Thomas Hutzschenreuter, Un-Seok Han and Ingo Kleindienst
Managerial intentionality has been assumed to be the most differentiating, but also the most neglected factor influencing internationalization. Although various scholars have…
Abstract
Managerial intentionality has been assumed to be the most differentiating, but also the most neglected factor influencing internationalization. Although various scholars have emphasized its relevance, the key question still remains unanswered: What is managerial intentionality and why and how does it matter? Researchers share the view that internationalization paths are a joint outcome of environmental factors, path dependence and learning, and managerial intentionality. However, although managerial intentionality is argued to be an important factor, it is rather taken as a “given.” Therefore, we step back and take a closer look at its very nature and relevance for international business research.
Thomas Hutzschenreuter, Ingo Kleindienst and Boris von Bieberstein
The aim of this paper is to explore whether and how the depth of a company's operations in a given host country influences how shareholders value further investments in that…
Abstract
Purpose
The aim of this paper is to explore whether and how the depth of a company's operations in a given host country influences how shareholders value further investments in that country. Here, depth means the extent of a company's presence, that is, a company's accumulated foreign direct investment (FDI) in a given country prior to the focal investment.
Design/methodology/approach
This paper develops a theoretical framework postulating that the value of an additional FDI in a given host country decreases to the extent to which it is redundant to a company's accumulated FDI in that country prior to the focal investment. Hypotheses are advanced and tested using a sample that encompasses the FDIs of 91 German MNEs over a 20‐year period from 1985 to 2004.
Findings
The empirical analysis shows that there is a negative relationship between depth of operations in a host country prior to the focal investment and the value that shareholders put on that investment. It is also found that the negative relationship is moderated by characteristics of the focal investment, as well as by characteristics of the country in which the additional investment is made.
Research limitations/implications
The theoretical framework developed in this study provides a starting‐point for further research on the valuation effect of individual FDIs. This study focuses on cross‐border acquisitions mainly because the value effect of such FDI can be calculated using an event study approach. However, it is believed that testing this study's theoretical framework using other forms of FDI would yield interesting results.
Originality/value
This is among the few studies that investigate how a company's path of FDI in a given host country affects the value of additional FDI in that country.
Details
Keywords
Thomas Hutzschenreuter, Ingo Kleindienst, Florian Groene and Alain Verbeke
The purpose of this paper is to address how firms adapt their product and geographic diversification as a response to foreign rivals penetrating their domestic market by adopting…
Abstract
Purpose
The purpose of this paper is to address how firms adapt their product and geographic diversification as a response to foreign rivals penetrating their domestic market by adopting a behavioral perspective to understand firm-level strategic responses to foreign entry.
Design/methodology/approach
The study proposes that strategic responses to foreign entry selected by domestic incumbents have both a framing component and a related, strategic choice component, with the latter including changes in product and geographic market diversification (though other more business strategy-related responses are also possible, e.g. in product pricing and marketing). This study tests a set of hypotheses building on panel data of large US firms.
Findings
The study finds, in accordance with our predictions, that domestic incumbents reduce their product and geographic diversification when facing an increase in import penetration. However, when increased market penetration by foreign firms takes the form of FDI rather than imports, the corporate response appears to be an increase in product and geographic diversification, again in line with our predictions.
Originality/value
The study develops a new conceptual framework that is grounded in prospect theory, but builds on recent insights from mainstream international strategic management studies (Bowen and Wiersema, 2005; Wiersema and Bowen, 2008).
Details
Keywords
Thomas Hutzschenreuter, Ingo Kleindienst and Michael Schmitt
The purpose of this paper is to provide insights to the impact of acquisition experience from prior acquisitions on the performance of subsequent ones. The authors base the…
Abstract
Purpose
The purpose of this paper is to provide insights to the impact of acquisition experience from prior acquisitions on the performance of subsequent ones. The authors base the analysis on the concept of mindfulness which has recently gained increasing attention in organizational learning theory. The aim is to extend prior research on mindfulness in organizational learning by empirically addressing how mindfulness in knowledge transfer affects task performance in the context of a rare organizational event, i.e. an acquisition, and how it is moderated by the conditions surrounding that event.
Design/methodology/approach
Employing a path-related approach, the authors analyzed large acquisitions of multiple US acquirers in a sequence to be able to clearly identify feedback from preceding acquisitions on subsequent ones. The authors adopt individual acquisition events as the unit of analysis to demonstrate the effect of mindfulness on task performance, and follow the widely used approach of measuring acquisition performance by abnormal stock market returns around the time of an acquisition announcement.
Findings
The analysis reveals an alternating relationship between an acquirer's acquisition experience and its acquisition performance. This relationship is positively moderated by an acquirer's cash reserves and by the temporal spacing of its acquisitions, but negatively moderated by an acquirer's market-to-book value.
Originality/value
Path-related approaches are rarely used in the mergers & acquisitions literature. The paper is based on the concept of mindfulness and identifies an up to now unrecognized pattern in the performance of multiple acquisitions.