Corporate name change: Investigating South African multinational corporations' postacquisition performance

It has long been argued a multinational corporation (MNC) needs to be able to leverage the firm‐specific advantages to overcome the liability of foreignness in the host markets so the MNC can enjoy the benefit of internationalization while competing with the indigenous firms in the host market. However, emerging‐market MNCs, which have the nontraditional ownership advantages, such as flexibility and cost‐advantage, may require different international strategies to realize the anticipated profit in their cross‐border acquisitions. This article takes an organizational identity approach to study how the foreign identity of South African MNCs constitutes the source of liability and negatively impacts their postacquisition performance. We find South African MNCs that adopted a corporate name change for their acquired subsidiaries experienced worse postacquisition return on asset than the South African MNCs who did not do so. On the other hand, facing a large economic distance, South African MNCs that facilitate the acquired subsidiary corporate name change enjoy better postacquisition performance.     

The effects of absorptive capacity,knowledge sourcing strategy,and alliance forms on firm performance

This paper explores the relationship between absorptive capacity, knowledge sourcing strategy, alliance forms, and firm performance. Based on the literature, the concept of a knowledge sourcing strategy in alliance contexts is proposed, which can be categorised into two types: a knowledge internalisation strategy and a knowledge access strategy. From an organisational learning perspective, it is argued that a firm's absorptive capacity has a positive influence on a knowledge internalisation strategy, and accordingly a firm's choices of alliance forms are also influenced. R&D performance is also included in the theoretical model in order to generate further managerial implications. Instead of using conventional regression methods, structural equation modelling (SEM) is adopted to conduct path analysis, as SEM is well suited in verifying multiple-dependent models. The arguments advanced are supported by empirical analysis of a sample of 148 alliances.     

The impact of informal social interaction on innovation capability in the context of buyer-supplier dyads

Although many studies employ social network theory to explain firm innovation, how individual-level factors lead to a firm's collective innovation capability remains under-researched. Building on studies that use the work boundary to define formal and informal social interactions, this research aims to illuminate how informal buyer-supplier employee interactions influence buyer firms' innovation capabilities through knowledge acquisition. Integrating the literatures on absorptive capacity and social interaction, the analysis of survey data from 273 Chinese manufacturing firms suggests that employees' informal interactions are positively associated with knowledge acquisition and enhance firms' innovation capabilities. Furthermore, the indirect effects of informal interactions on innovation capability are moderated by knowledge application.     

Motivation and ability in the decision to acquire

This study considers the decision to undertake an acquisition using a framework built around the concepts of motivation and ability to acquire. The paper develops an integrative model to examine how firm characteristics contribute to motivation and ability in predicting the likelihood of an acquisition and draws on two streams of literature to motivate the model: behavioral theory of the firm to explain a firm's motivation to acquire, and absorptive capacity to explain a firm's ability to acquire. Results from a publicly traded sample show that firms failing to meet aspirations (i.e., those with motivation) are more likely to acquire, as are firms that have a high absorptive capacity (i.e., those with ability). Most interestingly, absorptive capacity moderates the influence of performance shortfalls in the decision to acquire and is most important when the motivation to acquire is low.     

When Organizational Justice Matters for Affective Merger Commitment

We investigate when organizational justice matters to employees’ commitment in the postacquisition process after a company is taken over in a cross‐border acquisition. Overwhelming evidence from the literature suggests that employees who are treated fairly during acquisitions are more committed to their new firms. We extend this finding by dividing organizational justice into three subdimensions: informational justice, interpersonal justice, and procedural justice. We find evidence that procedural justice is an important antecedent of affective merger commitment at an early stage of the integration period, while informational justice becomes important at a later stage. Further analysis on heterogeneity between the target firm's employees and the bidder firm's employees reveals that, immediately after the acquisition, target firm's employees value knowing where they will be at the new firm (procedural justice), while bidder firm employees are more concerned about communication and transparency (informational justice). Our results point to the importance of organizational justice in a cross‐border merger and acquisition (M&A) setting and the need for a separate study of issues related to bidder firms and target firms. © 2016 Wiley Periodicals, Inc.     

The pre-acquisition evaluation of target firms and cross border acquisition performance

The paper investigates the impact of the pre-acquisition evaluation of target firms on the performance of cross border acquisitions using data from a sample of acquisitions made by UK firms. The findings provide reasonable support for organizational learning theory, suggesting that the more the acquiring firm learns about the target firm then the better will be the acquisition performance. Specifically, we find support for the hypothesis that thorough evaluation of the strategic and cultural fit positively influences cross border acquisition success. Further, the analysis reveals that detailed evaluation of the target firm's employee and business capability improves acquisition performance. The managerial implications of the findings and directions for future research are also discussed.     

Absorptive capacity development in Indonesian exporting firms: How do institutions matter?

This paper addresses how firms from an emerging market characterized by a challenging and variable institutional environment learn about internationalizing. Building on the organizational learning and institutional literatures, and the concept of absorptive capacity (AC), and using a sample of Indonesian manufacturing-sector exporters we identify two dimensions of internationalization-related AC: international market and international strategic operation. Unlike previous literature, we find that indirect, or second-hand, experience contributes more than the firm's own experience to the development of international market AC. Furthermore, the second-hand experience feeds Indonesian manufacturing exporters’ learning in both positive (e.g., buyers) and negative (e.g., suppliers and foreign multinationals in Indonesia) ways. In contrast, the development of international operation strategy AC appears to be driven internally, with minimal contribution from either first- or second-hand experience. We posit that these outcomes are influenced by the rapid and substantial changes in the domestic institutional environment faced by the Indonesian manufacturers.     

Configurations of strategic R&D decisions and financial performance in small-sized and medium-sized firms

This paper links the strategic decisions made in R&D during the financially turbulent period of 2009 to the firm's financial health in the period 2010–2013. The focus is on decisions made in R&D-active small and medium-sized enterprises in terms of absorptive capacity, open innovation, type of R&D, and the organizational structuring of R&D. Based on a representative set of R&D-active firms in Belgium, qualitative comparative analysis reveals that the outcomes in terms of financial performance related to optimal configurations of strategic R&D decisions depend on the firm's size and on the time-lag under consideration. Managers in small-sized firms are advised to pay particular attention to a more functionally-structured R&D approach in configurations of strategic R&D decisions. To increase medium-term financial performance, managers in medium-sized firms benefit from more engagement in research-oriented activities, more in-house innovation, and the enhancement of absorptive capacity in sets of strategic R&D decisions.     

Foreign direct investment motivations and knowledge acquisition from MNEs in overseas subsidiaries

Despite studies exploring factors affecting knowledge acquisition from multinational enterprises in subsidiaries, what accounts for a successful acquisition is unresolved. We argue that such disparity may stem from inattention to investment motivations of multinational enterprises (MNEs) in foreign markets and to the fact that learning patterns of subsidiaries can be influenced by foreign firms' market‐seeking or efficiency‐seeking behaviors. We find that absorptive capacity in learning organizations and daily interactions with knowledge possessors are essential to learning from parent firms. In addition, active support from parent firms is particularly crucial for subsidiaries seeking to improve operational efficiency of MNEs. We also suggest that potential absorptive capacity plays a catalyst role in initiating knowledge acquisition, particularly in cases where MNEs have market‐seeking motivations. Copyright © 2014 ASAC. Published by John Wiley & Sons, Ltd.     

Congenital learning in the Spanish telecommunication industry

Knowledge provided by a firm's founder(s) is one of the most important success factors for SMEs. This paper aims to identify the impact of the founder's knowledge on business performance in today's organization. It is with this in mind that we propose a specialized organizational learning process, which we refer to as the congenital learning process, by which the firm transforms the tacit and explicit knowledge of the founder into knowledge which is available to the firm and its members. The research model and hypothesized relationships are empirically tested using the structural equation modeling (SEM) approach, validated by factor analysis of 130 SMEs in the Spanish telecommunications sector. Two structural equation models, derived from the literature, have been used, resulting in the conclusion that organizational performance is positively affected by the transfer and transformation of knowledge as long as the organization has implemented processes that lead to the creation of what we refer to as an open organizational context.     

What determines performance of cross‐border M&As by Chinese companies? An absorptive capacity perspective

Chinese companies are increasingly using cross‐border merger and acquisitions (M&As) as a vehicle to source knowledge or strategic assets, so as to enhance their competitive advantage. However, a critical question is: Can strategic assets be effectively acquired by Chinese firms, thereby leading to superior firm performance? This article addresses this fundamental question from an absorptive capacity perspective. This approach concentrates on how an acquiring firm's absorptive capacity influences its ability to identify, assimilate, integrate, and apply external new knowledge into commercial use. By comparatively examining two high‐profile international M&A deals completed by leading Chinese firms Lenovo and TCL, we argue that the performance of Chinese companies' overseas acquisitions is substantially affected by the acquiring firm's absorptive capacity at multiple dimensions, thus drawing strategic implications for multinationals in other emerging markets. © 2010 Wiley Periodicals, Inc.     

Dynamic capability in a small global factory

In order to balance their local and global operations optimally, SMEs are moving toward a ‘global factory’ type of organizational form, meaning a differentiated network of activities held together through the control of key assets and flows of knowledge, and coordinated by a focal firm. Managing such a network requires a specific dynamic capability comprising, according to our study, cognitive, managerial, and organizational capabilities. Cognitive capabilities – cultural awareness, entrepreneurial orientation, and a global mindset – are the basis for a global factory because they are the source for opportunity recognition and exploitation, and are therefore crucial. The focal firm's organizational flexibility and absorptive capacity, as well as managerial capabilities in the areas of interface competence and analytical capability, are needed in the steering of a small global factory, the success of which depends on the nurturing of these assets.     

Do cross-border acquisitions create value? Evidence from overseas acquisitions by Chinese firms

Based on the dynamic capability and organizational learning perspectives, we examine whether acquirers from emerging economies can create value for their shareholders in cross-border mergers and acquisitions, and the key drivers which may influence any such value creation. A sample of 367 cross-border mergers and acquisitions between 2000 and 2011 involving Chinese listed companies as the acquirers was analyzed to highlight the relationship between the cultural distance involved and the acquirers’ market valuation. On average, such cross-border transactions created value for the acquirer's shareholders, but cultural distance was negatively related to the extent of such value creation. Larger firms, more experienced firms, and acquisitions within the same industry were found to be less affected by cultural distance, emphasizing the importance of learning and absorptive capability, but employing a financial advisor did not seem to help. Thus firms with greater absorptive capacity were found better able to overcome the difficulties caused by cultural differences. Implications for research and practice are discussed.     

Knowledge Recipients,Acquisition Mechanisms,and Knowledge Transfer at Japanese Subsidiaries: An Empirical Study in China

Although knowledge transfer contributes to a firm's competitive advantage, the effect of mechanisms used by a knowledge recipient on knowledge acquisition has been understudied. This article provides some insights on the interplay of knowledge recipients and transfer mechanisms between Japanese multinational corporations and their subsidiaries operating in China. Using structural equation methodology, this research proposes a knowledge transfer model that captures knowledge recipients’ characteristics and acquisition mechanisms, and empirically investigates the impact of knowledge recipients on mechanisms to test the applicability of specific mechanisms in knowledge acquisition. This article argues that knowledge recipients’ motivation and absorptive capacity have a positive impact on knowledge acquisition, and simultaneously provides evidence that mechanisms have mediating effects, which are vital to our understanding of knowledge transfer effectiveness. This study extends our understanding by adding knowledge transfer mechanisms as mediating factors in the relationship between knowledge recipients’ characteristics and knowledge acquisition, and quantifying the relationship. © 2015 Wiley Periodicals, Inc.     

Learning to export from neighbors

This paper studies how learning from neighboring firms affects new exporters' performance. We develop a statistical decision model in which a firm updates its prior belief about demand in a foreign market based on several factors, including the number of neighbors currently selling there, the level and heterogeneity of their export sales, and the firm's own prior knowledge about the market. A positive signal about demand inferred from neighbors' export performance raises the firm's probability of entry and initial sales in the market but, conditional on survival, lowers its post-entry growth. These learning effects are stronger when there are more neighbors to learn from or when the firm is less familiar with the market. We find supporting evidence for the main predictions of the model from transaction-level data for all Chinese exporters over the 2000-2006 period. Our findings are robust to controlling for firms' supply shocks, countries' demand shocks, and city-country fixed effects.     

Organizational Culture,Innovativeness, Market Orientation and Firm Performance in South Africa: An Interdisciplinary Perspective

ABSTRACT

For a sample of South African firms, this paper analyzes the relationships of firm performance and a set of organizational measures which includes organizational culture and climate, market orientation and innovativeness. These organizational measures are drawn from three different disciplines–organizational behavior, strategy and economics. The replicative study is framed in an extended model of competing organizational values which have been used in 13 countries including three transition economies (Vietnam, China and Russia). The work has also been done under a variety of conditions–for example, the US in a period of study growth, Thailand during the Asian Crisis and Hong Kong after the handover to China. Comparisons are made between South African results and those of firms from a group of five industrial countries. Market Orientation is the most important explainer of performance of the South African firms, and Innovativeness is also important. Specific elements of Organizational Culture are apparently less important in South Africa than elsewhere.     

Knowledge acquisition from foreign parents in international joint ventures: An empirical study in Vietnam

Drawing on alliance learning and absorptive capacity literatures, we propose a model-linking absorptive capacity, knowledge acquisition, and performance. The model is tested in a sample of 173 international joint ventures (IJVs) in Vietnam. The results show that all three components of absorptive capacity contributed substantially to the level of knowledge acquisition reported by IJVs. Critical factors predicting knowledge acquisition included investment in training, employees’ ability to learn, and joint participation. Knowledge acquisition, especially the acquisition of tacit knowledge, was found to contribute significantly to IJV performance. Our model generally supports existing theories regarding the relationship between absorptive capacity and knowledge acquisition, as well as between knowledge acquisition and performance.     

Market Orientation and Organizational Learning Capabilities

The platform of contemporary marketing thought is founded upon the marketing concept. While there has been much debate about the precise nature of this concept, related discussion concerning its manifestation, in the form of a firm's market orientation, has developed to suggest that it is a feature exhibited by organizations possessing superior skills in understanding and satisfying customer needs. Despite the favourable externalities likely to accrue to an organization that is market oriented, it has been claimed that for a firm to achieve its full potential to learn about the marketplace, instilling a market orientation is only a first principle. While market orientation provides the norms for responding to the marketplace, this needs to be complemented by appropriate mechanisms and processes for higher-order learning to occur. This article examines such a conceptual argument and empirically investigates the relationship between two key constructs: market orientation and organizational learning capabilities. Data were generated from a survey of medium and large industrial firms and five dimensions of organizational learning capability items are tested against two different groups of firms in terms of their degree of market orientation. As contrasted with low market orientation firms, organizations characterized by high levels of market orientation perceived greater organizational learning capability with regard to the dimensions of strategic awareness, operational flexibility, strategic development processes and managerial skills. Discussion is given to these findings and implications are drawn for business executives and future research.     

Market performance and deviance from industry norms: (Mis)alignment of organizational risk and industry risk

Much of the attention in the risk literature focuses on organizational risk. This research argues that industry-level risk indirectly influences firm performance in addition to the direct effects of organizational risk. We contend industry-level risk norms influence market performance. Our general hypothesis is that when managers pursue strategies that deviate from industry risk norms, the firm's market performance will decline. We also test for the moderating effects of performance relative to targets and managerial ownership. The general hypothesis was supported for market risk and returns risk, but not for strategic risk. In addition, performance relative to target moderates this deviation-market performance relationship for market and returns risk. These findings have implications for the risk literature, particularly a firm's risk premium, and institutional theory, in terms of the tradeoff related to conformity to norms.     

A Study of Marketing Standardization and Performance of Australian,Japanese, and U.S. Firms

Given the continued importance of the globalization era, there is an ever-increasing interest in the correlation between marketing mix standardization and the firm's market performance. This issue focuses on the firm's pursuit of global markets in an environment conditional to internal and external market factors. The research examines factors on multinational firm's marketing mix (program and process marketing) from Australia, Japan, and the United States and the impact on market performance. The results are mixed providing some support for marketing standardization and profit performance.