How Much is That Company Worth?: Interorganizational Relationships, Uncertainty, and Acquisition Premiums

Haunschild, Pamela R.

doi:10.2307/2393296

Cited by 343 publications

(317 citation statements)

References 29 publications

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“…Furthermore, prior exits and entries affect subsequent exit even when we hold constant the uncertainties stemming from volatility in firm performance and markets, as well as from inconsistent information. Yet this result hardly entails that uncertainty is not a necessary condition for observational learning (Haunschild 1994). It more likely reflects that bounded rationality introduces elements of uncertainty (and hence imprecision) into each firm's private information and that these elements are not reflected in our uncertainty measures; indeed, they are perhaps so inherent in the decision that they cannot even be parceled out.…”

Section: Effect Of Exits and Entriesmentioning

confidence: 91%

“…Previous research on these questions hints that uncertainty and imitation interrelate in ways that are more complicated than is commonly assumed. For instance, Haunschild (1994) and Greve (2009) find that imitation may occur in the absence of uncertainty. Yet Haunschild (1994) acknowledges that examination of uncertainty as a necessary condition is difficult because few (if any) decision scenarios are completely devoid of uncertainty.…”

Section: Introductionmentioning

confidence: 99%

“…The reason is that causal ambiguity makes it difficult for firms to identify what, exactly, to imitate. Other researchers have examined specific aspects of this moderating role: Haunschild (1994) investigates whether uncertainty differentially affects the selection of imitation targets, and Haunschild and Miner (1997) explore how uncertainty moderates the selection of imitation modes. Our study is situated within this latter line of inquiry, but rather than asking how uncertainty moderates the selection of imitation targets or modes, we examine how different types of uncertainty moderate a firm's tendency to imitate.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Decomposing Uncertainty and Its Effects on Imitation in Firm Exit Decisions

Gaba

Terlaak

2013

Organization Science

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T his study examines the effects of different uncertainty types on interorganizational imitation in firm exit decisions.We draw on herding models to conceptualize exit decisions as being based on a firm's private information, which the firm updates with information inferred from observing the actions of others. We posit that different types of uncertainty differentially affect this observational learning process; in particular, we propose that certain uncertainty types attenuate (rather than foster) observational learning and subsequent imitation. We test this theory using a 29-year panel data set on the exit of private venture capital firms. Our results indicate that observational learning does influence imitation in firm exit decisions, and they also suggest that a common belief-that uncertainty enhances imitation-does not apply to all types of uncertainty. Specifically, we find that uncertainty fosters imitation only when it is idiosyncratic to the firm; uncertainties that are common to all firms, in contrast, actually reduce reliance on observational learning. By decomposing uncertainty into different types and explicating their effects on imitation, we demonstrate that this relationship is more nuanced than previously assumed and, in addition, highlight the role of deliberate information processing in imitation.

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Section: Effect Of Exits and Entriesmentioning

confidence: 91%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Decomposing Uncertainty and Its Effects on Imitation in Firm Exit Decisions

Gaba

Terlaak

2013

Organization Science

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“…In order to measure for strategic consistency, we followed a two-step approach. First, we rated each acquisition regarding its strategic direction, following Haunschild (1994). An acquisition is considered to be horizontal when the target's primary SIC matches the bidder's SIC on a four-digit level.…”

Section: Measurement Of Strategic Consistencymentioning

confidence: 99%

Lost in transaction? The transfer effect of strategic consistency

Fehre

Kronenwett

Lindstädt

et al. 2015

Bus Res

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Prior empirical studies provide evidence that the learning-curve perspective from manufacturing settings is not directly applicable to strategic management settings. In the latter case learning relates to the quality rather than to the quantity of experience. Regarding the antecedents of organizational learning especially, there are still unanswered questions remaining; for example, the questions what kind of experience has a positive effect on performance and what kind of experience is more of a hindrance than a help. This becomes obvious when looking at acquisitions as examples of strategic management decisions. Results of prior empirical studies analyzing the relationship of acquisition experience and acquisition performance have been mixed. By introducing the concept of strategic consistency, we intend to facilitate a better understanding of the kind of experience necessary for organizational learning. Therefore, we measure the concordance and frequency of change in strategic actions. Employing a sample of 379 acquisition series, we find evidence for a positive transfer effect of strategic consistency within series and, therefore, a positive relationship between strategic consistency and acquisition performance.

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“…This is because existing routines provide a useful starting place from which organizations can begin enacting their environments (Weick, 1995), as they allow the organization to engage in concrete behaviors over which it has some control. Research has also demonstrated that in uncertain conditions organizations are more likely to take what they believe are safe courses of action (Haunschild and Miner, 1997) that are accepted as a reasonable and legitimate means for responding to uncertainty within their industry (Cyert and March, 1963;DiMaggio and Powell, 1983;Haunschild, 1994). Retaining a founder-CEO is a potentially uncertainty-increasing gamble that the current leadership will be able to continue to meet future demands, while replacing a founder-CEO with a proven professional whose leadership capabilities are better known reduces a specifi c source of leadership uncertainty (Flamholtz and Randle, 2000;Rubenson and Gupta, 1996).…”

mentioning

confidence: 99%

Dance with the one that brought you? Venture capital firms and the retention of founder‐CEOs

Pollock

Fund

Baker

2009

Strategic Entrepreneurship

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We consider how a venture capital fi rm's perceived uncertainty in new and uncertain industry environments affects its decisions to retain founder-CEOs at companies they take public. We further consider how the human capital of the founder-CEO, the overall experience of the venture capital fi rm (VCF), and the VCF's specifi c experience with the new industry moderate the relationship between industry-based uncertainty and founder-CEO retention. We explore these issues in the context of 340 venture capital fi rm investments in Internet sector start-ups that went public from 1995 to 2000. We fi nd evidence that industry-based uncertainty decreases the likelihood of founder-CEO retention, that founder-CEO human capital and VCF Internetsector experience decreases the effects of these uncertainties on founder-CEO retention for business-to-business (B2B) fi rms, but increases them for business-to consumer (B2C) fi rms,and that VCF age further decreases the likelihood that the founder-CEOs of B2C fi rms will be retained.

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How Much is That Company Worth?: Interorganizational Relationships, Uncertainty, and Acquisition Premiums

Cited by 343 publications

References 29 publications

Decomposing Uncertainty and Its Effects on Imitation in Firm Exit Decisions

Decomposing Uncertainty and Its Effects on Imitation in Firm Exit Decisions

Lost in transaction? The transfer effect of strategic consistency

Dance with the one that brought you? Venture capital firms and the retention of founder‐CEOs

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