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Advances in Mergers and Acquisitions

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Advances in Mergers and Acquisitions

Series Editors: Sydney Finkelstein and Cary L. Cooper

Recent Volumes:

Volumes 1–2: Edited by Cary L. Cooper and Alan Gregory

Volumes 3–18: Edited by Sydney Finkelstein and Cary L. Cooper

Advances in Mergers and Acquisitions Volume 19

Title Page

Advances in Mergers and Acquisitions

Sydney Finkelstein

Dartmouth College, USA

Cary L. Cooper

University of Manchester, UK

United Kingdom – North America – Japan – India – Malaysia – China

Copyright Page

Emerald Publishing Limited

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First edition 2021

Copyright © 2021 Emerald Publishing Limited

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British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN: 978-1-83982-329-9 (Print)

ISBN: 978-1-83982-328-2 (Online)

ISBN: 978-1-83982-330-5 (Epub)

ISSN: 1479-361X (Series)

Contents

About the Series Editors

Sydney Finkelstein is the Steven Roth Professor of Management and Director of the Center for Leadership at the Tuck School of Business at Dartmouth College, where he teaches courses on Leadership and Strategy. He also has experience working with executives at Dartmouth and other prestigious universities around the world. He holds degrees from Concordia University and the London School of Economics, as well as a PhD from Columbia University in strategic management. He has published 23 books and 85 articles, with several bestsellers, including the #1 bestseller in the USA and Japan, Why Smart Executives Fail. On Fortune Magazine’s list of Best Business Books, the Wall Street Journal called it

a marvel – a jargon-free business book based on serious research that offers genuine insights with clarity and sometimes even wit … It should be required reading not just for executives but for investors as well.

His latest bestselling book is SUPERBOSSES: How Exceptional Leaders Master the Flow of Talent, which was named one of Amazon’s “Best Books” on business and leadership for 2016. LinkedIn Chairman Reid Hoffman calls it “a leadership guide for the Networked Age.” He is a Fellow of the Academy of Management. He has had three books nominated for the Academy of Management’s Terry Book Award, the most prestigious such honor in the field. He is a recognized thought leader on leadership, strategy, and corporate governance, and is listed on the “Thinkers 50,” the most prestigious ranking of management thinkers in the world. He is well known for his keynote speeches and television appearances and is a regular columnist for the BBC.

Cary L. Cooper is the Author and Editor of more than 175 books and is one of Britain’s most quoted business gurus. He is the 50th Anniversary Professor of Organizational Psychology and Health at Alliance Manchester Business School, University of Manchester, UK. He is the President of the Chartered Institute of Personnel and Development, President of the British Academy of Management, a Companion of the Chartered Management Institute and one of only a few UK Fellows of the (American) Academy of Management, past President of the British Association of Counselling and Psychotherapy and Past President of RELATE. He was the Founding Editor of the Journal of Organizational Behavior, former Editor of the scholarly journal Stress and Health, and is the Editor-in-Chief of the Wiley-Blackwell Encyclopaedia of Management; now in its 3rd edition. He has been an Advisor to the World Health Organisation, ILO, and EU in the field of occupational health research and well-being, was Chair of the Global Agenda Council on Chronic Disease of the World Economic Forum (2009–2010, and a member of the Global Agenda Council on Mental Health of the WEF), and is Immediate Past Chair of the Academy of Social Sciences (comprising 47 learned societies in the social sciences and 90,000 members). He was awarded the CBE by the Queen in 2001 for his contributions to organizational health and safety; and in 2014, he was awarded a Knighthood for his contribution to the social sciences.

About the Authors

Addis Gedefaw Birhanu is an Assistant Professor in Strategy and Organization at EMLYON business school, France. She completed her PhD in Business Administration and Management at Bocconi University in 2015. Her research interest in firm political strategies and corporate governance, particularly, in emerging economies. One of her co-authored papers entitled “Bribery and Investment: Firm-level Evidence from Africa and Latin America” was recently published in a Strategic Management Journal. She currently serves as a member of the Editorial Review Board of Strategic Management Journal. Her other publications include book reviews and best paper proceedings at AoM annual conferences.

Trang Thu Doan is an Assistant Professor at the International School, Vietnam National University, Hanoi, Vietnam. She received her PhD degree from University of Antwerp – Belgium. Her research focuses on mergers and acquisitions, organizational learning, and entrepreneurship. Her work has been published in Long Range Planning, Advances in Mergers and Acquisitions, SAGE Research Methods Cases, and in national journals in Vietnam. Her research has also been presented at and published in the best paper proceedings of international conferences, such as The Academy of Management Annual Conference, The European Academy of Management Conference.

Philipp Geiler used to work as an Associate Professor of Finance before joining a major international compensation consulting firm. During his time at a French Business School, he was a Visiting Fellow to Cornell University’s ILR School. Prior to this position, he was a Researcher at Tilburg University, the Netherlands, and was a Visiting Scholar at Oxford University, UK. He graduated from Erasmus University Rotterdam with an MPhil in Business Research and an MSc in International Economics and Business Studies, and from Tilburg University with a PhD in Finance. He has published in the Journal of Corporate Finance, Corporate Governance: An International Review, the Journal of International Financial Markets, Institutions & Money, and others. His research interests are corporate finance, corporate governance, and executive compensation.

Kamal Ghosh Ray is currently a Professor of Finance and Accounting at Amruth Mody School of Management, Ahmedabad University, Ahmedabad, India. Earlier, he was a Professor of Finance of the IFMR Graduate School of Business at KREA University, chittoor/chennai, India. He is working on mergers and acquisitions for more than two decades. He is an Honorary Senior Fellow of the Institute for Mergers, Acquisitions and Alliances, Vienna, Austria. His book, titled Mergers and Acquisitions: Strategy, Valuation and Integration has been globally accepted as text cum reference on M&A. He advises on M&A, Valuation, and related issues. He has passion for knowing more on the subject, M&A.

Tomi Laamanen is Chaired Professor of Strategic Management and Managing Director of the Institute of Management & Strategy at University of St. Gallen. He is also Editor-in-Chief of Long Range Planning, former Associate Editor of Strategic Management Journal, and Member of the Executive Board of the Strategic Management Society. His research covers the strategic management field broadly ranging from corporate strategy to strategy execution. The special emphasis of his research is on mergers and acquisitions, and, in particular, on acquisition programs and serial acquirers, management’s cognition, strategy processes and strategic issue management, and digital platforms for strategy execution. In terms of strategy advisory work, before joining University of St. Gallen in 2011, he was Chaired Professor of Strategic Management at Aalto University (1997–2011) and the Managing Director of Institute of Strategy.

Christina Öberg is Professor/Chair in Marketing at Örebro University in Sweden, and she is also associated with The Ratio Institute, Sweden. Her research interests concern mergers and acquisitions, customer relationships, innovations, and new ways to pursue business including the sharing economy and effects of additive manufacturing. She has previously published in such journals as Industrial Marketing Management, European Journal of Marketing, International Marketing Review, Production Planning & Control, and Journal of Business Research.

Salih Zeki Ozdemir (PhD, University of Chicago Booth School of Business) is an AGSM Fellow and Associate Professor of Strategic Management at the UNSW Business School, University of New South Wales. His research focuses on the impact of social network relationships (among individuals or organizations) on decision-making and performance outcomes and the evolution of these relationships and the social structure they generate based on the agency individuals and organizations perform. He has widely published research that intersects social network theory with corporate strategy, innovation, entrepreneurship, internationalization, and corporate governance in leading journals such as Organization Science, Research Policy, and Entrepreneurship Theory & Practice. He has won the best paper awards from AOM, ANZAM, and ACERE conferences and Corporate Governance: An International Review journal and teaching excellence awards (MBA capstone Strategy course) from AGSM, UNSW.

Padma Rao Sahib is an Associate Professor at the Department of Global Economics and Management, Faculty of Economics and Business, University of Groningen, The Netherlands. She received her PhD degree from Cornell University, USA. Her research interests are in the areas of merger and acquisitions and international business. She has published in the Journal of International Business, The Strategic Management Journal, Long Range Planning, and The Journal of World Business.

Minh Thi Thu Vu earned her PhD in Organizations and Management from UNSW Business School, University of New South Wales. Her research focuses on mergers and acquisitions and the post-merger integration process. She especially focuses on the influence of intraorganizational social relationships (i.e., supervisor–employee social relationships and newcomer–incumbent social relationships) on employee perception and turnover during the post-merger integration process. In addition, she investigates the impact of interorganizational social networks and leadership on firm decision-making (including mergers and acquisitions) and innovation-related processes and outcomes.

Arjen van Witteloostuijn is Professor of Business and Economics at the Vrije Universiteit (VU) Amsterdam and Dean of the VU School of Business and Economics, as well as Research Professor in Business, Economics and Governance at the University of Antwerp and Antwerp Management School. In the 1980s, 1990s, 2000s, and 2010s, he was affiliated with the University of Groningen, University Maastricht, Tilburg University, and Utrecht University (all four the Netherlands), and Cardiff University and Durham University (both in the UK). He holds degrees in Business, Economics, and Psychology. He is Member of the Royal Netherlands Academy of Sciences (KNAW) and Fellow of the Association of International Business. Apart from many (chapters in) books and articles in Dutch dailies and journals, he has published widely in such international journals as the Academy of Management Journal, Academy of Management Review, Accounting, Organizations & Society, American Journal of Political Science, American Journal of Sociology, American Sociological Review, British Journal of Political Science, Economica, Industrial Relations, International Journal of Industrial Organization, Journal of Economic Behavior and Organization, Journal of International Business Studies, Journal of Management, Journal of Public Administration Research and Theory, Management Science, Organization Science, Public Administration Review, and Strategic Management Journal.

Natalia Vuori is Assistant Professor of Entrepreneurial Leadership at Aalto University. Her research interests involve the role of cognition and emotions in strategy formulation and implementation. She works in the contexts, such as mergers and acquisitions, acquisition programs, innovation, and adoption of AI in organizations. Her work has been published in the Strategic Management Journal. She has received the number of prestigious awards such as AOM Newman Award, Best Paper Awards at AOM and SMS.

Cyndi Man Zhang is an Assistant Professor of Strategic Management and Lee Kong Chian Fellow at the Lee Kong Chian School of Business, Singapore Management University. She obtained her PhD from INSEAD. Her current research interests include the influence of institutional logics on firms’ strategic choices, the impact of corporate governance on innovation performance, the power struggle and coalition building in strategic decision-making, and the pursuit of multiple goals in firm’s decisions of change. Her research has been published in renowned management journals including the Academy of Management Journal and Journal of Management. She currently serves on the editorial review board of the Academy of Management Journal, Strategic Organization, and Management and Organization Review. Her academic research has also been adapted and in press in leading business media such as Forbes and LSE Business Review.

Introduction

Sydney Finkelstein and Cary L. Cooper

With this new volume of original and thought-provoking articles in the Advances series, we bring seven outstanding contributions together. As always, topics and authors are as diverse as can be. Despite the volume of past work on mergers and acquisitions (M&A), it is remarkable how the contributions assembled here add intriguing new insights, lines of inquiry, and practical relevance to what we know on this central topic of organizational life.

Timing is important in M&A, as it is in life! We know that merger waves occur, but we don’t know much about how important it might be for an organization to pay attention to that timing. Enter Trang Thu Doan, Padma Rao Sahib, and Arjen van Witteloostuijn, who dig into completed and abandoned M&A deals to try to get at what’s really going on. First, they conduct a textual analysis of the 150 largest abandoned M&A deals and find that competing bidders, regulatory concerns, and shareholder opposition from the acquirer are major roadblocks in the pre-merger process, and that these hurdles often occur jointly. Then they examine a sample of 2,802 announced M&A across four industry waves and find that M&A deals initiated earlier in a merger wave are more likely to be completed and are completed more speedily. So, yes, timing is important, and deal makers should be paying attention.

Patterns in M&A are not only relevant across firms but within firms as well. And that is what Natalia Vuori and Tomi Laamanen investigate in a set of in-depth case studies of geographic roll-up acquisition programs. In particular, Vuori and Laamanen break new ground by identifying four types of acquisition programs (cautious approach, political approach, investment-intensive approach, and hybrid approach), and an acquisition program has to be designed in a way that not only fits to the current environmental conditions in the host country, but also considers an acquirer’s acquisition capabilities and resources.

Process concerns are also on the mind of Minh Thi Thu Vu and Salih Zeki Ozdemir, who set out to study whether firms rely on their own past experience or on what other influential firms have done in selecting their legal advisors for M&A transactions. They propose and find that firms with less experience in performing M&A deals place more emphasis on imitating others while firms with more experience with a particular legal advisor focus less on others’ experience with this advisor.

The behavioral theory of the firm is one of the most central conceptualizations around for organizational scholars; yet, M&A have not always been evaluated in this context. Building on some of her empirical work in this area, Cyndi Man Zhang turns her attention to M&A in her contribution to this Volume. She concludes that in fact, there are significant benefits from studying M&A decisions to enrich the overlooked coalition building and myopia mechanisms in the behavioral theory of the firm.

Philipp Geiler and Addis Gedefaw Birhanu are interested in the role of national corporate governance arrangements in acquisitions conducted in the European Union region. They put together an impressive sample of deals in 28 European countries between 2008 and 2015, and find that among the three types of corporate governance institutions, namely corporate ethics, accountability, and financial market development (efficiency), it is efficiency and a relatively higher level of corporate ethics within the target country in comparison to the acquirer country that are positively related to the value of acquisitions.

A major topic in both business and academia is business model innovation – changes to how a business is constructed to satisfy customers. The term “servitization” has been used to describe how a manufacturing firm redevelops its product offering to focus on the customer’s use of products and thereby also adds services to the offering. The question is, what about M&A? What role do they play in such business model innovation, and how might that happen? Christina Öberg reviews the literature on these questions and identifies potentially important research gaps for scholars to focus on, something that many articles in the Advances series have done over the years and, hence, a key contribution to this Volume as well.

In the final contribution in this Volume of Advances, Kamal Ghosh Ray takes on a classic issue in M&A – the hostile takeover. Relying on a detailed look at two well-known such instances in India, he develops a distinctive model to demonstrate that unsolicited hostile takeovers may not be a good mechanism for successful business combination.

In sum, we have in Volume 19 a collection of diverse articles from authors in different continents studying different aspects of M&A. Putting together a collection like this is always striking in that it once again highlights that there is a wide world of M&A deals, mechanisms, patterns, and solutions that are worthy of scholarly investigation.