移动壁垒外部企业绩效的不利影响显著大于其对壁垒内部企业的影响;相反,组间竞争对移动壁垒内部企业绩效的不利影响显著大于其对壁垒外部企业的影响。上述发现表明,行业中不同类型竞争的效果存在显著差异,而企业相对于移动壁垒的位置是造成上述差异的重要原因。对竞争效果的准确分析需把握以下两方面因素:行业中有哪些移动壁垒,以及竞争发生在组内还是组间。     

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.