Prelims

Half Title Page

ADVANCES IN MERGERS AND ACQUISITIONS

Series page

ADVANCES IN MERGERS AND ACQUISITIONS

Series Editors: Sydney Finkelstein and Cary L. Cooper

Recent Volumes:

Volumes 1–2: Edited by Cary L. Cooper and Alan Gregory

Volumes 3–22: Edited by Sydney Finkelstein and Cary L. Cooper

Title Page

ADVANCES IN MERGERS AND ACQUISITIONS VOLUME - 23

ADVANCES IN MERGERS AND ACQUISITIONS

EDITED BY

SYDNEY FINKELSTEIN

Tuck School of Business, USA

and

CARY L. COOPER

Alliance Manchester Business School, UK

United Kingdom – North America – Japan – India – Malaysia – China

Copyright Page

Emerald Publishing Limited

Emerald Publishing, Floor 5, Northspring, 21-23 Wellington Street, Leeds LS1 4DL.

First edition 2024

Editorial matter and selection © 2024 Sydney Finkelstein and Cary L. Cooper.

Individual chapters © 2024 The authors.

Published under exclusive licence by Emerald Publishing Limited.

Reprints and permissions service

Contact: www.copyright.com

No part of this book may be reproduced, stored in a retrieval system, transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without either the prior written permission of the publisher or a licence permitting restricted copying issued in the UK by The Copyright Licensing Agency and in the USA by The Copyright Clearance Center. Any opinions expressed in the chapters are those of the authors. Whilst Emerald makes every effort to ensure the quality and accuracy of its content, Emerald makes no representation implied or otherwise, as to the chapters’ suitability and application and disclaims any warranties, express or implied, to their use.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN: 978-1-83608-073-2 (Print)

ISBN: 978-1-83608-072-5 (Online)

ISBN: 978-1-83608-074-9 (Epub)

ISSN: 1479-361X (Series)

Contents

About the Editors

Sydney Finkelstein is the Steven Roth Professor of Management and Director of the Center for Leadership at the Tuck School of Business at Dartmouth College, where he teaches courses on Leadership and Strategy. He also has experience working with executives at Dartmouth and other prestigious universities around the world. He holds degrees from Concordia University and the London School of Economics, as well as a Ph.D. from Columbia University in Strategic Management. He has published 23 books and 85 articles, with several bestsellers, including the #1 bestseller in the USA and Japan, Why Smart Executives Fail. On Fortune magazine’s list of Best Business Books, the Wall Street Journal called it “a marvel – a jargon-free business book based on serious research that offers genuine insights with clarity and sometimes even wit … It should be required reading not just for executives but for investors as well.” His latest bestselling book is SUPERBOSSES: How Exceptional Leaders Master the Flow of Talent, which was named one of Amazon’s “Best Books” on business and leadership for 2016. LinkedIn Chairman Reid Hoffman calls it “a leadership guide for the Networked Age.” He is a Fellow of the Academy of Management. He has had three books nominated for the Academy of Management’s Terry Book Award, the most prestigious honor in the field. He is a recognized thought leader on leadership, strategy, and corporate governance, and is listed on the “Thinkers 50,” the most prestigious ranking of management thinkers in the world. He is well known for his keynote speeches and television appearances, and is a regular columnist for the BBC.

Cary L. Cooper is the author and editor of more than 175 books and is one of Britain’s most quoted business gurus. He is The 50th Anniversary Professor of Organizational Psychology and Health at Alliance Manchester Business School, University of Manchester, UK. He is the President of the Chartered Institute of Personnel and Development, President of the British Academy of Management, a Companion of the Chartered Management Institute and one of only a few UK Fellows of the (American) Academy of Management, past President of the British Association of Counselling and Psychotherapy and Past President of RELATE. He was the Founding Editor of the Journal of Organizational Behavior, former Editor of the scholarly journal Stress and Health, and is the Editor-in-Chief of the Wiley-Blackwell Encyclopaedia of Management – now in its 3rd edition. He has been an Advisor to the World Health Organisation, International Labour Organization, and European Union in the field of occupational health research and wellbeing, was Chair of the Global Agenda Council on Chronic Disease of the World Economic Forum (WEF, 2009–2010, and a member of the Global Agenda Council on mental health of the WEF) and is Immediate Past Chair of the Academy of Social Sciences (comprising 47 learned societies in the social sciences and 90,000 members). He was awarded the CBE by the Queen in 2001 for his contributions to organizational health and safety; and in 2014, he was awarded a Knighthood for his contribution to the social sciences.

About the Contributors

Neal M. Ashkanasy, OAM, Ph.D. is Emeritus Professor of Management in the University of Queensland Business School at The University of Queensland, Australia. He studies emotion in organizations, leadership, culture, ethical behavior, and the physical environment of work. He has published in journals such as the Academy of Management Journal and Review, the Journal of Management, and the Journal of Applied Psychology. He served as Editor-in-Chief of the Journal of Organizational Behavior, Associate Editor for the Academy of Management Review and Academy of Management Learning & Education. He is currently Associate Editor for Emotion Review and Series Editor for Research on Emotion in Organizations. He is the Founder and Administrator of the Emonet Listserv. In 2017, he was awarded a Medal of the Order of Australia (OAM), and in 2019, he was named the Academy of Management’s Managerial and Organizational Psychology Division Distinguished Scholar. He retired from full-time employment in 2023.

Marie-Ann Betschinger is an Associate Professor of Strategy at HEC Montreal in Canada. Her research focuses on corporate and international strategy. She is particularly interested in mergers & acquisitions, corporate governance, and the social and political context within which firms act.

Tsvetomira V. Bilgili is an Assistant Professor in the College of Business Administration at Kansas State University. She received her Ph.D. from the University of Memphis. Her research interests fall in the domains of international business and strategic management and include the effects of national context (institutions and international relations) on firms’ strategic decision-making, with a particular emphasis on cross-border acquisitions and the role of intra- and inter-firm networks on corporate governance and performance. Her research has been published in the Journal of Management, Global Strategy Journal, Journal of World Business, Review of Managerial Science, Corporate Governance: An International Review, and Group & Organization Management, among others.

Muhammad Umar Boodoo is an Associate Professor at Warwick Business School (WBS) in the United Kingdom. His research interests lie in grand challenges (sustainable development goals), corporate social responsibility, corporate philanthropy, income inequality, and financialization. His research has been published in peer-reviewed journals such as Human Resource Management Journal, Journal of Business Ethics, and Industrial and Labor Relations Review. Further, his research has also been mentioned in articles published by the Institute of Chartered Accountants in England and Wales, Forbes, and the Council on Business & Society. His paper on workforce trust in leveraged buyouts was a best paper in the Human Resources Division of the 2022 Academy of Management (AOM) Meeting. He was also recognized as an “Outstanding Reviewer” for the Strategic Management Division at the 2023 AOM Meeting. On top of his research at WBS, he also designs, lectures, and teaches undergraduate and postgraduate courses in management.

Laurence Booth holds the CIT Chair in Structured Finance at the Rotman School of Management, University of Toronto. His major research interests are in corporate finance and the behavior of regulated industries. He has published over 100 articles in academic and professional journals as well as three textbooks for McGraw Hill and John Wiley and Sons. He has taught graduate courses in business finance, international financial management, corporate financing, mergers and acquisitions, financial management, applied asset management, and financial theory (Ph.D.), as well as short executive programs. His advice is frequently sought by the media and he has appeared as an expert financial witness before the Ontario Securities Commission, the National Energy Board, the CRTC, and most of the major regulatory tribunals in Canada. He was awarded the Financial Post’s Leader in Management Education Award in 2003.

Helene Loe Colman is a Professor in Strategic Management at BI Norwegian Business School. Prior to pursuing an academic career, she worked as a management consultant. Her research addresses mergers and acquisitions, international strategy implementation, and organizational identity. Her current projects include a study examining the acquisition capabilities of serial acquirers. Her research has been published in Journal of Management, Journal of International Business Studies, Management International Review, Long Range Planning, and Economic and Industrial Democracy.

George J. Georgopoulos is an Associate Professor at the Department of Economics at York University, Toronto, Canada. He received his M.A. and Ph.D. in Economics from the University of Toronto. His research is on Firm Strategy, Multinationals and Globalization, and International Finance has led to publications in journals including the Canadian Journal of Economics, Economics Letters, Journal of Economics and Business,and International Review of Economics and Finance. He has received the Dean’s Award of Excellence in Research and the Dean’s Award of Excellence in Teaching at York University.

Jerayr Haleblian is the A. Gary Anderson Professor of Business Administration at the University of California-Riverside. He earned his Ph.D. in Business from the University of Southern California. He conducts research on mergers and acquisitions, and on strategic leadership. His work has been published at Academy of Management Journal, Strategic Management Journal, Administrative Science Quarterly, and Organization Science.

Walid Hejazi is a Professor of Economic Analysis and Policy at the Rotman School of Management, University of Toronto. He is Academic Director of Rotman Executive Programs, a Fellow of the Michael Lee-Chin Family Institute for Corporate Citizenship, and member of the Board of Directors of the David & Sharon Johnston Centre for Corporate Governance Innovation. He is also Academic Director of the University of Toronto’s ESG Designation program, the first of its kind in Canada. He has worked closely with leaders within many companies to develop and implement innovative strategies, with a particular focus on the role of leaders in preparing those companies to lead strategic change. He teaches in Rotman’s MBA, EMBA, and custom executive programs, and has also delivered lectures in over 30 countries. He is regularly quoted in the media on a wide range of business and economic issues, and has testified extensively before parliamentary and senate committees.

HeeJung Jung is an Assistant Professor in the Department of Management and Entrepreneurship at Imperial College London. She earned her Ph.D. from INSEAD. She specializes in research concerning status-based social evaluation across diverse contexts. Her work delves into how individuals in the business setting may be perceived and assessed differently based on their social status, as well as how they might adjust their behaviors in anticipation of such evaluations. A significant focus of her research lies in uncovering the influence of nonregulatory factors, that form one’s social status, on diversity and equality within organizational settings, particularly within the realm of organizational leadership. Her investigations extend to various domains including entrepreneurial teams, elite workers, and top echelon executives.

Yonghoon G. Lee is an Associate Professor of Management at Mays Business School, Texas A&M University. His research includes how status and networks enable or stifle professionals such as financial advisors, top executives, and corporate directors. He has published in Administrative Science Quarterly, Academy of Management Journal, and Organization Science. He obtained his doctorate at INSEAD.

Randi Lunnan is a Professor of Strategy and Tom Wilhelmsen Chair at the Strategy and Entrepreneurship Department at BI Norwegian Business School in Oslo, Norway. Her research interests include inter-organizational relations, mergers and acquisitions, and the management of multinationals. She leads the Center for Ocean Business, and her current projects focus on the transition of firms in the maritime sector, particularly on the emergence of new business models and collaborative arrangements. Her work has been published in journals such as Strategic Management Journal, Journal of International Business Studies, Journal of World Business, Journal of Management, and Journal of Management Studies.

Patia J. McGrath is an Assistant Professor in the Strategic Management and Entrepreneurship Department at Erasmus University’s Rotterdam School of Management. Her research interests lie at the intersection of strategy execution, organizational learning, and firm innovation. She previously served on the faculty of the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. She earned her Ph.D. from Wharton.

Gerry McNamara is the John H. McConnell Professor of Management at Michigan State University. He received his Ph.D. from the University of Minnesota. His research examines the effect of leader attributes, organizational characteristics, and market pressures on strategic perceptions, impression management actions, and strategic decisions. His research has been published in leading journals, including the Academy of Management Journal, the Strategic Management Journal, Organization Science, the Journal of Applied Psychology, Organizational Behavior and Human Decision Processes, Personnel Psychology, the Journal of Management, the Academy of Management Annals, and the Journal of International Business Studies. He presently serves as the Senior Editor for macro-organizational research at the Journal of Management and previously served as an Associate Editor for the Academy of Management Journal and the Strategic Management Journal.

Atul Nerkar is Professor of Strategy and Entrepreneurship and Allred Distinguished Scholar in the Kenan-Flagler Business School at the University of North Carolina (UNC) at Chapel Hill. His research focuses on how technology, innovation, and entrepreneurship affect business and corporate strategy. He is the Former Associate Dean of the Executive MBA Evening and Weekend Programs at UNC. He previously served on the faculty of Columbia University’s Graduate School of Business and was a Visiting Professor at the University of Pennsylvania’s Wharton School. He earned his Ph.D. from Wharton.

Andre A. Pekerti is an Associate Professor in the International Business Discipline at The University of Queensland. As an n-Cultural, his research focuses on (societal) culture and how it affects people’s behaviors. His research has explored cultural intelligence, servant leadership, and ethical behavior in society. His recent work and book look at multiculturalism within individuals and explore how we can maintain our cultural values and still behave appropriately in different contexts. He is on the Editorial Board of Asia-Pacific Journal of Management, Cross-Cultural and Strategic Management, Human Resource Management Review, International Journal of Intercultural Relations, Journal of International Business Studies, Journal of World Business, and Honorary Editor of Andalas Management Review. He has consulted for Diner’s Club, Singapore; the Department of Transport Victoria, Australia; and the Ministry of Trade, Indonesia. Most recently, he collaborated with BiasSync, a science-based solution designed to help organizations assess, train, and avoid unconscious bias.

Manish K. Srivastava received his Ph.D. from Virginia Tech. He is a Professor of Strategy and Innovation and the David L. and Marilyn Bernard Faculty Fellow of Business at the College of Business, Michigan Tech. His current research focuses on firm mergers, acquisitions, strategic alliances, firm innovation strategy, and firm survival. His research has been published in the Academy of Management Journal, Strategic Management Journal, Journal of Management, Long Range Planning, Technological Forecasting and Social Change, Journal of Technology Transfer, Journal of Engineering and Technology Management, and Industrial Marketing Management, among others.

Adam Steinbach is an Associate Professor in the Management Department at the University of South Carolina’s Darla Moore School of Business. He received his Ph.D. from Michigan State University and also holds a bachelor’s degree in finance from the University of Notre Dame. His research focuses on the personal factors that motivate executive decision-making as well as the impact of those decisions on various stakeholder groups. His work has been published in Academy of Management Annals, Academy of Management Review, Journal of Applied Psychology, Journal of Management, Personnel Psychology, and Strategic Management Journal.

Sandor Talas is a Ph.D. candidate in the University of Queensland Business School at The University of Queensland, Australia. His research is focused on the human aspects of mergers and acquisitions and the impact of increased emotional and cognitive load on employee performance and behavior. Before starting his studies, he worked for over two decades as an advisor and manager of many companies involved in international mergers and acquisitions in over 30 countries. He presented several papers on his research at the annual conferences of the Academy of Management, the Academy of International Business, the British Academy of Management, the Australian and New Zealand Academy of Management, and the Australia and New Zealand International Business Academy.

Ghahhar Zavosh is Faculty Lecturer in the Strategy and Organization Area at the Desautels Faculty of Management, McGill University. His research centers on corporate strategy, with a particular emphasis on themes related to corporate resource allocation and redeployment, as well as mergers and acquisitions.

Introduction: Research on Mergers and Acquisitions

Sydney Finkelstein and Cary L. Cooper

We start this Volume of Advances in Mergers and Acquisitions with a review chapter of cross-border mergers and acquisitions (M&A), by Bilgili. What is unusual here is that this chapter surveys literature as far back as 1980, as early as empirical work on this topic might be. The data trends are intriguing, but probably of most interest are the clusters of research themes identified within the broader research record – geopolitics, people, strategy, and governance. These are fundamental themes in research that go beyond cross-border M&A, so it’s not surprising to see this pattern. Nonetheless, thanks to Bilgili, we now have a picture of the research landscape that will be informative to scholars, and a reminder of the necessity of generating insights and observations that add to, or sometimes even challenge, the research record.

A good example of adding to what we know about cross-border M&A is the second chapter in this volume on multinational strategies and financing considerations, by Boodoo, Booth, Georgopoulos, and Hejazi. These authors bring home the important point that multinationals can only target acquisitions when they have the financial resources to do so, and that these financial resources depend very much on the supply of capital in the target market.

Continuing the theme of under-appreciated drivers and constraints on M&A activity, Zavosh and Betschinger remind us that the topic of divisional-level drivers of corporate acquisition decisions and the subsequent performance implications for the divisions remain insufficiently explored. We agree and were very pleased to see some remedy to this situation in this chapter. What did the authors find? That firms engage in acquisitions to allocate resources to their more promising divisions, particularly those with higher growth prospects and greater potential for resource-sharing among sister businesses. Stated somewhat differently, it’s not a one-size-fits-all scenario for acquisition activity in multi-divisional firms; there are winners and losers in the corporate battle for resources. Perhaps, someone reading this will take us further down this line by studying how corporate political in-fighting affects M&A activity.

We’ve always been interested in research on serial acquirers, not the least because of what it might say about the role of experience and learning in M&A success. In an excellent review of work in this area, Colman and Lunnan highlight precisely this point, and much more, as summarized in their conceptual model of serial acquirers. They also recommend a closer look at the integration challenges of multiple acquisitions. This is not only a theoretical concern, but a practical one. How many of us have noticed how difficult it is for serial acquirers to make everything work together once they slow down on their buying spree? Thanks to Colman and Lunnan for bringing this point home.

Continuing with the general theme of experience, Steinbach, Haleblian, and McNamara ask in their chapter whether relying on outside advisors (“outsourced experience”) helps or hinders, and why. It’s easy to imagine the “helping” part – these are experts (investment banks and consulting firms) with deep content knowledge about M&A, much more than any individual firm would likely have access to internally. So, we found the “hurting” part intriguing – even deep knowledge, when devoid of critical context, can provide inappropriate guidance. Results were consistent with this latter interpretation, with the important proviso that when advisor experience is context-specific (i.e., experience with M&A in the target firm’s industry), the market responds more positively.

Lee and Jung come in next with a somewhat related study, in that they focus on financial advisors in M&A deals. But they come at it in a different manner. Whereby high-status advisors have little incentive to endorse risky deals, middle-status advisors (“the also-rans”, our word, not the authors) have no such luxury. They need the work, and may well be selected because they are more client-pleasing, at least as Lee and Jung see it. Which means that acquisition premiums (an indicator of risk) will be higher for middle-market advised deals than others. Findings are consistent, though this is one of those articles where it would be so interesting to add qualitative data to get a feel for what was really going on.

The next two chapters bring strategy front and center. First, McGrath and Nerkar make a compelling case that a perceived symmetry between divestiture and acquisition (“two sides of the same coin”) is not only an over-simplification, but can also lead to poor strategic thinking. This chapter can’t easily be summarized in a sentence or two; rather, we found interesting insights and nuance for theory and practice up and down the chapter. All we can say is, read this one carefully.

If there’s a natural analogy to the acquisition–divestiture relationship, it may well be the one between acquisitions and alliances. They are similar, but they are different. Srivastava focuses on the governance implications that arise with these two types of growth strategies, drawing on a wide range of theories in strategy, economics, and organizations. Readers will appreciate the multi-disciplinary lens Srivastava takes.

The final chapter in Volume 23 brings us back to people. The role of emotions in the post-acquisition integration process is self-evident to anyone who has gone through it, and researchers have responded with their own work, but how valid are these analyses? This is the controversial, and timely, question Talas, Pekerti, and Ashkanasy ask in their important chapter. They document how a reliance on interviews, often conducted months or years after the events in question, create such inherent data bias that the findings of such studies are inherently unreliable. This is really a valuable chapter, and Talas et al. do an outstanding job dissecting the past, and providing a solid foundation for future work on emotions in M&A integration.

We are happy to share these nine chapters with our community of M&A enthusiasts, each particular in their approach but together a wonderful example of a collective at work on one of the most central and fascinating topics any of us in business academia might choose to study.