Interorganizational Imitation and Acquisitions of High‐tech Ventures

Abstract

Research summary: This article shows that there is a positive association between the changes in the number of prior acquisitions or the changes in the prominence of prior acquirers within the focal venture's subfield and the venture's likelihood to be acquired. Results are in line with the existence of frequency‐ and trait‐based imitation in acquisitions targeting tech ventures. More importantly, these positive associations are more pronounced when (a) exogenous technological uncertainty within the venture's subfield increases and (b) there are significant differences between the focal venture's and acquirer's technological resources. Our findings are in accord with the suggestion that uncertainty in the technology domain is an important boundary condition in moderating the extent of imitation in technology acquisitions. We also discuss alternative explanations and implications. Managerial summary: The findings of this article suggest that when deciding whether or not to acquire a technology venture (i.e., startup company in a high‐tech industry), managers infer information by observing other acquisitions in the venture's subfield to make assessments about the underlying value of the potential targets. We also find that receiving some informational cues from previous acquisitions would be more useful when there is high technological uncertainty in the potential target's subfield about which technologies will be dominant, and when the potential acquirer and the tech venture operate in dissimilar technological areas. This article shows that imitation can be one way to deal with decision‐making under uncertainty when making acquisition decisions in high‐tech environments. Copyright © 2017 John Wiley & Sons, Ltd.

Disentangling the driving factors of logistics outsourcing: a configurational perspective

“…Chen et al (2011) reported that mimetic pressures (frequency-based and outcome-based imitation) are important determinants of green IT adoption. Recently, Ozmel et al (2017) examined and confirmed the positive effects of frequency-based imitation and trait-based imitation on acquisitions of ventures.…”

“…Haunschild and Miner (1997) classified inter-organizational imitation as three types – frequency-based imitation (imitating common practices), trait-based imitation (imitating practices of firms with certain features) and outcome-based imitation (imitating practices of firms with certain outcomes). Inter-organizational imitation has been applied in various research fields, such as entering new product or geographic markets (Belderbos et al , 2011; Fernhaber and Li, 2010), IT adoption (Chen et al , 2011), IT outsourcing (Hanafizadeh and Zare Ravasan, 2018) and acquisition of high-tech ventures (Ozmel et al , 2017; Yigitbasioglu, 2015). For example, Fernhaber and Li (2010) explored the impact of inter-organizational imitation on new venture international entry and performance.…”

The Pre-Deal Phase of Mergers and Acquisitions: A Review and Research Agenda

“…Target selection has also been argued to be influenced by managers observing other M&As taking place in a related business domain (Ozmel et al, 2017) or by performance feedback (Kumar et al, 2015).…”

“…Baum et al (2000) suggest that experiential-learning processes lead firms to select targets that are geographically and organizationally similar to their most recent targets, whereas vicarious-learning processes lead acquirers to favor targets that are similar to the M&A targets of their peers. Target selection has also been argued to be influenced by managers observing other M&A taking place in a related business domain (Ozmel, Reuer, & Wu, 2017) or by performance feedback (Kumar, Dixit, & Francis, 2015).…”

Mimicry, Knowledge Spillover and Expatriate Assignment Strategy in Overseas Subsidiaries

“…First, it has seldom considered the possible influence of inter-organizational relationships on expatriate assignment. Firms are not only affected by their own resources and ownership structure, they can also be influenced by what other firms do (Greve 2011;Guillén 2002;Haunschild and Miner 1997;Ozmel et al 2017;Xie and Li 2017), including in forming their expatriation strategies (Williamson and Cable 2003). The neo-institutional theory suggests that firms tend to imitate their peers' practice, which is considered legitimate (DiMaggio and Powell 1983;Haunschild and Miner 1997;Meyer and Rowan 1977).…”