Who's acquiring whom? — Experimental evidence of firm size effect on B2B mergers and marketing/sales tasks

Oh, Joon-Hee; Peters, Linda D.; Johnston, Wesley J.

doi:10.1016/j.indmarman.2014.05.016

Cited by 19 publications

(32 citation statements)

References 47 publications

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“…The size of the target firm has been an important variable used in many past IB and management studies because it represents availability of resources and assets (e.g. Erel, Jang and Weisbach, 2015;Oh, Peters and Johnston, 2014;Uhlenbruck, Hitt and Semadeni, 2006). According to transaction cost logic, the size of the target firm presents an important dilemma for the investing MNE, as its interests lie in the separation of desired assets from undesired ones, and achieving synergy relatively quickly (Erel, Jang and Weisbach, 2015;Verbeke and Hillemann, 2013).…”

Section: Target-firm Sizementioning

confidence: 99%

“…However, a large target firm may lead to higher costs of post-M&A integration (e.g. Brar, Giamouridis and Liodakis, 2009;Das and Teng, 2000;Oh, Peters and Johnston, 2014). The main sources of these extra costs in the case of large target firm are: (a) the cost of acquiring the target firm in its entirety so that the foreign firm can exercise its hierarchical authority to separate the desired assets from undesired ones (Oh, Peters and Johnston, 2014;Feliciano and Lipsey, 2017); (b) the cost of restructuring the target firm to separate desired assets from nondesired assets (e.g.…”

Section: Target-firm Sizementioning

confidence: 99%

“…Brar, Giamouridis and Liodakis, 2009;Das and Teng, 2000;Oh, Peters and Johnston, 2014). The main sources of these extra costs in the case of large target firm are: (a) the cost of acquiring the target firm in its entirety so that the foreign firm can exercise its hierarchical authority to separate the desired assets from undesired ones (Oh, Peters and Johnston, 2014;Feliciano and Lipsey, 2017); (b) the cost of restructuring the target firm to separate desired assets from nondesired assets (e.g. Erel, Jang and Weisbach, 2015;Hennart and Reddy, 1997;Maksimovic, Phillips and Prabhala, 2011); (c) the cost of selling the non-desired assets of the target firm -including search and negotiation costs (e.g.…”

Section: Target-firm Sizementioning

confidence: 99%

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Equity Ownership in Cross‐border Mergers and Acquisitions by British Firms: An Analysis of Real Options and Transaction Cost Factors

Ahammad

Leone

Tarba

et al. 2017

British J of Management

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The authors investigate the factors influencing the share of equity ownership sought in cross‐border mergers and acquisitions (CBM&As). Drawing on real options theory and transaction cost economics (TCE), they address and hypothesize key factors linked to commitment under exogenous uncertainty and the separation of desired and non‐desired assets’ influence on share of equity sought by acquiring firms in CBM&As. Empirical analysis based on 1872 CBM&As undertaken by British firms in both developed and emerging economies shows that British MNEs are more likely to pursue a partial acquisition in a target foreign firm when those foreign firms are from culturally distant countries. Further, findings support the view that the high cost of separating desired assets from non‐desired assets motivates firms to make a partial acquisition rather than acquire the target completely. This is one of the first studies to use real options theory to address the cost of commitment under exogenous uncertainty, as well as TCE logic to address the separation of desired and non‐desired assets in the target firm while analysing equity ownership sought in CBM&As. Empirically, this paper contributes by examining CBM&As by British firms in both developed and emerging markets.

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Section: Target-firm Sizementioning

confidence: 99%

Section: Target-firm Sizementioning

confidence: 99%

Section: Target-firm Sizementioning

confidence: 99%

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Equity Ownership in Cross‐border Mergers and Acquisitions by British Firms: An Analysis of Real Options and Transaction Cost Factors

Ahammad

Leone

Tarba

et al. 2017

British J of Management

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“…Target firm size: Chari and Chang () argued that the cost of separating desired assets from non‐desired assets is likely to be greater in larger target firms than in smaller target firms. In this study, we measure target firm size as the logarithm of number of employees, since the higher cost of restructuring in large firms is more likely to arise from the greater numbers of employees and activities to be restructured (Oh et al, ; Kavadis and Castañer, ; Ahammad et al, forthcoming). We also use the logarithm of sales as an alternative for robustness check.…”

Section: Methodsmentioning

confidence: 99%

R&D capabilities, intellectual property strength and choice of equity ownership in cross‐border acquisitions: evidence from BRICS acquirers in Europe

et al. 2017

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The aim of the study is to investigate two relatively underexplored factors, namely, the R&D (research and development) capabilities of target firms and the strength of intellectual property (IP) institutions in target economies, that influences the choice of equity ownership in cross border acquisitions (CBAs) undertaken by multinational enterprises (MNEs) from BRICS (Brazil, Russia, India, China and South Africa) economies. They developed the key hypothesis on foreign market entry through CBAs by incorporating insights from transaction costs economics, the resource‐based view and institutional theory to investigate the determinants of full versus partial equity ownership. Using logistic regression estimation methods to a sample of 111 CBA deals of BRICS MNEs in 22 European countries, it was found that BRICS MNEs were likely to pursue full rather than partial acquisition mode when target firms have high R&D capabilities. However, the greater the degree of strength of IP institutions in target economies and higher the target firms’ R&D capabilities, the more likely it is for BRICS MNEs to undertake partial, rather than, full acquisition mode. They provided interesting theoretical insights and managerial implications that might underlie some of the key findings on CBAs by emerging market MNEs.

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“…An important study comes to emphasize the growing signifi cance of companies from emerging economies in the M&A process ( [29]). They point out that an important feature of the present M&A wave is the infl uence of employees on the results of the process.…”

Section: The 2014 Trends In the Study Of Mergers And Acquisitionsmentioning

confidence: 99%

Recent trends in the study of merges and acquisitions

Achim¹

2015

E+M

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Who's acquiring whom? — Experimental evidence of firm size effect on B2B mergers and marketing/sales tasks

Cited by 19 publications

References 47 publications

Equity Ownership in Cross‐border Mergers and Acquisitions by British Firms: An Analysis of Real Options and Transaction Cost Factors

Equity Ownership in Cross‐border Mergers and Acquisitions by British Firms: An Analysis of Real Options and Transaction Cost Factors

R&D capabilities, intellectual property strength and choice of equity ownership in cross‐border acquisitions: evidence from BRICS acquirers in Europe

Recent trends in the study of merges and acquisitions

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