Le Wang, Lars Schweizer and Björn Michaelis
In a contribution to the emerging research examining Chinese cross-border acquisitions (CBAs), the authors observe experiential learning applications for enhancing M&A…
Abstract
Purpose
In a contribution to the emerging research examining Chinese cross-border acquisitions (CBAs), the authors observe experiential learning applications for enhancing M&A completions. By emphasizing knowledge transfer, the authors reveal how target-to-target industry similarity and bidder-to-target cultural distance affect learning outcomes.
Design/methodology/approach
Using a binary logistic regression model, the authors examine a sample of CBA attempts announced by Chinese companies from January 2002 to December 2012 to identify the variables that affect the completion of CBAs.
Findings
The authors find that foreign acquisition experience but not domestic acquisition experience enhances subsequent acquisition attempts, especially when prior and focal target companies share the dominant industrial logic. Learning transfer is negatively affected when target countries are more culturally distant from China, but learning benefits appear to increase under strong bidder-to-target cultural distance.
Originality/value
By investigating learning in the precompletion stage in Chinese outward CBAs, the authors complement research that uses postacquisition performance to assess learning. The authors’ more fine-grained characterization reveals that acquisition experience increases knowledge transfer through experiential learning. Furthermore, the authors show that dominant industrial logic and cultural distance are underexplored contextual conditions, although they interact with foreign and domestic experience to affect the completion of CBAs.
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Lars Schweizer and Andreas Nienhaus
Sensemaking models generally lack an objective determinant to distinguish between CEO fault and changes in systematic risk caused by exogenous negative shocks like a banking…
Abstract
Purpose
Sensemaking models generally lack an objective determinant to distinguish between CEO fault and changes in systematic risk caused by exogenous negative shocks like a banking crisis. The interdisciplinary approach of this paper combines attribution theory with econometric time series analyses to provide an objective measure of exogeneity and persistence of a negative shock to an organization. The purpose of this paper is to address the exploratory research question, of how scapegoating by managers can be avoided by the use of an objective and empirical measurement and if the recent financial crisis can be seen as an exogenous shock to manufacturing firms.
Design/methodology/approach
By testing for stationarity with a structural break with an econometric time series analysis, the model helps to reduce agency costs during organizational crisis by effectively determining crisis causation and avoid scapegoating by managers.
Findings
By combining the sensemaking models of Haleblian and Rajagopalan (2006), Staw (1980), and Weick (1988), an integrated model of sensemaking in performance crises under the specific context of simultaneously occurring external crises is provided. By applying the authors approach the results suggest that the financial crisis of 2008/2009 has true exogenous adverse effects on US manufacturing firms.
Originality/value
The interdisciplinary approach encourages the integration of econometric time series analysis as an objective determinant in sense making models.
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Theresa Goecke, Björn Michaelis and Lars Schweizer
Firms pursue merger and acquisitions in order to gain valuable resources from acquired companies, including employee-held know-how and culture. This study aims to identify reasons…
Abstract
Firms pursue merger and acquisitions in order to gain valuable resources from acquired companies, including employee-held know-how and culture. This study aims to identify reasons employees choose to stay or leave in reaction to acquisitions. Seventeen employees involved in two major acquisitions in the software industry were interviewed for this qualitative study that goes beyond classical turnover variables to indicate that turnover or retention decisions depend on highly critical acquisition-specific variables such as leadership behavior, contact with new colleagues, or appreciation from the acquirer. We develop an acquisition-specific turnover model as a basis for further research on acquisition-specific turnover and to provide guidelines for practitioners dealing with retention and turnover during acquisitions.
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This study investigates the way in which acquisition-related human factors affect knowledge transfer in the context of Chinese cross-border M&A for strategic assets. The authors…
Abstract
This study investigates the way in which acquisition-related human factors affect knowledge transfer in the context of Chinese cross-border M&A for strategic assets. The authors find that the process of knowledge transfer is reciprocal for revenue and cost synergies, including explicit and tacit knowledge. The establishment of joint ventures (JV) in China after the takeover boosts product-oriented knowledge transfer from overseas-acquired firms in mature markets to Chinese acquirers. The promotion of overseas synergies stimulates complementary knowledge transfer flow, which is reversely transferred from Chinese acquirers to overseas-acquired subsidiaries such as low-saving sourcing and new market applications. This study identifies three acquisition-related human factors that impact overseas knowledge senders for knowledge transfer. These human factors are implemented by Chinese strategic investors as new shareholders during the loosen integration phase. The first facilitator is all-round communication programs with top management involvement, aiming to build up constructive communication channels to boost knowledge transfer. The second facilitator is competence-based trust, which stimulates cooperation and application based on similar professional competence between Chinese acquirers and their overseas-acquired subsidiaries. The impeder is a high turnover of key skilled workers at Chinese acquirers to undermine the effectiveness of knowledge transfer.
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Lars Schweizer, Shalini Rogbeer and Björn Michaelis
This paper aims to show how researchers can overcome problems of fragmentation and eclecticism in an important strategy paradigm, namely, the Dynamic Capabilities (DC…
Abstract
Purpose
This paper aims to show how researchers can overcome problems of fragmentation and eclecticism in an important strategy paradigm, namely, the Dynamic Capabilities (DC) perspective.
Design/methodology/approach
First, the explanandum of the theory of DC, conceptualized as a theory of strategic change, is generates. Second, four main constituent theoretical perspectives of DC were selected and their explanans on the explanandum of a theory of strategic change was mapped. Third, the explanans of a theory of strategic change was parsed out to derive the critical fragmentation sources as illustrated by the classical papers in DC.
Findings
First, consistent explanans of a theory of strategic change are integrated to build a meta-theory of strategic change. Second, testable propositions based on the meta-theory, in the context of industry convergence, a context which requires the development of dynamic capabilities in an uncertain and changing environmental context are developed.
Originality/value
By developing a meta-theory of strategic change, researchers are provided with the tools to overcome the confusion of fragmentation and eclecticism, specifically in the field of strategy research.
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The purpose of this paper is, to study macroeconomic risk factors driving the expected stock returns of listed private equity (LPE). The authors use LPE indices divided into…
Abstract
Purpose
The purpose of this paper is, to study macroeconomic risk factors driving the expected stock returns of listed private equity (LPE). The authors use LPE indices divided into different styles and regions from January 2004 to December 2016 and a set of country stock indices to estimate the macroeconomic risk profiles and corresponding risk premiums. Using a seemingly unrelated regressions (SUR) model to estimate factor sensitivities, the authors document that LPE indices exhibit stock market βs that are greater than 1. A one-factor asset pricing model using world stock market returns as the only possible risk factor is rejected on the basis of generalized method of moments (GMM) orthogonality conditions. In contrast, using the change in a currency basket, the G-7 industrial production, the G-7 term spread, the G-7 inflation rate and a recently proposed indicator of economic policy uncertainty as additional risk factors, this multifactor model is able to price a cross-section of expected LPE returns. The risk-return profile of LPE differs from country equity indices. Consequently, LPE should be treated as a separate asset class.
Design/methodology/approach
Following Ferson and Harvey (1994), the authors use an unconditional asset pricing model to capture the structure of returns across LPE. The authors use 11 LPE indices divided into different styles and regions from January 2004 to December 2016, and a set of country stock indices as spanning assets to estimate the macroeconomic risk profiles and corresponding risk premiums.
Findings
Using a seemingly unrelated regressions (SUR) model to estimate factor sensitivities, the authors document that LPE indices exhibit stock market ßs that are greater than 1. The authors estimate a one-factor asset pricing model using world stock market returns as the only possible risk factor by GMM. This model is rejected on the basis of the GMM orthogonality conditions. By contrast, a multifactor model built on the change in a currency basket, the G-7 industrial production, the G-7 term spread, the G-7 inflation rate and a recently proposed indicator of global economic policy uncertainty as additional risk factors is able to price a cross-section of expected LPE returns.
Research limitations/implications
Given data availability, the authors’ sample is strongly influenced by the financial crisis and its aftermath.
Practical implications
Information about the risk profile of LPE is important for asset allocation decisions. In particular, it may help to optimally react to contemporaneous changes in economy-wide risk factors.
Originality/value
To the best of authors’ knowledge, this is the first LPE study which investigates whether a set of macroeconomic factors is actually priced and, therefore, associated with a non-zero risk premium in the cross-section of returns.
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Thomas Bieger and Christian Laesser
With the introduction of the EUR, a new time of European economy and tourism has begun.