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Integration, network and industrial innovation in technology sourcing overseas M&A: a comparison between China and South Korea
Abstract
Appropriate integration in technology sourcing overseas M&A is effective for acquirers to improve their innovation network positions and to promote domestic industrial innovation. We use the technology sourcing overseas M&A of Chinese and South Korean manufacturing industries as samples for empirical analysis. The results show that post-merger integration strategy should match resource characteristics between acquiring and acquired firms to promote industrial innovation through innovation network position improvement. Specifically, high-degree integration should match high-resource-similarity / low-resource-complementarity acquired firms, low-degree integration should match low-resource-similarity / high-resource-complementarity acquired firms, and moderate-degree integration should match high-resource-similarity / high-resource-complementarity acquired firms. The acquirer’s home country institutional development enhances the effect of post-merger integration. This study provides guidance for promoting industrial innovation through post-merger integration.
... Крім того, такі компанії можуть відчувати більше проблем і труднощів в управлінні персоналом і інноваціями об'єктів придбання за кордоном, ніж їх конкуренти в розвинених країнах 3 . При злиттях та поглинаннях транснаціональна корпорація на ринку, що розвивається, може істотно впливати на управління інноваційним розвитком у контексті зворотної інтегрованості 4 . Виникає необхідність визначення, як і якою мірою розміщення глобальної інноваційної мережі може впливати на поширення інновацій в контексті інтегрованого розвитку бізнесу. ...
... The post-merger integration strategy should match resource characteristics between acquiring and acquired firms, to leverage innovation through a network position improvement. Specifically, high-degree integration should be in place, when there is high-resource similarity with the acquired firm, and on the opposite way, low-degree integration should be applied when there is highresource complementarity (Chen, Li, and Meng 2019). ...
Large multinational IT companies are always trying to produce competitive innovation at a faster pace. Even giant IT corporations, however, are unable to produce sustainable technological innovation alone. Literature offers many alternatives to obtain external technologies, but there are few studies about acquisition strategy to obtain technology innovation. A case study was carried out in a multinational IT company, EMC, which has applied mainly the acquisition strategy to develop innovations and increase its competitive position. The company has acquired many technology-based IT companies in the U.S. and abroad, and this strategy showed effectiveness in value creation, leading them to increase their income, value and market capitalisation during this period. An important finding here is that, by combining acquisitions with increasing investments in R&D, EMC was able to leverage innovations and strengthen its competitiveness and global market presence. The EMC experience has also allowed proposing a graphical tool, showing which are the key management processes that might be considered to get successful in using the acquisition strategy to create values for the business through innovation. Associated with this tool, this study also presents a step-by-step procedure to guide practitioners on how to manage the strategy of acquisition to access innovation.
... However, a comprehensive approach still needs to be developed to evaluate the process of building the firm's position in the business network and to highlight its importance for a given firm's business performance. Research on the influence of a firm's network position on its business performance is important as "an advantageous network position can enhance the prominence of a firm," according to Chen, Li andMeng [2019: 1169]. ...
The theory of business networks has attracted increasing attention in recent years. It assumes that the competitive advantage of a firm depends on its business relationships with various entities. The quality and number of business relationships a firm maintains shape its network position, which influences the firm’s performance. The aim of this paper is to propose a framework for analysing the development of the firm’s position in the business network in the context of the firm’s performance. A literature review method was used in the paper. Based on a literature analysis and the authors’ earlier research, the proposed framework suggests that a firm’s network position changes constantly due to continuous changes in the determinants of its network position and continuous changes in the firm’s behaviour as it develops its network position. In turn, changes in the network position impact the firm’s performance.
Purpose
Emerging market firms (EMFs) are increasingly expanding their global presence through cross-border mergers and acquisitions (CBMAs). While such deals are distinct from those by advanced market firms, there is a need for a comprehensive understanding of how emerging home markets form this distinctiveness. This study aims to remedy this gap.
Design/methodology/approach
The authors conduct a systematic literature review of 84 empirical papers. Through a broad search string and seven exclusion criteria, the authors carefully select studies on country-level home factors of CBMAs by EMFs.
Findings
After summarizing paper volumes, journals and context factors of home/host countries and industries, the authors highlight different strands of institutional theory as the prevailing perspective and pre-M&A issues as the foremost theme. CBMAs by EMFs are influenced by distinct home-exclusive factors, and the mechanisms linking home-country factors to CBMAs by EMFs show significant inconsistencies across studies.
Originality/value
This review focuses on home country influence and thus goes beyond general characteristics of CBMAs by EMFs. The authors highlight more diverse types of home country factors and CBMA outcomes and, more importantly, take a closer look at involved mechanisms. Doing so, the authors identify gaps and disparities that have limited the understanding of home country influence in CBMAs by EMFs. To correct this, the authors offer a comprehensive roadmap for future research, contributing to EMF studies in particular and CBMA and international business research in general.
Previous reviews of cross-border mergers and acquisitions (M&As) have not provided an integrative and evolutionary analysis, and the academic literature generally reflects a fragmented research perspective. Therefore, this study combined a bibliometric analysis and text-mining to analyze the evolution of theories and topics as well as theory-topic co-occurrence. We also used a topic modelling technique to divide the articles into 10 subareas and further analyzed their subthemes and dynamics. Overall, we examined 1,197 articles published from 1989 to 2022. This study contributes to the current literature by providing data on theory-topic co-occurrence and its evolution in cross-border M&As, conducting theory-topic co-occurrence analysis that identifies popular research trends and provides new insights into how to integrate M&As practices with theories, identifying 10 sub-areas via bibliometric analysis and BERTopic modelling, and identifying key theories and emerging themes to be examined in future studies.
This study uses a sample of technological mergers and acquisitions (M&As) of A-share listed companies in the five major high-tech industries from 2012 to 2016, and conducts factor analysis to measure the heterogeneity of these enterprises in terms of financial slack resources, equity resources, and governance structure. On this basis, multivariate regression analysis is utilized to explore the influence of the acquiring firms' heterogeneity on their innovation performance, and the adjustment action of absorptive capacity between heterogeneity and innovation performance. The research results show that the slack financial resources and highly centralized equity structure of enterprises are not conducive to enterprises improving their innovation performance following a technological M&A, while the impact of governance structure on innovation performance following an M&A is similarly not significant. The empirical evidence provided offer insights and a decision reference for technological M&As of high-tech enterprises.
The social network view claims that connections are an important determinant of information access. However, whether business group networks provide an information advantage has received little attention. This paper provides evidence of the information advantage in the context of technology acquisitions. Using a sample of listed business groups in China from 2004 to 2017, we find that the propensity for technology acquisition is positively associated with network centrality in business groups. Greater centrality allows affiliates to gather valuable information, thus resulting in lower acquisition premiums, acquiring companies with more patents, and greater innovation efficiency. Additional analyses show that technology acquisitions by business groups with greater centrality enhance firms’ marginal innovation output and generate superior acquisition performance. We also find that non-state-owned firms and firms in high-tech industries benefit more from network centrality in technology acquisitions. Overall, this study sheds light on the information benefits of network centrality in business groups.
Purpose
The purpose of this paper is to investigate the impact of two dimensions of technological relatedness, namely technological similarity and complementarity, on collaborative performance, plus the mediating role of collaboration network stickiness and the moderating role of partner expertise and geographical distance in interfirm collaboration contexts.
Design/methodology/approach
This study takes Chinese Scientific and Technological Achievements (STA) of inter-firm collaboration in five high-tech fields in 2010–2020 as the sample and uses OLS regression to test the hypothesis.
Findings
Technological similarity and complementarity positively affect collaborative performance. Partner expertise negatively moderates the relationship between similarity, complementarity and collaborative performance. Geographical distance positively moderates the relationship between similarity and collaborative performance while negatively moderates that between complementarity and collaborative performance. Collaboration network stickiness partly mediates the relationship between similarity and collaborative performance.
Originality/value
This study expands literature on inter-firm collaboration, especially research on the antecedents of collaborative performance. Moreover, this study not only compensates for lack of empirical analysis in partner selection research, but also utilizes second-hand data to enhance the objectivity of analysis. Additionally, we enrich the research on the moderating role of partner expertise and geographical distance as well as the mediating role of collaboration network stickiness.
Technology-sourcing mergers and acquisitions (M&As) has become an important instrument for enterprises to acquire new knowledge and build technological ability. To achieve technology innovation improvement, the choice of integration strategy is vitally important. The purpose of this paper is to explore the relationship between integration and innovation in technology-sourcing M&As. To verify our hypotheses, we conduct a comparative empirical study based on the data of overseas and domestic M&As of Chinese enterprises from 2000 to 2019. We find that for overseas M&As, the influence of integration degree on technology innovation depends on the resource characteristics of the two merging parties. In cases of high resource similarity and low resource complementarity, the degree of integration positively affects technology innovation, while in cases of low resource similarity and high resource complementarity, the degree of integration negatively affects technology innovation. In comparison, for domestic M&As, the degree of integration positively affects technology innovation.
Purpose
In the process of cross-border mergers and acquisitions (M&A), the social capital of enterprises is dynamic. In this context, cross-cultural competence plays an important role and can affect the transformation process of social capital and further influence the realisation of M&A performance. However, there is still not enough research on the process of social capital transformation and corporate cross-cultural competence. This study aims to explore the influence mechanism of social capital and the cross-cultural competence of enterprises.
Design/methodology/approach
In this paper, four typical manufacturing M&A case studies were analysed and a grounded theoretical analysis process was used to explore the structure of cross-cultural competence and its impact on the dynamic process of social capital.
Findings
The results of this study imply that social capital experiences three stages of transformation in the process of M&A. There are also four dimensions of corporate cross-cultural competence, which are composed of various factors. These all affect the dynamic process of social capital through different influence mechanisms.
Originality/value
According to the results, a mechanism model was composed to determine how corporate cross-cultural ability affects the social capital process. This is of practical significance as it can enhance the performance of M&A integration in a cross-cultural context.
Purpose
The purpose of the paper is to examine the coevolutionary dynamics between multistage overseas mergers and acquisitions (M&A) integration and knowledge network reconfiguration and the impact of this coevolution on industrial technology innovation.
Design/methodology/approach
This paper builds a coevolution analysis framework in stages and constructs structural equation models for empirical tests using the Chinese technology-sourcing overseas M&A events that occurred from 2001 to 2012.
Findings
Overseas M&A integration and knowledge network reconfiguration are in a coevolutionary relationship, driving industrial technology innovation. The acquirer adopts initial integration degree that matches the resource relatedness between the acquiring and acquired parties, promoting initial industrial technology innovation through initial knowledge network reconfiguration. Initial knowledge network reconfiguration will feed back to the M&A integration decision in the mid-to-late stage through increasing knowledge similarity and narrowing network position difference. The higher the improvement of mid-to-late integration degree, the more it can drive mid-to-late industrial technology innovation through mid-to-late knowledge network reconfiguration.
Research limitations/implications
Future research can accurately classify overseas M&A integration stages through case tracking and explore other network attributes.
Practical implications
Practical guidelines are provided for managers on how to implement a multistage overseas M&A integration strategy, optimize knowledge network reconfiguration and promote industrial technology innovation. Significant practical implications are presented, especially in academia, society and quality of life.
Originality/value
Different from the previous research considering M&A integration as a single-stage decision, this paper emphasizes the dynamics of the M&A integration process and explores the coevolution mechanism of multistage overseas M&A integration and knowledge network reconfiguration.
A large and growing literature spanning multiple fields has identified employee mobility as a critical influence on several important organizational outcomes. However, extant research on the topic is highly fragmented and lacks a unifying theoretical framework, impeding the development of a cumulative conceptually integrated body of research. We seek to remedy this situation by undertaking a review of research on employee mobility and its organizational impacts and casting it within a novel integrative conceptual framework. As a critical foundation for this framework, we highlight how the various organizational impacts of employee mobility are ultimately engendered by different dimensions of human and/or relational capital that are conveyed by mobile individuals. Building on this foundation, we describe how multilevel contextual factors—characterized as attributes of the employee, source and destination firms, and environmental conditions—may moderate the transfer and utilization of human and relational capital held by mobile individuals. Finally, we review how constraining factors, such as labor market imperfections on both demand and supply sides, can impede employee mobility and also how alternative competing channels—for example, alliances, networks and geographic spillovers, and acquisitions—may be used for effectuating the same organizational impacts as mobility events. These constraints and competing channels are important because they circumscribe the conditions under which employee mobility can be a critical influence on organizational outcomes. We seek to provide a rich integrative theoretical understanding of employee mobility and spur future research on important unanswered research questions.
The costs of doing business abroad (CDBA) is a well-known concept in the international business literature, measuring the disadvantages or additional costs borne by multinational enterprises (MNEs) that are not borne by local firms in a host country. Recently, international management scholars have introduced a second concept, liability of foreignness (LOF). There is confusion in the two literatures as to the relationship between CBDA and LOF, as evidenced in a recent special issue on liability of foreignness (Journal of International Management, 2002). We argue that LOF stresses the social costs of doing business abroad, whereas CDBA includes both economic and social costs. The social costs arise from the unfamiliarity, relational, and discriminatory hazards that foreign firms face over and above those faced by local firms in the host country. Because the economic costs are well understood and can be anticipated, LOF becomes the core strategic issue for MNE managers. We argue that the key driver behind LOF is the institutional distance (cognitive, normative, and regulatory) between the home and host countries, and explore the ways in which institutional distance can affect LOF. We operationalize our arguments by showing how institutional distance and liability of foreignness can provide an alternative explanation for the MNE's ownership strategy when going abroad.
Using survey data from China, we demonstrate that managers' micro interpersonal ties with top executives at other firms and with government officials help improve macro organizational performance. This micro-macro link differs among firms with different (1) ownership types, (2) business sectors, (3) sizes, and (4) industry growth rates. In addition, managerial ties were found to be necessary but insufficient for good performance; a number of traditional strategy variables also drive performance. Theoretically, the findings point to the importance of the social context in which managerial ties are embedded. Empirically, this study provides the first set of quantitative data demonstrating both the extent and limits to which managerial ties are beneficial in a transition economy.
This article argues that upgrading in China has been a historical success, that upgrading must be seen as a learning process, and that current Chinese upgrading involves a transformation in industrial learning dynamics. During China's initial export-oriented industrialization strategy, indigenous producers successfully upgraded by apprenticing themselves to their foreign customers, and they learned through integration in transnational communities of practice. The success of those initial unilateral learning relations enhanced the sophistication of the Chinese market, both as a community of producers and as a market for manufactured goods. This has generated a new phase of learning-driven upgrading in which Chinese producers and MNC manufacturers both seek to make their Chinese operations more sophisticated. In this new context, apprenticeship disappears and Chinese and foreign players learn from one another. A core claim about the new mutual learning is that it is facilitated by the globalization of formal learning systems, such as corporate production systems (CPSs).
Complementing received research on the role of collaboration networks in fostering interorganizational learning and innovation, the authors focus on the importance of learning from other firms’ public knowledge. To this end they introduce the concept of spillover network—the network of “source” firms whose public knowledge a “recipient” firm is able to readily absorb and use as innovation input. Using patent-based data on a panel of semiconductor firms between 1976 and 2002, the authors demonstrate that firms’ innovative performance tends to be higher when their spillover network is either munificent or rich in structural holes. However, being exposed to a spillover network that is both munificent and rich in structural holes is generally counterproductive. Consistent with the insight that the value of external knowledge inputs depends on the firm-level resources with which it can be bundled, furthermore, the authors argue that the extent to which firms benefit from their spillover network hinges on specific intraorganizational factors—their scientific intensity and degree of downstream integration.
This paper investigates the effects on product innovation of firms' search to innovate, taking into account how a firm's search relates to that of its competitors. Drawing on organizational learning theory, we hypothesize that search timing relative to competitors matters and test two seemingly contradictory views: that competitors take away the exclusivity of search and therefore suppress innovation or, in contrast, sharpen and validate the focal firm's search and thus promote innovation. Our analysis of 15 years of longitudinal data on 124 Japanese, European, and U.S. industrial automation organizations reconciles these views. Results show that firms introduce more new products if they search after their competitors do, and they introduce more innovative new products if they search ahead of their competitors. The most innovative firms combine these two approaches, bridging their own and their rivals' hitherto isolated clusters of knowledge, but avoid engaging in learning contests in which they search at the same time as their rivals. The key insight for innovating firms, then, is not necessarily to strive to perform as well as possible in absolute terms, but to be different from the competition.
Research on social networks has grown considerably in the last decade. However, there is a certain amount of confusion about network theory-for example, what it is, what is distinctive about it, and how to generate new theory. This paper attempts to remedy the situation by clarifying the fundamental concepts of the field (such as the network) and characterizing how network reasoning works. We start by considering the definition of network, noting some confusion caused by two different perspectives, which we refer to as realist and nominalist. We then analyze two well-known network theories, Granovetter's strength of weak ties theory [Granovetter, M. S. 1973. The strength of weak ties. Amer. J. Sociol. 78(6) 1360-1380] and Burt's structural holes theory [Burt, R. S. 1992. Structural Holes: The Social Structure of Competition. Havard University Press, Cambridge, MA], to identify characteristic elements of network theorizing. We argue that both theories share an underlying theoretical model, which we label the network flow model, from which we derive additional implications. We also discuss network phenomena that do not appear to fit the flow model and discuss the possibility of a second fundamental model, which we call the bond model. We close with a discussion of the merits of model-based network theorizing for facilitating the generation of new theory, as well as a discussion of endogeneity in network theorizing.
We argue in this paper that when the knowledge base of an industry is both complex and expanding and the sources of expertise are widely dispersed, the locus of innovation will be found in networks of learning, rather than in individual firms. The large-scale reliance on interorganizational collaborations in the biotechnology industry reflects a fundamental and pervasive concern with access to knowledge. We develop a network approach to organizational learning and derive firm-level, longitudinal hypotheses that link research and development alliances, experience with managing interfirm relationships, network position, rates of growth, and portfolios of collaborative activities. We test these hypotheses on a sample of dedicated biotechnology firms in the years 1990-1994. Results from pooled, within-firm, time series analyses support a learning view and have broad implications for future theoretical and empirical research on organizational networks and strategic alliances.•.
Little, Bovaird and Widaman (2006) proposed an unconstrained approach with residual centering for estimating latent interaction effects as an alternative to the mean-centered approach proposed by Marsh, Wen, and Hau (2004, 2006). Little et al. also differed from Marsh et al. in the number of indicators used to infer the latent interaction factor and how they were represented, but this issue is separate from the mean versus residual centering distinction that was their primary focus. However, their implementation of the Marsh et al. mean-centered approach failed to incorporate the mean structure that Marsh et al. argued was necessary to obtain unbiased estimates. One might suppose that their new approach would suffer this same problem, an issue not addressed by Little et al. However, we demonstrate here why the Little et al. approach obviates this requirement that heretofore was thought to be necessary for all constrained, partially constrained, and unconstrained approaches. Both the Marsh et al. and Little et al. unconstrained approaches typically result in similar results and are much easier to implement than traditional constrained approaches. They differ primarily in that the Little et al. approach is a 2-step approach involving a potentially large number of separate analyses prior to estimating the structural equation model that apparently does not require the estimation of a mean structure, whereas the Marsh et al. approach is a 1-step approach that includes a mean structure.
Acquisition integration is a pivotal factor in determining whether the objectives of an acquisition are achieved. In this paper, we hypothesize that the productivity of corporate scientists of acquired companies is generally impaired by integration, but that some scientists experience more disruption than others. In particular, acquisition integration will be most disruptive, leading to the most severe productivity drops, for those inventors who have lost the most social status and centrality in the combined entity. Drawing from prior literatures on the knowledge-based view of the firm, and on mergers and acquisitions, we develop hypotheses about a concise set of conditions that will lead to substantial performance drops for acquired technical personnel. We test our hypotheses, using patent application data, on a sample of 3,933 inventors in pharmaceutical firms whose companies were acquired. Results are strongly in line with our theorized expectations.
This paper examines the impact of acquisitions on the subsequent innovation performance of acquiring firms in the chemicals industry. We distinguish between technological acquisitions, acquisitions in which technology is a component of the acquired firm's assets, and nontechnological acquisitions: acquisitions that do not involve a technological component. We develop a framework relating acquisitions to firm innovation performance and develop a set of measures for quantifying the technological inputs a firm obtains through acquisitions. We find that within technological acquisitions absolute size of the acquired knowledge base enhances innovation performance, while relative size of the acquired knowledge base reduces innovation output. The relatedness of acquired and acquiring knowledge bases has a nonlinear impact on innovation output. Nontechnological acquisitions do not have a significant effect on subsequent innovation output. Copyright © 2001 John Wiley & Sons, Ltd.
What drives mergers and acquisitions (M&As) in different institutional environments? This article builds on the resource dependence perspective and argues that networks, learning, and institutions represent three building blocks that can enhance our understanding of the drivers behind M&As. Specifically, we consider firms as learning actors embedded in network relations and influenced by institutional development, and compare and contrast firms' acquisition activities across the United States and China. Our findings show that there are indeed important learning and network factors that lead to M&As. More interestingly, the impact of such learning and network factors varies sharply across countries with different market-based institutions. Copyright © 2009 John Wiley & Sons, Ltd.
In this paper, we argue that the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities. We label this capability a firm's absorptive capacity and suggest that it is largely a function of the firm's level of prior related knowledge. The discussion focuses first on the cognitive basis for an individual's absorptive capacity including, in particular, prior related knowledge and diversity of background. We then characterize the factors that influence absorptive capacity at the organizational level, how an organization's absorptive capacity differs from that of its individual members, and the role of diversity of expertise within an organization. We argue that the development of absorptive capacity, and, in turn, innovative performance are history- or path-dependent and argue how lack of investment in an area of expertise early on may foreclose the future development of a technical capability in that area. We formulate a model of firm investment in research and development (R&D), in which R&D contributes to a firm's absorptive capacity, and test predictions relating a firm's investment in R&D to the knowledge underlying technical change within an industry. Discussion focuses on the implications of absorptive capacity for the analysis of other related innovative activities, including basic research, the adoption and diffusion of innovations, and decisions to participate in cooperative R&D ventures.
This paper examines the impact of ownership structures of emerging-market firms, which are shaped by local institutions, on the decision of these firms to undertake outward FDI. Our results suggest that family firms and firms with concentrated ownerships (both ubiquitous in emerging markets) are less likely to invest overseas, and that strategic equity holding by foreign investors facilitates outward FDI. We conclude that organisational forms such as family firms, which are optimal outcomes of institutions prevailing in emerging markets, may be suboptimal in a changing business environment in which outward FDI is necessary for access to resources and markets.
This paper examines the statistical importance of governance infrastructure as a determinant of US foreign direct investment (FDI). In broad terms, governance infrastructure represents attributes of legislation, regulation, and legal systems that condition freedom of transacting, security of property rights, and transparency of government and legal processes. Our econometric analysis uses a two-stage estimation procedure. In the first stage, the probability that a country is an FDI recipient is estimated. The results indicate that countries that fail to achieve a minimum threshold of effective governance are unlikely to receive any US FDI. Countries that receive no US FDI are typically countries that do not promote free and transparent markets, that have ineffective governments, and that often have legal systems that are not rooted in English common law. In the second stage, the analysis is restricted to those countries that did receive FDI flows. The estimated equations focus on the determinants of the amount of FDI received. Given that a country is a recipient of US FDI, governance infrastructure – including the nature of the legal system – is an important determinant of the amount received. Journal of International Business Studies (2003) 34, 19–39. doi:10.1057/palgrave.jibs.8400001
We develop a dynamic model with knowledge spillovers in production. The model contains two opposing forces. Imitation of other firms helps followers catch up with leaders, but the prospect of doing so makes followers want to free ride. The second force dominates and creates permanent inequality. We show that the greater are the average spillovers and the easier they are to obtain, the greater is the free-riding and inequality. More directed copying raises inequality by raising the free-riding advantages of hanging back. Using Compustat and patent-citation data we find that copying is highly undirected.
This study focuses on the multiplexity of firm R&D networks, and it investigates two types of boundary-spanning networks: the bipartite network between firms and government-sponsored institutions (GSIs), and the traditional firm–firm network. We apply a social network perspective to examine the effects that these kinds of networks have on firm innovativeness, in relation to the effects of the firm's internal R&D efforts. We define the firm-GSI network as bipartite, and we investigate how the structural characteristics of this network (cohesion and centrality) affect innovativeness. We then decompose the innovational effects of firm–firm networks into two categories (intra- and inter-sector) to distinguish the effects of these collaboration networks. Furthermore, we investigate how these various external collaborative networks interact with a firm's internal R&D efforts for driving innovativeness. Our empirical study of 420 manufacturing firms in Mexico evaluates evidence from surveys and secondary data. The findings indicate that the structural properties of both firm–GSI and firm–firm networks have positive effects on innovativeness, but firm–GSI network cohesion has a stronger negative interaction with R&D in influencing firm innovativeness. Moreover, intra-sector centrality in a firm–firm network has a stronger negative interaction with R&D than inter-sector centrality does in driving firm innovativeness. We contribute to the literature by integrating insights from the perspectives of network multiplexity, social embeddedness, and resource complementarity in regard to inter-organizational behavior. Our study also provides meaningful guidelines for both managers and policy makers. The study's findings are robust to concerns of common method bias and alternative model specifications.
We construct a Markov game of cross-border post-merger integration on technology innovation. The acquirer chooses the integration degree considering resource backgrounds and then makes innovation collaborations. Equilibrium analysis and numerical examples suggest that when resource similarity is high and resource complementarity is low, the acquirer should choose a high integration degree to improve the number of innovation collaborations and increase technology innovation. When resource similarity is low and complementarity is high, the acquirer should choose a low integration degree. When resource similarity and complementarity are both high, the acquirer should choose a medium integration degree. We run quantile regressions using samples of cross-border mergers and acquisitions proposed by acquirers from China, Japan and the United States in the period of 2000-2013. The dynamic game and quantile regressions altogether provide new insight and empirical evidence for understanding post-merger integration's effect on technology innovation under different resource backgrounds. The paper provides theoretical direction for choosing proper cross-border post-merger integration degree to improve innovation with resource-based view.
We explore a novel mechanism of network change that occurs when a firm acquires another one and inherits its network ties. Such “node collapse” can radically restructure the network in one transaction, constituting a revolutionary change compared with the incremental effect of tie additions and deletions, which have been the focus of prior research. We explore several properties of node collapses: their efficacy in helping firms achieve superior network positions, the externalities they impose on other network actors, and how they provide exclusive control over both internal and network resources. Using a simulation in which actors compete to acquire one another, we model network dynamics driven by node collapses. We find that node collapses directly affect the performance of the acquirer and indirectly that of other actors, and that the direction of network evolution hinges on the degree to which firms pursue internal versus network synergies through node collapses.
This paper was accepted by Olav Sorenson, organizations.
We show how knowledge-based and incentive-based perspectives complement each other to explain the effects of acquisitions on the productivity of inventors from acquired firms. Incentive-based theories account for their lower productivity relative to that of inventors at nonacquired firms, and both perspectives jointly explain why their productivity converges with that of inventors from acquiring firms. Higher productivity is achieved when there is greater overlap in routines and moderate overlap in skills, and when the acquired firm is large relative to its acquirer. This study clarifies the subtle manner in which incentives and the knowledge-based view are intertwined.
We propose that the mixed findings of research on the internationalization-performance (I-P) relationship reflect its failure to adequately consider the moderating role of firms’ home country formal and informal institutions. This general hypothesis is supported in a meta-analysis of the firm-, industry-, home country–, and host country–level factors driving the I-P relationship across 32 countries between 1972 and 2012 from 359 primary studies—the largest sample of primary studies of any meta-analysis on this topic to date. We make three main contributions to the I-P and global strategy literatures. First, we develop a novel integration of the theoretical logics from the I-P research and the institution-based view of strategy to explain how embeddedness in home country institutions affects the strength of the I-P relationship. Second, we show the importance of including both formal and informal institutions in analyses of firms’ institutional embeddedness, thereby extending our knowledge of the effects of institutional complexity. Our third contribution is methodological and reflects our use of advanced meta-analytical techniques based on both product-moment and partial correlations as effect sizes, which allow us to address unresolved debates about the sign and shape of the I-P relationship. Our results show that the I-P relationship is positive, although the overall effect is small and varies greatly across firms’ home countries. We conclude by discussing the findings’ relevance and promising future research avenues, including novel research questions, multilevel theoretical and empirical frameworks, and improvements in methodological rigor.
As part of the recent interest in serial entrepreneurship, studies have investigated the presence (or absence) of learning benefits from a previous to a subsequent venture. We extend this literature by integrating behavioral concepts on attribution and learning from failure that highlight the differences in behavioral responses to success versus failure. We theorize that serial entrepreneurs whose previous venture failed are likely to blame the external environment and change industries for their subsequent venture, and that this industry change is costly in that it invalidates potentially useful industry experience, thereby hindering their subsequent venture. In contrast, founders of failed ventures are unlikely to change aspects of their previous business (when starting their subsequent venture) that would be attributable to their leadership-that is, strategy, decision-making, and planning style. Using data on entrepreneurs in China and the U.S., we find support for our theory. The results have important implications for the study of serial entrepreneurship, and more broadly for research on behavioral responses to failure.
How do organizations make strategic choices during the time of fundamental institutional transitions such as those sweeping numerous emerging economies? To answer this question, a two-phase model of institutional transitions is developed in this article. I focus on the longitudinal process to move from a relationship-based, personalized transaction structure calling for a network-centered strategy to a rule-based. Impersonal exchange regime suggesting a market-centered strategy. I then identify the points of inflection; predict strategic choices for incumbent, entrepreneurial, and foreign firms; and delineate their performance implications.
M&As provide unique opportunities for the acquirer to grow rapidly, to gain new capabilities which an organisation might otherwise find difficult to develop on its own, and to gain access to new markets (e.g. Haspeslagh and Jemison, 1991; Hitt et al., 2001). Recent trends indicate that cross-border mergers and acquisitions (M&As) keep increasing following the double-dip recession (World Investment Report, 2014). While M&As have become increasingly popular as a method of organisational growth and development, the acquisition success rate has remained mediocre at best. Accordingly, M&A success and value creation have been at the heart of M&A research and have been approached from various disciplines (cf. King et al., 2004; Cartwright and Schoenberg, 2006; Schoenberg, 2006; Degbey, 2015). A number of scholars have tried to explain cross-border M&A failure through external issues, such as national cultural differences, but the results have been inconclusive (cf. Teerikangas and Very, 2006; Stahl and Voigt, 2008), and it has been argued that the effect of culture on M&A performance is mediated by the post-acquisition integration strategy, the acquisition experience and integration capabilities of the acquirer, and the level of integration (e.g. Morosini and Singh, 1994; Slangen, 2006; Dikova and Sahib, 2013). However, a growing body of literature on post-acquisition integration has focused on internal issues, that is, the human side, and argues that M&A failure is largely down to socio-cultural challenges such as change resistance, acculturation stress and so forth (e.g. Buono and Bowditch, 1989; Datta, 1991; Cartwright and Cooper, 1993; Very et al., 1996; Birkinshaw et al., 2000; Stahl and Voigt, 2008).
Innovation in firms is doubly embedded: in a social network of collaborations between researchers, and in a knowledge network composed of linkages between knowledge elements. The two networks are decoupled. Their structural features are distinct and influence researchers' exploratory innovation differently. Using the patent data of a leading U.S. microprocessor manufacturer, we constructed the firm's collaboration and knowledge networks, and examined the effects of two structural features in the two networks-structural holes and degree centrality-on researchers' exploratory innovation. Our findings show that a researcher with knowledge elements rich in structural holes in the knowledge network tends to explore fewer new knowledge elements from outside the firm, while structural holes in the collaboration network increase exploratory innovation. The average degree centrality of a researcher's knowledge elements in the knowledge network has an inverted-U-shaped relationship with his or her exploratory innovation, while degree centrality in the collaboration network has a negative effect. This study suggests that knowledge and social networks influence where researchers search for discoveries.
Successful ageing is often defined as a later life with less disease and disease-related disability, high level of cognitive and physical functions, and an active life style. Few studies have compared successful ageing across different societies in a non-Western social context. This study aims to compare prevalence and correlates of successful ageing between China and South Korea. The data come from the Chinese Longitudinal Healthy Longevity Survey (CLHLS) and the Korean Longitudinal Study of Ageing (KLoSA). A total of 19,346 community-dwelling elders over 65 years were included, 15,191 from China and 4,155 from Korea. A multidimensional construct of successful ageing was used, with the criteria of no major comorbidity, being free of disability, good mental health, engaging in social or productive activity, and satisfaction on life. Correlates of successful ageing included demographics (gender, age, and rural/urban residence), socioeconomic features (financial status, education, and spouse accompany), and health behaviours (smoking, alcohol-drinking, and exercising). The results showed that 18.6 % of the older adults in China was successful agers, which was less than 25.2 % in Korea. When gender and age were adjusted, older adults were 51 % less likely to be successful agers in China than Korea (p
We draw from the recently developed construct of institutional distance to propose a framework that explains foreign direct investment by the multinational enterprise. We decompose the institutional distance between the host and home countries into distances on the regulative, normative, and cognitive dimensions of institutions, and match these with firm-level attributes to produce propositions regarding host country selection and foreign market entry strategies.
Plentiful research suggests that embeddedness in alliance networks influences firms’ innovativeness. This research, however, has mostly overlooked the fact that interorganizational ties are themselves embedded within larger institutional contexts that can shape the effects of networks on organizational outcomes. We address this gap in the literature by arguing that national institutions affect the extent to which specific network positions, such as brokerage, influence innovation. We explore this idea in the context of corporatism, which fosters an institutional logic of collaboration that influences the broker’s ability to manage its partnerships and recombine the knowledge residing in its network as well as the extent of knowledge flows among network participants. We argue that differences in institutional logics lead brokerage positions to exert different effects on firm innovativeness. We propose that the firm spanning structural holes obtains the greatest innovation benefits when the firm the broker or its alliance partners are based in highly corporatist countries, or under certain combinations of broker and partner corporatism. We find support for these ideas through a longitudinal study of cross-border fuel cell technology alliance networks involving 109 firms from nine countries between 1981 and 2001.
An extensive body of knowledge exists on network outcomes and on how network structures may contribute to the creation of outcomes at different levels of analysis, but less attention has been paid to understanding how and why organizational networks emerge, evolve, and change. Improved understanding of network dynamics is important for several reasons, perhaps the most critical being that the understanding of network outcomes is only partial without an appreciation of the genesis of the network structures that resulted in such outcomes. To provide a context for the papers in this special issue, and with the broader goal of furthering network dynamics research, we present a framework that begins by discussing the meaning and role of network dynamics and goes on to identify the drivers and key dimensions of network change as well as the role of time in this process. We conclude with theoretical and methodological issues that researchers need to address in this domain.
We show how knowledge-based and incentive-based perspectives complement each other to explain the effects of acquisitions on the productivity of inventors from acquired firms. Incentive-based theories account for their lower productivity relative to that of inventors at nonacquired firms, and both perspectives jointly explain why their productivity converges with that of inventors from acquiring firms. Higher productivity is achieved when there is greater overlap in routines and moderate overlap in skills, and when the acquired firm is large relative to its acquirer. This study clarifies the subtle manner in which incentives and the knowledge-based view are intertwined.
This paper aims to disentangle the mechanisms through which technological similarity between acquiring and acquired firms influences innovation in horizontal acquisitions. We develop a theoretical model that links technological similarity to: (i) two key aspects of post-acquisition reorganization of acquired R&D operations – the rationalization of the R&D operations and the replacement of the R&D top manager, and (ii) two intermediate effects that are closely associated with the post-acquisition innovation performance of the combined firm – improvements in R&D productivity and disruptions in R&D personnel. We rely on PLS techniques to test our theoretical model using detailed information on 31 horizontal acquisitions in high- and medium-tech industries. Our results indicate that in horizontal acquisitions, technological similarity negatively affects post-acquisition innovation performance and that this negative effect is not mediated by the reorganization of the acquired R&D operations. However, replacing the acquired firm's R&D top manager leads to R&D productivity improvements that positively affect innovation performance.
Determining the appropriate level of integration is crucial to realizing value from acquisitions. Most prior research assumes that higher integration implies the removal of autonomy from target managers, which in turn undermines the functioning of the target firm if it entails unfamiliar elements for the acquirer. Using a survey of 86 acquisitions to obtain the richness of detail necessary to distinguish integration from autonomy, the authors argue and find that integration and autonomy are not the opposite ends of a single continuum. Certain conditions (e.g., when complementarity rather than similarity is the primary source of synergy) lead to high levels of both integration and autonomy. In addition, similarity negatively moderates the relationship between complementarity and autonomy when the target offers both synergy sources. In contrast, similarity does not moderate the link between complementarity and integration. The authors’ findings advance scholarly understanding about the drivers of implementation strategy and in particular the different implementation strategies acquiring managers deploy when they attempt to leverage complementarities, similarities, or both.
This paper concerns the high failure rate during the integration phase of cross-border M&A from the resource-based view. This integration risk in cross-border M&A comes from both firm’s internal resource and external resource integration. On this basis, we clearly analyze the relationship between resource similarity and firm’s internal resources integration risk, as well as resource complementarity and firm’s external resource integration risk. Then, we put forward the main conclusion: stronger external resource complementarity and stronger internal resource similarity between the acquirer and target firms will make integration in cross-border M&A less risky. For this study’s empirical stage, we collect a large amount of questionnaire data from Chinese firms with cross-border M&A experiences. We use the logistic regression method to verify hypothesis. This paper provides both the acquirer and target firms with fresh ideas of how to avoid the integration risk of cross-border M&A. We hope to help firms from developing country to achieve more outstanding results through cross-border M&A in an intense global competitive environment.
While strategy scholars primarily focus on internal firm capabilities and network scholars typically examine network structure, we posit that firms with superior network structures may be better able to exploit their internal capabilities and thus enhance their performance. We examine how innovative capabilities—both those of focal firms and those they access through their networks—influence the performance of Canadian mutual fund companies. We find that a firm's innovative capabilities and its network structure both enhance firm performance, while the innovativeness of its contacts does not do so directly. Innovative firms that also bridge structural holes get a further performance boost, suggesting that firms need to develop network-enabled capabilities—capabilities accruing to innovative firms that bridge structural holes. Copyright © 2005 John Wiley & Sons, Ltd.
Although knowledge spillovers between firms play a critical role in the evolution of technology, we know little about such spillovers. How does knowledge flow across company boundaries? How do industry characteristics and national institutions shape knowledge diffusion? To what extent do companies direct knowledge flows? This study seeks answers to these questions by examining knowledge sharing patterns in the semiconductor industry. The research shows that public sources of technical data play a larger role in knowledge diffusion in Japan than in the United States and in semiconductors relative to steel. By understanding the mechanisms and determinants of knowledge flows, company managers and public policy makers can influence knowledge diffusion more effectively.
Underlines that marketers are interested in how consumers evaluate products sourced from overseas. Observes that, along with the globalization of business, more developing countries have become feasible markets for a variety of consumer goods manufactured in industrialized countries, yet relatively little research has investigated how consumers in those emerging markets evaluate foreign-sourced products. Focuses on Chinese consumers’ evaluation of products made in the USA, Japan and South Korea. Suggests that country-of-origin (COO) information significantly influences Chinese subjects’ evaluation of the products from these countries, with a hierarchy of country of origin effects existing among the sample of Chinese consumers. Determines that products from the USA and Japan received more favourable ratings than those from South Korea and, contrary to prior belief, cultural similarity did not seem to moderate the COO effect. However, finds that product type and how COO and other product information were communicated to the subjects did seem to influence the subjects’ product evaluation.
In this paper, we examine how the configuration of intraorganizational networks, and in particular, cohesion among members of an organization, influences organizations' innovative output. We argue that the cohesion among R&D scientists could be at a local level or a global level, and that local and global cohesion may have different impacts on firms' innovation performance. We test our hypotheses by examining the structure of the R&D collaboration networks within firms that operated in the pharmaceutical industry between 1981 and 1989, and their innovative outcomes—patents that led to new product launches. We find that local cohesion has a positive impact on the innovative performance of a firm, and global cohesion has a negative impact. Copyright © 2011 John Wiley & Sons, Ltd.
Most traditional research on mergers and acquisitions tends to focus on the role of similarity in explaining acquisition performance. While scholars have recently begun to examine acquisition complementarity, there is still little evidence concerning how complementarity influences acquisition performance. Further, previous research has not drawn the connections between related contexts and the potential benefits from complementarity. In this article, we move the study of acquisition complementarity forward by investigating the effects of strategic and market complementarity on acquisition performance in the context of related horizontal acquisitions. We also propose that two key attributes of acquirers—strategic focus and out-of-market acquisition experience—will moderate this relationship. We investigate our research questions in the context of all 2,204 acquisitions made by publicly traded U.S. commercial banks during the 12-year period from 1989 to 2001. Our findings are generally supportive, suggesting complementarity is an important antecedent of acquisition performance, and raising important issues on the nature of acquisition research in general. Copyright © 2009 John Wiley & Sons, Ltd.
For firms seeking to strategically combine their resources with those of other firms, two popular alternative governance structures emerge: alliance or acquisition. In this paper, we propose a dyadic perspective to examine how and why configurations of two firms' resources and capabilities affect the costs and benefits associated with each governance structure. More specifically, we posit that factors such as (1) the resource similarity and complementarity between a pair of firms, (2) the combined relational capabilities of a pair of firms, and (3) the partner-specific knowledge between a pair of firms will affect the likelihood of observing that pair of firms forming an alliance vs. engaging in an acquisition. We test and find support for our hypotheses using extensive longitudinal data from a sample of the largest firms in the United States from 1991 to 2000. Copyright © 2007 John Wiley & Sons, Ltd.
This paper extends current knowledge of industry clusters by disentangling the effects of networks from cluster (i.e., distinctly geographic) mechanisms on firm performance as well as by studying the influence of these different mechanisms on firms located inside and outside the industry cluster. It also highlights the importance of simultaneously modeling multiple networks which may differentially influence important firm outcomes. In the paper, I model the innovativeness of Canadian mutual fund companies as a function of their geographic location—inside or outside the industry cluster of Toronto—and of their centrality in networks of managerial and institutional ties. I find that locating in the industry cluster as well as centrality in the managerial tie network enhances firm innovation, while centrality in the institutional tie network does not. Copyright © 2005 John Wiley & Sons, Ltd.
In this paper, we examine the relationship between structural holes in a firm's ego network and firm performance. We argue that the firms need two types of information - about new business opportunities and partner cooperativeness - to pursue, respectively, two types of self-reinforcing performance goals: status accumulation and market performance. Firms' open ego networks facilitate access to information about new business opportunities, which helps them attain status accumulation. However, open ego networks limit access to information about partner cooperativeness, which dampens market performance. Analyses of investment banks acting as advisers for merger and acquisition transactions in the United Kingdom during 1992-2001 provide support for these arguments.
This study examines the roles of firm characteristics and environmental factors in the formation of interfirm alliances. Specifically, we examine the dual role of these groups of factors as inducements and opportunities for Chinese high-technology new ventures (HTNVs) in their adoption of agency business activity, a downstream type of alliance involving marketing and distribution of the products of foreign firms. Results suggest that both internal and external factors are related to the adoption of agency business activity but the inducement and opportunity value of environmental uncertainty may be dampened by institutional support provided to HTNVs. Further, we find that successful agency business activity is positively related to new venture performance but negatively related to its product innovation efforts. Theoretical and managerial implications are discussed. Copyright © 2002 John Wiley & Sons, Ltd.
Prior research on M&As and invention outcomes has not systematically examined the influence of two types of knowledge differences. Knowledge relatedness has typically been equated with knowledge similarity and the separate influence of knowledge complementarity has been overlooked. Similarly, studies examining innovation outcomes of M&As have typically focused on the role of technological knowledge and overlooked the influence of scientific knowledge. We develop a model of relatedness and invention performance of high-technology M&As that considers science and technology similarity and complementarity as important drivers of invention. We test the model using a sample of M&As from the drug, chemical, and electronics industries and a fine-grained measure of knowledge relatedness that distinguishes between science and technology relatedness. We find that complementary scientific knowledge and complementary technological knowledge both contribute to post-merger invention performance by stimulating higher quality and more novel inventions. This suggests that high-technology firms seeking acquisitions should search for, identify, and acquire businesses that have scientific and technological knowledge that is complementary to their own. Our results also suggest that similarities in knowledge facilitate incremental renewal, while complementarities would make discontinuous strategic transformations more likely, and that absorptive capacity research should be expanded to consider complementarities as well as similarities. Copyright © 2010 John Wiley & Sons, Ltd.
This paper examines the effect of national cultural distance on the performance of foreign acquisitions. While some studies have argued that this effect should be negative and others that it should be positive, we argue that this depends on the level of post-acquisition integration. We hypothesize that large differences in national culture reduce foreign acquisition performance if the acquired unit is tightly integrated into the acquirer, but that they enhance acquisition performance if post-acquisition integration is limited. Analyzing a sample of 102 cross-border acquisitions by Dutch firms in 30 countries, we find strong empirical support for this hypothesis.
Although R&D spillovers play a key role in the battle for technological leadership, it is unclear under what conditions firms build on and benefit from the discoveries of others. The study described here empirically examines this issue. The findings indicate that, depending on technological opportunities, firm size and competitive pressure, the net impact of R&D spillovers on productivity can be either positive or negative. Specifically, we find that although spillover effects are positively associated with the technological opportunities that a firm faces, this relationship is reversed when firm size is considered. Whilst external R&D affects large self-reliant firms negatively, its impact on the productivity of smaller firms (who usually introduce incremental innovations that are characterized by a strong reliance on external technologies) is positive, and even higher than that of their own R&D. We also demonstrate that the economic payoff for firms’ own R&D is lower when they face intense competition. In cases of low-appropriability, however, spillover effects are more positive, allowing firms to increase their performance using the inventions of others.
In this paper, we provide an empirical analysis of evolving knowledge networks of successful patent collaboration at national level in 1980s, 1990s, and 2000s. All countries are classified into main knowledge creators (Organisation for Economic Co-operation and Development (OECD) group) and main knowledge users (non-OECD group) in order to distinguish specific characteristics of knowledge interactions within groups and between groups. The analyses are carried out from four aspects, i.e., the overall distribution of knowledge interactions among countries, the countries’ ability to inhabit and facilitate the knowledge flows among others with the help of flow betweenness measures, the countries’ bridgeness between two groups with the recently developed Q-measures, and the most important bilateral knowledge interactions. Results show that although most of the international knowledge interactions still take place within the OECD group, the non-OECD countries have improved their performance significantly. They participate much more in international patenting and collaborations and play much more important roles in facilitating knowledge interactions among others. Among them, China and Taiwan are two most dazzling new stars according to their performance in international knowledge interactions. Considering together with their rapidly improved world competitiveness, the findings indicate that the wide and deep participation in international knowledge interactions may have great contribution to the economic competitiveness.
Recent theoretical work points to the possibility of foreign direct investment motivated not by 'ownership' advantages which may be exploited by a multinational enterprise but by the desire to access the superior technology of a host nation through direct investment. To be successful, technology sourcing foreign direct investment hinges crucially on the existence of domestic-to-foreign technological externalities within the host country. We test empirically for the existence of such 'reverse spillover' effects for a panel of UK manufacturing industries. The results demonstrate that technology generated by the domestic sector spills over to foreign multinational enterprises, but that this effect is restricted to relatively research and development intensive sectors. There is also evidence that these spillover effects are affected by the spatial concentration of industry, and that learning-by-doing effects are restricted to sectors in which technology sourcing is unlikely to be a motivating influence. Copyright Blackwell Publishing Ltd and The Victoria University of Manchester, 2003.