Becoming an acquirer and becoming acquired

This paper considers mergers and acquisitions (M&A) in Finland. We explain the likelihood that a firm acquires or is acquired by another firm. We try to find out whether the incidences of M&A are influenced by the firms' R&D activity, measured by the calculated R&D stock. We obtained a very robust result, which says that R&D stock increases the probability that a firm acquires in all industries. In the nonprocessing industries, R&D stock similarly increases the probability that a firm is acquired by another. In the processing industries, the firm's own R&D stock has, however, zero impact on the likelihood that another firm buys a firm concerned. We interpret these results indicating that M&A are used as instruments to transmit knowledge from one firm to another. In the nonprocessing industries, it is evident that knowledge capital cumulated in the target is the main motivation for the purchase. Then a buyer's own R&D—which also increases the probability of the trade—signals that a buyer is efficient in absorbing the purchased new technology. In the processing industries, the motive for acquisition is different. We discovered that in the processing industries, technology is rather transmitted from the buyer's firm than to the purchased firm. It looks like that, in these industries, the firms have decreased their unit costs by means of their R&D activity, and so through M&A, the appeared unit cost differences have been levelled.     

Causation,counterfactuals, and competitive advantage

Causation is still poorly understood in strategy research, and confusion prevails around key concepts such as competitive advantage. In this paper, we define epistemological conditions that help dispel some of this confusion and provide a basis for more developed approaches. In particular, we argue that a counterfactual approach—one that builds on a systematic analysis of ‘what‐if’ questions—can advance our understanding of key causal mechanisms in strategy research. We offer two concrete methodologies—counterfactual history and causal modeling—as useful solutions. We also show that these methodologies open up new avenues in research on competitive advantage. Counterfactual history can add to our understanding of the context‐specific construction of resource‐based competitive advantage and path dependence, and causal modeling can help to reconceptualize the relationships between resources and performance. In particular, resource properties can be regarded as mediating mechanisms in these causal relationships. Copyright © 2009 John Wiley & Sons, Ltd.     

Interest Rate Risk Management in Major Finnish Firms

The interest rate policies of Finnish firms appear risk aversive, but hedging decisions are influenced by market view. Managers find they can forecast trends in interest rate development, and employ the forecasts in the choice of debt and hedging instruments. The use of risk assessment methods and hedging instruments are related to firm size but not to leverage. Most frequently employed hedging instruments are interest rate swaps and forward rate agreements. The respondents find their firms' interest rate risk management is successful, but performance is seldom measured against an explicitly defined benchmark.     

Performance of moving average trading strategies over varying stock market conditions: the Finnish evidence

This article examines the profitability of dual moving average crossover (DMAC) trading strategies in the Finnish stock market over the period 1996 to 2012. It contributes to the existing technical analysis literature by comparing for the first time the performance of DMAC trading portfolios of individual stocks to the performance of index trading strategies based on trading on an index that consists of the same stocks. The results show that their relative performance varies over time, whereas previous studies have documented outperformance of index trading strategies over trading strategies of stock portfolios. Moreover, the great majority of 3020 DMAC strategies examined in this article outperform the corresponding buy-and-hold (B and H) strategy for both trading targets (i.e., OMX Helsinki 25 index and individual stocks included in the index) in out-of-sample tests. In addition, the decomposition of the full-sample-period performance into separate bull- and bear-period performance shows clearly that the outperformance of DMAC strategies over B and H strategy is mostly attributable to their better performance during bearish periods.     

Narrative attributions of entrepreneurial failure

We examine how organizational stakeholders use narratives in their psychological processing of venture failure. We identify a range of “narrative attributions”, alternative accounts of failure that actors draw on to process the failure and their role in it. Our analysis provides a view of entrepreneurial failure as a complex social construction, as entrepreneurs, hired executives, employees and the media construct failure in distinctively different ways. Narratives provide means for both cognitive and emotional processing of failure through grief recovery and self-justification.     

Analysing the employment effects of mergers and acquisitions

This paper examines the employment effects of mergers and acquisitions (M&As) by using matched establishment-level data from Finland. Our data register practically almost all M&As in all sectors. We compare the employment effects of cross-border M&As with the effects arising from two different types of domestic M&As and internal restructurings. The results show that cross-border M&As lead to downsizing in manufacturing employment. The effects of cross-border M&As on employment in non-manufacturing are much weaker. Changes in ownership associated with domestic M&As and internal restructurings also typically cause employment losses, but they exhibit an interesting sectoral variation.     

The Impact of Organizational and National Cultural Differences on Social Conflict and Knowledge Transfer in International Acquisitions

The purpose of this paper is to elucidate the effects of organizational and national cultural differences on international acquisitions. We argue that cultural differences prompt social identity building that leads to ‘us versus them’ thinking and thereby creates the potential for social conflict. We also maintain that the same cultural differences can contribute to learning in terms of knowledge transfer. We develop a structural equation model to test these hypothesized effects on a sample of related international acquisitions. Our analysis shows that cultural differences at the organizational level are positively associated with social conflict, but that national cultural differences can decrease social conflict. Furthermore, both organizational and national cultural differences are positively associated with knowledge transfer. This analysis shows the importance of disentangling the various effects that cultural differences have on international acquisitions. It also suggests that national cultural differences are less of a problem in international acquisitions than is usually assumed.