Geographic distance and corporate acquisitions: signals from IPO firms

This paper examines acquisitions of firms after they have undergone initial public offerings (IPOs). Combining insights from information economics with recent research on geographic distance in various market settings, the analysis investigates whether the presence or absence of different signals on IPO firms has an impact on the geographic proximity of acquirers. The central proposition we develop and test is that specific characteristics of IPOs—venture capitalist backing, investment bank reputation, and underpricing of issued shares—convey signals on these firms, which can facilitate acquisitions by more remote acquirers who are more likely to face the risk of adverse selection. Copyright © 2011 John Wiley & Sons, Ltd.     

Deliberate learning in corporate acquisitions: post‐acquisition strategies and integration capability in U.S. bank mergers

This paper introduces a knowledge‐based view of corporate acquisitions and tests the post‐acquisition consequences on performance of integration decisions and capability‐building mechanisms. In our model, the acquiring firm decides both how much to integrate the acquired firm and the extent to which it replaces this firm's top management team. It can also learn to manage the post‐acquisition integration process by tacitly accumulating acquisition experience and explicitly codifying it in manuals, systems, and other acquisition‐specific tools. Using a sample of 228 acquisitions in the U.S. banking industry, we find that knowledge codification strongly and positively influences acquisition performance, while experience accumulation does not. Furthermore, increasing levels of post‐acquisition integration strengthen the positive effect of codification. Finally, the level of integration between the two merged firms significantly enhances performance, while replacing top managers in the acquired firm negatively impacts performance, all else being equal. Implications are drawn for both organizational learning theory and a knowledge‐based approach to corporate strategy research. Copyright © 2004 John Wiley & Sons, Ltd.     

Breakthrough innovations in the U.S. biotechnology industry: the effects of technological space and geographic origin

How are breakthrough innovations created? Our study suggests that the type of external knowledge sourced determines the likelihood of creation of breakthrough innovation. We characterize the external knowledge utilized on two dimensions: its technological space and geographic origin. We draw on the concepts of local search and national innovation systems to identify critical knowledge inputs. We hypothesize that external knowledge characterized by technological distance or proximity and the national or international context can have a differential impact on breakthrough innovation. This is due to the contradictory implications of its value created by distance and to absorptive capacity limitations in effectively utilizing knowledge from a different context. To test our hypotheses we use patent data from the U.S. biotechnology industry. Our findings suggest that technologically distant knowledge of national origin has a curvilinear effect and technologically proximate knowledge of international origin has a positive effect on breakthrough innovation. However, simultaneous exploration along technologically and geographic dimensions is not useful to generating breakthrough innovation; technologically distant knowledge of international origin does not have a significant impact. Copyright © 2006 John Wiley & Sons, Ltd.     

Geography and power in an organizational forum: Evidence from the U.S. Senate Chamber

We examine the role that geography plays in structuring interactions within an organizational setting designed to promote broad patterns of interaction: the organizational forum. We propose that, within a forum, an individual's location structures his or her access to peer support, but individuals with power (i.e., those who control the flow of organizational resources) can transcend these geographic constraints. We examine these propositions with data collected on strategic actors in the U.S. Senate Chamber. Using a dyad fixed effects approach, time‐varying controls, selection‐on‐observables estimation, and quasi‐exogenous shocks to seating arrangements, we find support for our propositions. These results contribute to our understanding of strategic interaction patterns, with an emphasis on the geographic scaffold upon which strategic actions are constructed. Copyright © 2013 John Wiley & Sons, Ltd.     

The Impact of Employee Stock Option Adoption and Incidence on Productivity: Evidence from U.S. Panel Data

This paper examines the productivity effect of broad‐based and executive stock option programs in adoption year and five subsequent years. The findings include a positive impact on productivity, which is maintained over a five‐year period after adoption for executive plans but diminishes immediately for broad‐based plans. We interpret these findings as evidence of stock option usage being of benefit to organizations. However, to sustain the impact of broad‐based plans options, grants may need to be made with the same frequency as executive option grants.     

The limits of growth of the multidivisional firm: A case study of the U.S. oil industry from 1930-90

Some scholars (Chandler, 1977; Penrose, 1959) believe that firms grow by transferring inimitable marketing, production, and research skills from one line of business to another. Extending this view and emphasizing the role of the central office of a multidivisional firm to transfer administrative skills, Williamson (1975) argues that competition among business units within the firm mimics a competitive capital market and leads to an effcient allocation of resources. Coase (1937), however, argues that firm size is limited by the costs of organizing diverse transactions and Chandler (1991) claims that growth is constrained by the technical and marketing expertise of the top managers. The purpose of this paper is to demonstrate that the scope of the multidivisional firm is limited by the transferability of firm-specific skills and the efficiency of capital markets. Support comes from a case study of 19 oil companies over the 1930–90 period.     

The effects of strategic and market complementarity on acquisition performance: evidence from the U.S. commercial banking industry, 1989–2001

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.     

The role of social proximity in professional CEO appointments: Evidence from caste/religion‐based hiring of CEOs in India

Research Summary: The role of homophily in CEO appointments at the largest corporations is an important subject in corporate governance. This subject is particularly important in a country like India where a multitude of religions, castes, and communities form its social fabric. We test for the role of homophily in professional CEO appointments in India by empirically examining the preference for same caste/religion CEOs by the largest firms. Using a unique dataset, assembled by detailed identification of castes/religions from family names and counterfactuals obtained through the Coarsened Exact Matching technique, we find that caste/religion plays a crucial role in CEO selection as a source of information (positive discrimination). The evidence is not consistent with its use to pursue taste‐based preferences (negative discrimination). Managerial Summary: We test for the role of homophily in the appointments of CEOs in India by empirically examining the preference for same caste/religion CEOs by the largest firms. We find that caste/religion plays an important role in CEO selection, i.e., as a form of information or “positive discrimination.” The evidence is not consistent with its use to pursue taste‐based preferences or “negative discrimination.”     

The influence of digital divide frames on legislative passage and partisan sponsorship: A content analysis of digital equity legislation in the U.S. from 1990 to 2020

Government funding is essential for digital equity. Scholarship on policies to improve internet access often examines the funding mechanisms behind subsidies, or the quality and reach of services provided. However, a better understanding of the issues and constituencies to receive government support to date may help digital equity activists more strategically lobby for new digital divide policies in the future. To do this, we take a macro-level approach to Van Dijk's resources and appropriation theory and examine how the framing of all digital divide–related U.S. Congressional legislation introduced between 1990 and 2020 may be associated with a bill's passage or the political party of its sponsor. Content analysis revealed that bills highlighting privacy literacy programs, educational outcomes, and corporate transparency were more likely to be passed into legislation. Bills sponsored by Republicans were 422% more likely of being passed into legislation. Certain frames were also associated with partisan sponsorship: Republican-sponsored bills were more often framed around deregulation, privacy programs, corporate transparency, and rural access, whereas Democrat-sponsored bills were more often framed around digital skills such as digital literacy and educational outcomes. Findings serve as a historical record of digital equity priorities in the U.S. and highlight possible strategies for future policy design.     

The environment and its impact on satisfaction with supplier performance: An investigation of the mediating effects of control mechanisms from the perspective of the manufacturer in the U.S.A.

An important question for manufacturers relates to how to conduct exchanges with suppliers when the interaction is done in an uncertain environment. Existing literature suggests the use of unilateral control (i.e., vertical control over the supplier) to reduce the negative effects of environmental uncertainty, whereas recent research on relational norms suggests bilateral control mechanisms (i.e., the norm of information sharing) as an alternative. We propose that in order to secure satisfactory performance from suppliers, manufacturers rely on different control mechanisms depending upon the level of environmental uncertainty on one hand, and the nature of interdependence in the manufacturer-supplier relationship on the other. Our empirical results based on 162 manufacturers indicate the following: 1) manufacturers' reliance on vertical control increases as environmental uncertainty and power asymmetry increase; 2) by contrast, reliance on the bilateral information sharing increases as interdependence magnitude increases and as environmental uncertainty decreases; 3) suppliers' performance, as perceived by manufacturers, increases with the use of bilateral information sharing.