Resource-based theory and mergers & acquisitions success

Mergers & acquisitions (M&A) are most popular external growth strategies. While the number of M&A has been increasing during the past decades, on average, only the shareholders of target firms gain value during the acquisitions process, while acquirers do not receive abnormal positive returns. This paper analyses the impact of strategically valuable resources on the success of M&A decisions. We test complementary resource-based hypotheses regarding the value of M&A for the shareholders of both transaction partners. Our sample consists of transactions in the pharmaceutical and biotechnological industry. The results of our study show that the shareholders of both transaction partners will gain above average positive returns only when the acquirer and the target own and combine strategically valuable resources and capabilities. --

Strategic or Status quo-Preserving Business Exit: (How) Do CEO Turnover and Succession Matter?

Business exit has implications for a firm’s corporate strategy. Two types of exit events are distinguished: those that involve strategic change and those that are status quo-preserving. This study investigates the impact of CEO turnover and succession on strategic versus status quo-preserving business exits. Based on a sample of CEO turnover and succession events and subsequent business exits of German corporations from different industries, our results suggest that neither voluntary nor involuntary CEO turnover is relevant to business exit. In contrast, outsider succession significantly affects the likelihood of strategic business exit, while a corporation’s performance does not moderate this relationship

competitive advantage by shaping institutions

Institutions matter greatly in the development of competitive advantage. Different institutional strategies to manipulate and shape institutions are discussed in the literature. This paper aims at extending the existing conceptual model of membership strategy. Despite being referenced frequently, the concept of membership strategy is not well developed. This is surprising because what is referred to as membership strategy has become very popular in various industries. We propose and develop a theoretical model that explains a firm’s opportunity to protect itself against dominant institutional pressures and, additionally, to create competitive advantage by implementing a consumer centric membership strategy. Practical examples are discussed to clarify theoretical interrelationships. The main illustrative case focuses on Blizzard Entertainment, an American developer and publisher of video games

comparing the VRIO-framework to the recognition heuristic

Decision-making heuristics are widely used in different economic and non- economic contexts to yield a good solution with an acceptable problem-solving effort. This paper presents the main features of an experimental research project to analyze the effectiveness and efficiency of selected heuristic techniques, which can be used to facilitate and improve the strategic decision-making process. The resource-based view and modern, psychologically inspired decision-making theory provides the theoretical basis for the study

examining the predictive power of the VRIO-framework

Strategy tools are widely used in the practice of strategic management to yield a good solution with an acceptable problem-solving effort. This paper presents results of an experimental research project that assesses the practical effectiveness of a theory-based decision-making tool, the VRIO- Framework, in predicting the stock-market performance of different companies. The VRIO’s predictive power is compared to the predictions derived from Analyst Ratings that are a widespread and commonly used tool in the decision- making context of this study. Our results suggest that the VRIO-Framework is a particularly effective forecasting tool whereas the power of Analyst Ratings is disputable. The results also provide support for the practical usefulness of resource-based theory

Resource-based theory and mergers & acquisitions success

Mergers & acquisitions (M&A;) are most popular external growth strategies. While the number of M&A; has been increasing during the past decades, on average, only the shareholders of target firms gain value during the acquisitions process, while acquirers do not receive abnormal positive returns. This paper analyses the impact of strategically valuable resources on the success of M&A; decisions. We test complementary resource-based hypotheses regarding the value of M&A; for the shareholders of both transaction partners. Our sample consists of transactions in the pharmaceutical and biotechnological industry. The results of our study show that the shareholders of both transaction partners will gain above average positive returns only when the acquirer and the target own and combine strategically valuable resources and capabilities

(how) do CEO turnover and succession matter?

Business exit has implications for a firm’s corporate strategy. Two types of exit events are distinguished: those that involve strategic change and those that are status quo-preserving. This study investigates the impact of CEO turnover and succession on strategic versus status quo-preserving business exits. Based on a sample of CEO turnover and succession events and subsequent business exits of German corporations from different industries, our results suggest that neither voluntary nor involuntary CEO turnover is relevant to business exit. In contrast, outsider succession significantly affects the likelihood of strategic business exit, while a corporation’s performance does not moderate this relationship

The impact of governance on management research

The rigor versus relevance debate of management research is ongoing. We contribute to this discussion by contrasting alternative assumptions about generating management knowledge and linking knowledge generation to academic governance. Specifically, we show that knowledge-by-representation dominates the field and is reinforced by the governance structures and processes guiding our academic management journals, peer review, and business school practices. We propose governance changes in academic publishing to encourage innovative research that may also generate knowledge-by-exemplification with strong ties to management practice

Choosing the right network strategy to manage exploration processes

We develop a social capital model that explains how networks of interorganizational relationships can be structured to manage exploration processes directed at gaining competitive advantage in different environmental contexts. We argue that a networkstructure of low density and high strength of relationships is beneficial if the main goal of the network is to actively configure the environment, e.g. under conditions of high environmental complexity. In contrast, a network structure of high density and low strength of relationships is advantageous if the adaptation to changing environmental conditions is the main concern of the embedded organizations, e. g., in contexts characterized by high environmental variability

Using Updated Information from the Frontline

Effective strategy-making in turbulent industries needs current insights that can inform ongoing decisions around adaptive strategic moves. Frontline employees involved in the daily business transactions are the first to see the subtle changes not otherwise observed by top managers. Top management with dominant logics anchored in previous business contexts usually receive updated information from performance reports for prior periods. All the while, we discern a human inclination linked to the position of power where managers subconsciously discard updated information from frontline employees. We present an experiment to investigate these effects and discuss the implications for strategic response capabilities among firms