Strategic momentum: The effects of repetitive, positional, and contextual momentum on merger activity

Abstract

CI \ This paper defines and examines three types of strategic momentum. Reperirive momenrum occurs when organizations repeat previous strategic actions. Postitional mornvntum occurs when organizations take actions that sustain or extend existing strategic positions. Contextual momentum occurs when general traits, such as organizational structure, shape strategic action in a consistent fashion. Event-history analysis of 262 large f i r m over a 29-year period indicates that: ( I ) the occurrence of mergers tends to increase the rate of mergers of the same type (repetitive momentum), and (2) organizational decentralization increases the rate of diversifying mergers (contextual momentum). Product market diversification was found to increase the probability of product extension mergers but not conglomerate mergers, only partly confirming positional momentum. The results indicate that internal momentum can affect merger activity, and suggest the importance of continuing research on the role of inertia in organizational adaptation.

Disentangling the Influences of Leaders' Relational Embeddedness on Interorganizational Exchange

“…Prior exchanges provide information about others' incentives to behave reliably and can help deter opportunism (Gulati, 1995). Prior exchanges also allow partners to develop relationship-specific exchange routines and structures (Amburgey & Miner, 1992) that reduce the transaction costs of subsequent negotiation and resource transfer.…”

Shifting Gears, Shifting Niches: Organizational Inertia and Change in the Evolution of the U.S. Automobile Industry, 1885–1981

“…It is widely believed that experience impacts the propensity of an organization to implement change. As it gains experience in undertaking a particular type of change, an organization becomes more likely to attempt a similar transformation in the future (Amburgey et al 1993). Experience with a certain type of change also tends to constrain future transformations: The organization becomes less likely to experiment with different types of transformation.…”

“…It should be distinguished from the familiar interpretation of "momentum of change" which researchers have used to describe the absolute effect of prior change on subsequent reorganization (Amburgey et al 1993, Amburgey and Miner 1992, Kelly and Amburgey 1991.…”

“…Within this framework, a rapidly growing series of empirical studies follow Amburgey et al (1993) and Haveman (1992) in analyzing the consequences of specific types of structural change in complete organizational populations. In general, findings from these studies link inertia to disruptive process effects.…”

Internationalization of the Taiwan Banking Industry, 1990-2001

“…Domestic branch experience while fostering multiunit operational capability also develops a strong domestic-oriented dominant logic which prevents banks from entering overseas markets. This lack of attention on overseas expansion arises because of a domestic, repetitive momentum [9].…”