From hybrids to hierarchies: shareholder wealth effects of joint venture partner buyouts

Reuer, Jeffrey J.

doi:10.1002/1097-0266(200101)22:1<27::aid-smj110>3.0.co;2-z

Cited by 87 publications

(59 citation statements)

References 72 publications

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“…We relied on advertising investments because they represent a key component of a firm's marketing resources (Dutta et al 1999). A firm's advertising investments are highly related to its marketing know-how (Reuer 2001) and its ability to build and differentiate brands (Langlois 2003). Thus, marketing resources can play a critical role in a firm's ability to recognize and target customer needs and position products relative to competitors (Day 1994).…”

Section: Methodsmentioning

confidence: 99%

Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

King

Slotegraaf

Kesner

2008

Organization Science

210

151

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W e explore the role of resource interactions in explaining firm performance in the context of acquisitions. Although we confirm that acquisitions do not lead to higher performance on average, we do find that complementary resource profiles in target and acquiring firms are associated with abnormal returns. Specifically, we find that acquiring firm marketing resources and target firm technology resources positively reinforce (complement) each other; meanwhile, acquiring and target firm technology resources negatively reinforce (substitute) one another. Implications for management theory and practice are identified.Key words: merger and acquisition; resource-based view; high technology History: Published online in Articles in Advance January 7, 2008. IntroductionThe value of worldwide merger and acquisition (M&A) activity set a new record in 2006 with $3.79 trillion worth of transactions-a 38% increase over 2005 (Berman 2007a). 1 The dominant rationale used to explain acquisition activity is that acquiring firms seek higher performance (Bergh 1997, Sirower 1997. However, existing M&A research has not consistently identified variables that impact acquisition performance (King et al. 2004). These mixed signals represent an apparent inconsistency or unsolved puzzle (Agrawal and Jaffe 2000), because firms continue to use acquisitions as a strategic tool with no evidence establishing that acquisitions improve firm performance. Consequently, there is a recognized need for research to identify a theoretical framework that helps to explain acquisition performance (Hitt et al. 1998, Hoskisson et al. 1994, Sirower 1997.Research on resource interdependence may offer such a framework (Barney 1988, Capron and Pistre 2002, King et al. 2004). Using resource-based theory (RBT) as a theoretical lens, research in this area suggests that, in general, acquisition performance will be higher when acquiring and target firm resources complement one another (Capron and Pistre 2002;Hitt et al. 1998Hitt et al. , 2001Puranam et al. 2006). Most extant research on resource interconnectedness (Dierickx and Cool 1989) has focused on positive reinforcement (Milgrom and Roberts 1995, Tanriverdi and Venkatraman 2005, Teece 1986) or on complements, where the marginal benefit from higher levels of one resource increases from the level of another resource (Sigglekow 2002). However, firm resource transfers may also serve as substitutes , Miller 2003 or display negative interactions (Sigglekow 2002). We examine resource interactions involving both substitutes and complements between acquiring and target firm resources.Although an acquiring firm's ability to achieve improved performance is likely to depend on interdependence between its resources and those of the target firm, there is limited research that empirically examines target and acquiring firm resource interactions on firm performance (Song et al. 2005). For example, in three different studies, Capron and her colleagues use a methodology largely reliant on survey data, showing that substantial...

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Section: Methodsmentioning

confidence: 99%

Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

King

Slotegraaf

Kesner

2008

Organization Science

210

151

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“…Based on our theoretical arguments-the ability of CSR engagement to protect shareholder value in the face a negative event-we employed the event study method, well established in the strategy literature (e.g., Hoskisson, Harrison, and Dubofsky, 1991;Kumar, 2005;Lee, 2001;Mahoney and Mahoney, 1993;Reuer, 2001) as well as the financial economics literature (see Peterson, 1989, for a review). Event studies provide a systematic procedure for examining the impact of a variety of business events on the value of the firm (shareholder value) as all losses in a stock's price have a permanent effect and represent a tangible loss in the earnings value of a security to investors (Orlitzky, Schmidt, and Rynes, 2003).…”

Section: Model Specificationmentioning

confidence: 99%

The relationship between corporate social responsibility and shareholder value: an empirical test of the risk management hypothesis

Godfrey

Merrill

Hansen

2008

Strategic Management Journal

2,220

1,734

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“…In addition, as cultural distance increased, the amount of US foreign direct investment (FDI) decreased (Li and Guisinger, 1992;Loree and Guisinger, 1995); shareholder wealth in those firms making cross-border acquisitions decreased (Datta and Puia, 1995); foreign venture longevity decreased (Barkema et al, 1996), especially when JVs or acquisitions were considered ; the level of embeddedness and integration between host companies and affiliates decreased (Hakanson and Nobel, 2001); the degree of personal attachment in international cooperative ventures decreased (Luo, 2001a), as did the frequency of expressive ties in organizational networks (Manev and Stevenson, 2001); and the level of CEO role conflict and ambiguity (Gong et al, 2001), international expansion performance (Luo and Peng, 1999), local responsiveness (Luo, 2001b), subsidiary return on assets (Luo and Park, 2001), the payoffs from JV partner buyouts (Reuer, 2001), IJV sales (Luo, 2002), and the likelihood of success of foreign-owned affiliates in the US (Li and Guisinger, 1991) all decreased. Increasing cultural distance from the US was negatively associated with entrepreneurial traits such as internal locus of control, moderate risk-taking, and high energy level at the country level (Thomas and Mueller, 2000).…”

Section: Research Challengesmentioning

confidence: 99%

A quarter century of Culture's Consequences: a review of empirical research incorporating Hofstede's cultural values framework

2006

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Since Geert Hofstede's Culture's Consequences: International Differences in Work-Related Values (Sage, 1980) was published, researchers have utilized Hofstede's cultural values framework in a wide variety of empirical studies. We review 180 studies published in 40 business and psychology journals and two international annual volumes between 1980 and June 2002 to consolidate what is empirically verifiable about Hofstede's cultural values framework. We discuss limitations in the Hofstede-inspired research and make recommendations for researchers who use Hofstede's framework in the future. Journal of International Business Studies (2006) 37, 285–320. doi:10.1057/palgrave.jibs.8400202

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From hybrids to hierarchies: shareholder wealth effects of joint venture partner buyouts

Cited by 87 publications

References 72 publications

Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

The relationship between corporate social responsibility and shareholder value: an empirical test of the risk management hypothesis

A quarter century of Culture's Consequences: a review of empirical research incorporating Hofstede's cultural values framework

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