THE TRANSFORMATION AND SURVIVAL OF FORTUNE 500 INDUSTRIAL CORPORATIONS THROUGH MERGERS AND ACQUISITIONS, 1981–1995

The 1980s leveraged buyouts followed by the 1990s stock swap mergers represent the most dynamic period in U.S. business history. Using Cox regression with time-varying covariates, we examine the relationships among changes in corporate mergers and acquisitions, changes in corporate diversification strategies, and the transition from the multidivisional form (MDF) to the multisubsidiary form (MSF) of the largest Fortune 500 U.S. parent corporations. Consistent with the political economy contingency theory of accumulation (PECTA), our findings show that acquisition risk is reduced as a function of size, product and industry diversification, and percentages of shares held by institutional investors. Acquisition risk is increased by holding units in a multidivisional rather than a multisubsidiary form, higher returns to shareholders, higher divestitures, higher production to administrative imensity, and surviving previous takeover attempts. The political-legal institutions of the state have increasingly engaged in activities that are supportive and profitable for industrial and financial corporations. The actions of the state are increasingly aligned with the interests of capital.     

Capital Dependence,Financial Risk,and Change from the Multidivisional to the Multilayered Subsidiary Form

Students of the modem corporation continue to assume that corporations have the same form as they did before the turbulent 1980s when the economy became increasingly globalized and competitive. Our analysis shows that corporations are changing from the multidivisional form to a multilayered subsidiary form. Previous research showed that most corporations were multidivisional in the late 1970s. However, by 1993, 42% of the largest 100 industrial corporations had one or no divisions. The mean number of divisions per corporation declined from 8.8 in 1981 to 4 in 1993, while the mean number of domestic subsidiary corporations increased from 23 in 1981 to 51 in 1993. Parent corporations are creating a hierarchy of subsidiary corporations. Most of these changes occurred after the mid-1980s change in state business policy. The theoretical framework historicizes the corporation by identifying how capital accumulation constraints and changes in the institutional arrangements (e.g., the state) within which corporations are embedded created motives and behaviors that resulted in a change in the corporate form. Findings from logistic regression suggest that corporations that have low profits, have low working capital, have a decline in dividend payments, and manufacture high-risk, liability prone product lines have an increased probability of change to the multilayered subsidiary form. Our results provide support for the capital dependence perspective.     

Corporate Transformation to the Multilayered Subsidiary Form: Changing Economic Conditions and State Business Policy

Despite the prevalence of corporate change in the last decade, researchers have not examined whether a change occurred in the corporate form. The analysis here presents a historical case study of a large U.S. corporation and quantitative data on the largest 100 U.S. industrial corporations. The case study examines the effects of changing economic conditions and state business policy on the corporate form. This study demonstrates that the corporation changed to a multilayered subsidiary form (MLSF): a corporation with a hierarchy of two or more levels of subsidiary corporations with a parent company at the top of the hierarchy operating as a management company. Whereas rising debt and increasing competition in the 1970s and 1980s undermined corporations' capacity to accumulate capital, changes in state business policy in the mid-1980s provided the political-legal structure for corporations to restructure their assets as subsidiary corporations tax free. Changes in state business policy also provided a means for corporations to merge, acquire, and spin-off subsidiary corporations tax free. Quantitative data on the 100 largest U.S. industrial corporations show that while the multidivisional form decreased, the MLSF increased between 1981 and 1993. Findings support a capital dependence framework. The MLSF constructs liability firewalls among corporate entities and creates internal capital markets, reducing dependence on external capital markets.     

Are Latin America's corporate elites transnationally interconnected? A network analysis of interlocking directorates

Conflicting perspectives appear when thinking about the emergence of a cohesive transnational corporate network in Latin America. On the one hand, regional political integration, foreign investment growth, increased cross‐border mergers and acquisitions, and cultural and linguistic homogeneity may have fostered transnational networks among Latin America's corporate elites. On the other hand, domestic‐based business groups, family control and trade orientation to the USA may have hindered the emergence of a cohesive transnational corporate network in Latin America. Based on a network analysis of interlocking directorates among the 300 largest corporations in Latin America, I ask whether the region's corporate elites interconnect at the transnational level and form a cohesive transnational corporate network. I found few transnational interlocks, a lack of cohesion in the transnational corporate network and no regional leaders. Corporate elites in Latin America are not transnationally interconnected and so a cohesive transnational corporate network has not emerged. I discuss implications and avenues of future research.     

CORPORATE TAX LAWS, CORPORATE RESTRUCTURING, AND SUBSIDIARIZATION OF CORPORATE FORM, 1981–1995

Between 1981 and 1995 the dominant form of Fortune 500 firms changed from the multidivisional form to the multisubsidiary form (Zey and Camp 1996). The explanation for the movement toward subsidiarization originates in changes during the late 1970s and 1980s in the political economy, the relationship between corporations and capital, and the regulation of corporations. As a result of the declining capital accumulation of the 1970s, the federal government instituted two measures of corporate welfare, the Tax Reform Act of 1986 (TRA86) and the Revenue Act of 1987 (RA87), that provided corporations with nontaxable ways to restructure their acquisitions and divisions as subsidiaries. Thus, by the process of subsidiarization, corporations were able to continue capital flows. We examine the increase in subsidiarization from 1981–1995 as a means of assessing the utility of four theoretical perspectives to explain change in corporate form. A one-way random effects panel analysis demonstrates how corporate financial conditions, national business laws, and organizational characteristics combine to affect the rate of subsidiarization of U.S. corporations. Separate panel models for 1981–1985 (pre- TRA86) and 1986–1995 (post- TRA86) reveal that changes in corporate tax laws affect capital accumulation and result in significant change in corporate form. This analysis supports the structural political economy contingency theory arguing that change in capital accumulation, brought about by macro changes in political legal conditions of corporations, leads to the transformation of corporate form.     

Corporate Form and the State: Business Policy and Change from the Multidivisional to the Multilayered Subsidiary Form*

The largest industrial corporations are changing to a multilayered subsidiary form. Whereas corporations have used subsidiaries to organize their assets since the tum of the century, the number of wholly owned subsidiaries in the 100 largest industrial corporations doubled between 1981 and 1993. The question addressed here is: Why are corporations changing their form now? I suggest that the question is historically contingent and that the answer is, in part, explained by changes in state business policy. A capital dependence framework is elaborated to examine the relationship between state business policy and corporations in the 1970s and 1980s. Business policy changes–resulting in the Tax Reform Act of 1986 and the Revenue Act of 1987–provided corporations with tax-free procedures for parent companies to simultaneously restructure their divisions as subsidiaries and restructure their debt. There are additional incentives for corporations to restructure their divisions as subsidiaries: (1) creating a liability firewall between the parent company and its subsidiary corporations, limiting the financial risk of parent companies, and (2) creating an internal capital market, providing an alternative form of financing thereby reducing corporations’dependence on external capital markets.     

Income Diversity,Technology Choice and Agricultural Research Policy in Sub‐Saharan Africa

This article makes an initial analysis of the implications of income diversification for technical change and agricultural research policy in Africa, leading to two insights. First, that the dilution effect of income diversification means that, as the proportion of non‐farm income increases, so must the expected gains from adopting a new agricultural technology. Second, that diversified producers will face disproportionately large transactions costs associated with information acquisition to inform technology choice decisions. Two hypotheses about how diversified producers are likely to react are then explored. Both point to the conclusion that income diversification among the poor is likely to constrain significantly the direct poverty impacts of agricultural research. The policy implications of these findings are then considered.     

Shareholder Value and the Transformation of the U.S. Economy, 1984–20001

Using data from 62 U.S. industries for 1984–2000, this article explores the connections between shareholder value strategies, such as mergers and layoffs, and related industry‐level changes, such as de‐unionization, computer technology, and profitability. In line with shareholder value arguments, mergers occurred in industries with low profits, and industries where mergers were active subsequently saw an increase in layoffs. Industries with a high level of mergers increased investment in computer technology. This technology displaced workers through layoffs and was focused on reducing unionized workforces. Contrary to shareholder value arguments, there is no evidence that mergers or layoffs returned industries to profitability.     

CROSS-BORDER ACQUISITIONS AND BOARD GLOBALIZATION IN THE WORLD'S LARGEST TNCS, 1995–2005

Because of their size, power, and undemocratic nature, the cross-border activities of the world's transnational corporations (TNCs) are of particular interest to sociologists. Previous research shows that over the past decade the boards of directors of the world's largest TNCs have become more multinational, in other words are increasingly composed of individuals from different countries. During the same period there was also a dramatic increase in the number of cross-border TNC mergers and acquisitions (M&As). Anecdotal evidence suggests a connection between cross-border acquisitions and the increasingly multinational composition of TNC boards, and this study explores that relationship using data on the 148 largest TNCs and commercial banks. We find that a cross-border acquisition almost always results in a more multinational board of directors, that multinational boards are more likely to do cross-border deals, and that once a board becomes multinational it stays that way. The evidence also shows that multinational boards are concentrated in Europe, suggesting another dynamic between the integrating forces of the European Union and its TNCs. Because the results show increasing cross-national contact between the corporate elites who serve on multinational TNC boards, the results also provide some support for claims about the recent emergence of a "Transnational Business Class" or "Transnational Capitalist Class," at least in Europe, although it is recognized that more study is needed to make the case that such a class is forming.     

The Walking Wounded: Employees’Perspectives on Mergers and Acquisitions*

Several popular and academic works have reiterated Marx's concern over the issue of social class polarization in capitalist societies. Marx characterized this polarization as the increasing concentration of wealth and poverty in the upper and lower classes, respectively, coupled with a disappearing middle class. Building on these ideas, other work suggests a process of fragmented polarization with an increasing economic, political, social, and psychological diversity within each social class. This paper illustrates this process of class fragmentation, and shows that even though the upper class is gaining overall, there are segments which are beginning to feel the effects of economic restructuring. We address corporate restructuring in the form of mergers and acquisitions and how upper- and-middle managers perceive these processes and outcomes. We conducted 33 interviews with individuals from different organizational levels, involved in four different mergers or acquisitions. We focus on the meaning these individuals attribute to these processes and changes. Although most respondents remained with the new company, all were faced with major changes in their work environment. Respondents often experienced a breach of social contract, a dramatically altered perception of managerial control and decision making, a shift from corporate loyalty to self-interest, and new forms of power and resistance. We conclude by discussing the implications of such class fragmentation, and suggest directions for future research and policy.     

Motives of corporate political donations: industry regulation,subjective judgement and the origins of pragmatic and ideological corporations

What motivates corporate political action? Are corporations motivated by their own narrow economic self‐interest; are they committed to pursuing larger class interests; or are corporations instruments for status groups to pursue their own agendas? Sociologists have been divided over this question for much of the last century. This paper introduces a novel case – that of Australia – and an extensive dataset of over 1,500 corporations and 7,500 directors. The paper attempts to understand the motives of corporate political action by examining patterns of corporate political donations. Using statistical modelling, supported by qualitative evidence, the paper argues that, in the Australian case, corporate political action is largely motivated by the narrow economic self‐interest of individual corporations. Firms’ interests are, consistent with regulatory environment theory, defined by the nature of government regulation in their industry: those in highly regulated industries (such as banking) and those dependent on government support (such as defence) tend to adopt a strategy of hedging their political support, and make bipartisan donations (to both major parties). In contrast, firms facing hostile regulation (such as timber or mining), and those without strong dependence on state support (such as small companies) tend to adopt a strategy of conservative partisanship, and make conservative‐only donations. This paper argues that regulatory environment theory needs to be modified to incorporate greater emphasis on the subjective political judgements of corporations facing hostile regulation: a corporation's adoption of conservative partisanship or hedging is not just a product of the objective regulation they face, but also whether corporate leaders judge such regulation as politically inevitable or something that can be resisted. Such a judgement is highly subjective, introducing a dynamic and unpredictable dimension to corporate political action.     

Gender and National Identity Constructions in the Cross‐Border Merger Context

In this article we explore ways in which vertical gender inequality is accomplished in discourse in the context of a recent chain of cross‐border mergers and acquisitions that resulted in the formation of a multinational Nordic company. We analyse social interactions of ‘doing’ gender in interviews with male senior executives from Denmark, Finland and Sweden. We argue that their explanations for the absence of women in the top echelons of the company serve to distance vertical gender inequality. The main contribution of the article is an analysis of how national identities are discursively (re)constructed in such distancing. New insights are offered to studying gender in multinationals with a cross‐cultural team of researchers. Our study sheds light on how gender intersects with nationality in shaping the multinational organization and the identities of male executives in globalizing business.     

Organisationsentwicklung in M&A Prozessen

Technical issues like legal matters or different types of due diligence predominate during the execution of mergers and acquisitions. Personnel issues only get considered during the post-merger integration phase. However, the success of mergers and acquisitions depends considerably on the early and correct involvement of the human resource and organization development (OD) department in every phase of the merger.     

Growth and Poverty Reduction in Uganda, 1999–2000: Panel Data Evidence

To explore factors underlying growth and poverty reduction in Africa while overcoming some of the limitations of cross‐country analysis, this article uses micro‐level survey and panel‐data evidence from Uganda spanning 1992–2000. The high elasticity of both income growth and poverty reduction with respect to agricultural output (coffee) prices confirms the benefits from Uganda's decisive liberalisation of output markets. It also suggests the importance of product diversification to protect the poor against price shocks and the potential of cotton‐market improvements in tackling persistent poverty in the North. The importance of improving access to basic education and health care emerges more clearly than in cross‐country analysis, but benefits depend on complementary investments in electricity and other infrastructure, and reductions in civil strife.     

产业升级必须关注开放性与拓展国际视野

促进我国产业升级,必须高度重视经济全球化发展的新态势,而这主要体现在3个方面:区域性合作势头增强,国际产业转移速度加快并形成多向特点;跨国公司作为经济全球化的主要载体,其全球拓展的组织形态尤其是总部形态呈现多样化。在产业升级的过程中,关注开放性和拓展国际视野应采取6项举措,即:在继续扩大对外开放中,促进产业增量升级;在国际购并中推进产业升级;在优化出口结构中带动产业升级;在创造跨国公司总部、地区分部以及功能性组织发展环境中优化产业升级;在帮助企业"走出去"的过程中扶持产业升级;在融入区域合作经济发展中支撑产业升级。     

Local union mergers: Frequency,forms, and national union policy

This paper presents the results of a survey on the characteristics of almost 1,900 union mergers. It was found that a large proportion of national unions had some local mergers, but a majority of cases occurred in a few very active unions. Most mergers were absorptions of smaller locals into larger ones. Formal requirements for local mergers, either through general policies or constitutional clauses, were infrequent, but national level governing bodies appear to have substantial control over the approval of mergers. Suggestions are made for the further study of local mergers in relation to bargaining structure, local autonomy, membership participation, and local effectiveness.     

INTERNATIONAL DEAL EXPERIENCE AND CROSS‐BORDER ACQUISITIONS

I show that corporate directors' human capital facilitates international investments. Directors' experience with cross‐border transactions positively influences firms' decisions to conduct their first cross‐border acquisitions. Cross‐border acquirers are more likely to buy firms headquartered in countries with which the directors have prior deal experience. This effect is strongest for target firms headquartered in culturally and institutionally dissimilar countries. Announced cross‐border acquisitions are received more favorably by financial markets and are more likely to be completed successfully when the announcing firm has a director with cross‐border acquisition experience. These effects are not driven by investment bank involvement in the deal process or by other forms of directors' human capital, and they are robust to endogeneity of director hires. (JEL F23, F21, J24, L23)     

The Leverage of Protest: Market,Media, and Reputational Disruption in Social Movement Success

How do social movements gain concessions from large corporations? The ability of protests to attain leverage by imposing disruption costs on their targets is widely assumed but less often tested. In this article, we assess the ability of protests to attain concessions by disrupting three broad sources of interest to firm officials: maximizing shareholder value, gaining positive media, and fostering a well-reputed image. In contrast to the body of research on the benefits to movements from shaping media discourses and damaging the reputations of their targets, we find that only market disruption provides protests with leverage. We show this through statistical analyses of an original database of protests against large corporations in the United States over five years, 2005–2009. This study advances social movement and organizational research by demonstrating the ways in which the interests of large corporations provide insurgents with means of attaining leverage over their targets. It also speaks to the broad debate over the importance of disrupting the material versus symbolic interests of movement targets. Our results suggest that when it comes to obtaining concessions from large corporations, it is material disruption and not symbolic disruption that provides movements with leverage.     

The Cyber Worlds of Self‐Injurers: Deviant Communities,Relationships, and Selves

We explore how self‐injurers, a group of deviants who primarily were loners, now use the Internet to form subcultural and collegial relations. Drawing on virtual participant‐observation in cyber self‐injury groups, over eighty face‐to‐face and telephone in‐depth interviews, and over ten thousand e‐mail postings to groups and bulletin boards, we describe and analyze the online subcultures of self‐injurers. Via the Web, they have become cyber “colleagues,” simultaneously enacting two deviant organizational forms and challenging the idea that deviant loners can exist in a cyber society. We further analyze these individuals and their interactions to compare and contrast the venues that they use, the communities and relationships that they form, and their relation to real life. We contribute to symbolic interactionism through our social constructionist stance toward the creation of virtual communities and relationships, our focus on identity and stigma, our view of social organization as grounded in the panoply of human interpersonal relationships, our contrast of the competing reality claims posed by virtual as opposed to the solid world, and our discussion of the modern versus postmodern self.     

A longitudinal analysis of mergers and acquisitions patterns of U.S. public relations agencies between 1984 and 2004

This study was designed to examine the trends of M&As (mergers and acquisitions) in the public relations industry from 1980 to 2004. The results revealed that although M&A activities in the public relations industry increased in the decade between the early 1980s and early 1990s, they began to drop in the early 1990s. Also, it was found that public relations firms acquired or were acquired by other public relations firms.