Prelims

Half Title Page

Advances in Mergers and Acquisitions

Series Page

Advances in Mergers and Acquisitions

Series Editors: Sydney Finkelstein and Cary L. Cooper

Recent Volumes:

Title Page

Advances in Mergers and Acquisitions Volume 17

Advances in Mergers and Acquisitions

Edited by

Sydney Finkelstein

Tuck School of Business, Dartmouth College, Hanover, NH, USA

Cary L. Cooper

Manchester Business School, University of Manchester, Manchester, UK

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

Copyright Page

Emerald Publishing Limited

Howard House, Wagon Lane, Bingley BD16 1WA, UK

First edition 2018

Copyright © 2018 Emerald Publishing Limited

Reprints and permission service

Contact: permissions@emeraldinsight.com

No part of this book may be reproduced, stored in a retrieval system, transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without either the prior written permission of the publisher or a licence permitting restricted copying issued in the UK by The Copyright Licensing Agency and in the USA by The Copyright Clearance Center. Any opinions expressed in the chapters are those of the authors. Whilst Emerald makes every effort to ensure the quality and accuracy of its content, Emerald makes no representation implied or otherwise, as to the chapters’suitability and application and disclaims any warranties, express or implied, to their use.

British Library Cataloguing in Publication Data

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

ISBN: 978-1-78756-136-6 (Print)

ISBN: 978-1-78756-135-9 (Online)

ISBN: 978-1-78756-137-3 (Epub)

ISSN: 1479-361X (Series)

Contents

List of Contributors

About the 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 Ph.D. from Columbia University in strategic management. Professor Finkelstein has published 23 books and 85 articles, with several bestsellers, including the #1 bestseller in the USA and Japan, Why Smart Executives Fail. In 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.” Professor Finkelstein 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 honor in the field. Professor Finkelstein 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 125 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, a founding 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 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, International Labour Organization, and European Union in the field of occupational health research and wellbeing, was a Chair of the Global Agenda Council on Chronic Disease of the World Economic Forum (2009–2010, and currently a member of the Global Agenda Council on mental health of the World Economic Forum), and is an 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 Commander of the Order of the British Empire 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.

Introduction to Volume 17 Advances in Mergers and Acquisitions

Sydney Finkelstein and Cary L. Cooper

With this new volume of original and thought-provoking articles in the Advances series, we bring eight 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&As), 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.

First, there are papers on methodology. Yes, there is a long history of research on M&As, but we know that results are mixed and sometimes dependent on not only the context but also the methods that researchers rely on to derive their findings. That’s why we are so pleased to have included in this volume an assessment of ethnographic methods for studying M&As. Satu Teerikangas and Noelia-Sarah Reynolds draw on their personal and extensive research experience to provide insight into how ethnographic methods can be used in the context of M&A, almost a guide for other scholars interested in, or just curious about, how to do such in-depth analysis.

The mixed results may be due to other factors beyond methodology, of course, and that is what Joaquín Sanz Berrioategortua, Olga del Orden Olasagasti, and Beatriz Palacios Florencio set out to investigate in their ­article. After an extensive meta-analysis, they point to the use of differing ­definitions of the post-merger performance construct as a critical factor in the pattern of results. Interestingly, and in line with Teerikangas and Reynolds, they also highlight the wide variety of methodologies used to measure M&A success as a contributing factor.

We are big fans of the paper by Katsuhiko Shimizu and Daisuke Uchida, for two reasons. First, the question they ask is novel and important in the context of M&As: Are announcements of M&A budgets by Japanese firms (a common practice in Japan) an indicator of strategic intent or a method of managing impressions and reducing information asymmetry? And second, as they review several case studies and draw out relevant research propositions, they produce a model of M&A budget announcements that could be the basis of considerable empirical inquiry, a new direction for research on M&As.

A related question is posed by Elisa Labbas, Padma Rao Sahib, and Trang Thu Doan. Namely, why are some cross-border deals abandoned after announcement, and never consummated, despite potential negative consequences to acquirers and targets? Their empirical paper presents evidence on the dynamic effects of spatial distance and two industry-level characteristics, namely industry relatedness between the two firms and technological intensity, on the completion likelihood of cross-border M&A deals. Their focus on spatial distance is particularly interesting, as is their finding that spatial distance increased the odds of completion, opposite to what most people might anticipate. As these authors note, there is more work to do here to untangle the dynamics that account for such a surprising result.

The idea that signaling plays a role in perceptions of M&A success is taken up by Jiachen Yang and Michel W. Lander, who look at how news reports inform and influence investor reactions to deal announcements. They find that signals related to deal characteristics may be interpreted both positively and negatively, so investors also consider messages from key informants. When signals related to deal characteristics are particularly ambiguous (diversifications announced during merger waves or involving large premiums), investors require strong endorsement from multiple key informants (boards, top management, and analysts) to react positively, or else their reaction will be negative.

One of the most fundamental questions in organizational science is how firms can manage the tradeoff between exploration and exploitation. Now, David R. King, Svante Schriber, Florian Bauer, and Sina Amiri have come up with a new answer: by conceptualizing how acquisitions can be seen as a form of corporate entrepreneurship for firms to maintain a fit with their environment, these authors provide insight to how exploration and exploitation can be managed in an ambidextrous manner. Similarities and differences in learning orientation enable a firm’s fit with a changing environment. Provided they are integrated appropriately, different acquisitions can strengthen an organization’s ability for ambidexterity by helping a firm to either maintain or shift focus on exploration and exploitation.

We live in an era where social media is affecting every walk of life, from personal friendships to corporate branding decisions to political influences on elections. In light of this, it’s a bit surprising that research on M&As has not yet done much to incorporate insights from social influences that are so central to everyday life; that’s why we like Ralph McKinney, Lawrence Shao, Dale Shao, and Marjorie McInerney’s article, where they proceed to do exactly that. Theirs won’t be the last word on this topic, as they readily acknowledge, but starting with an analysis of the influence of social media information on human resource management decisions post-acquisition strikes us as a very good way to move forward.

We’ve always been fans of carefully constructed qualitative studies because such work can uncover nuances and subtleties that get glossed over, at best, in larger scale studies. So we are excited to include the paper by Theresa Goecke, Björn Michaelis, and Lars Schweizer on why employees choose to stay or leave in reaction to acquisitions. Seventeen employees involved in two major acquisitions in the software industry were interviewed, with these authors finding that turnover or retention decisions depend on highly critical acquisition-specific variables such leadership behavior, contact with new colleagues, or appreciation from the acquirer. Not only well done research, but a positive finish to the volume, highlighting as they do that how people are treated actually makes a difference for the success of M&As.