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This paper provides a primer on European multinational business groups (BGs) and their subsidiaries. Firms in these BGs appear to have higher sales performance than firms in domestic groups (15% higher). This leads us to investigate which elements increase the likelihood that a group will transition towards multinational status. BGs’ characteristics matter for foreign acquisition: groups becoming multinational are usually larger, have a more hierarchical structure with respect to the number of layers in a group, and are more diverse in terms of sectors. Groups tend to expand into bordering countries or countries providing particular advantages, such as a large internal market. The first acquisition is a corporate-level decision that appears to be made by the group’s controlling firm and is often a diversification into a different industry.

The authors examine how firms can achieve organizational ambidexterity, that is, how they can successfully engage in concurrent exploitation of existing competencies and exploration of new competencies in their search for new products. Existing research has identified three enablers to manage these fundamentally different activities: temporal separation, structural separation, and the creation of context. Studying the strategic orientation, organization design, and performance of a unique sample of mid-sized German manufacturing firms, the authors find that the controlled interplay of decentralized decision making and formalized processes and goals is another effective means to manage the challenges of pursuing an innovation strategy balancing both exploitative and exploratory activities. The findings of this study suggest that this balanced control constitutes a fourth enabler of ambidexterity.

Purpose – To analyse the contribution of firm structure (size, clustering and foreign ownership) and strategy (subsector specialization) to the financial performance Return On Assets [ROA] of almost 10,000 European textile-clothing firms.

Methodology/approach – A panel regression analysis is conducted for five European countries that are representative of a Southern European model of clustered Small and Medium Enterprises (SMEs) specialized in low-value-added products (Spain, Italy and Portugal) and of a Northern European model of large vertically integrated firms specialized in high-value-added products (France and Germany) in 2002–2009.

Findings – The Northern European model has generated better financial performance than the Southern European model due to the joint role of its structure (large size) and strategy (specialization). Nevertheless, we find a positive effect of clustering in the Southern European model.

Research limitations – Clusters were defined at the NUTS II level instead of the NUTS III level. The coefficient of specialization was calculated for the pre-liberalization average.

Practical implications – Explaining the different levels of competitiveness shown by the same territorial organizational model in an industry.

Originality/value of the chapter – Work that has studied the behaviour of the firms within this territory-industry relationship is still scarce. Given that the viability of clusters and of European manufacturing have been put into question, our work evidences that the efficacy of the decisions related to the firm's structure and strategy needs to be tested jointly so that the way in which the firm addresses environmental changes can be appraised.

In this paper, we explore an extensive panel data set covering more than 4,000 listed firms in 16 European countries to study the effects of shareholder protection on ownership structure and firm performance. We document a negative firm-level correlation between shareholder protection and ownership concentration. Differentiating between shareholder types, we find that this pattern is mainly driven by strategic investors. In contrast, we find a positive correlation between shareholder protection and block ownership of institutional investors, in particular when we restrict the analysis to independent institutional investors. Finally, we find that independent institutional investors are positively associated with firm valuation as measured by Tobin’s Q. The opposite applies for strategic investors. Overall, our results are consistent with the view that (i) high shareholder protection and (ii) limited ownership by strategic investors make small investors and investors interested in security returns more confident in their investments.

Purpose – Firm acquisitions have been shown to serve as a way to gain access to international markets, technological assets, products or other valuable resources of the target firm. Given this heterogeneity of takeover motivations and the skewness of the distribution of the deal value we show whether and how the importance of different takeover motivations changes along the deal value distribution.

Methodology/approach – On the basis of a comprehensive dataset of 652 European mergers and acquisitions in the period from 1997 to 2003, we use quantile regressions to decompose the deal value at different points of its distribution.

Findings – Our results indicate that the importance of technological assets is higher for smaller target firms while the importance of non-technological assets seems to be higher for larger targets. The findings support the view on small acquisition targets to complement the acquirer's technology portfolio while larger acquisition targets tend to be used to gain access to international markets.

Research limitations/implications (if applicable) – Our findings suggest that the average firm as a reference for study might not be appropriate to address as the size of the target firm influences the value attribution to the target's assets.

Practical implications (if applicable) – Managers in the acquiring firm should be aware that they might overpay for the technological assets of a small firm. However, the acquisition of larger targets requires a well-developed integration strategy.

Originality/value of paper – For the first time, the broad merger motive of technology acquisition has been further qualified according to the size of the target which exhibits a considerable impact.

Portfolios of temporary organisations, particularly portfolios of R&D projects with different project partners, are a common yet understudied phenomenon. We know that these portfolios suffer from tensions inherent in project portfolio ambidexterity (e.g. portfolios balancing R&D projects with new and recurrent partners), yet our understanding of what might lessen these tensions remains limited. This study introduces the idea of project portfolio maturity and theorises how it can mitigate the negative effects of ambidextrous project portfolios. We test our hypotheses by combining proprietary survey and archival data on 136 R&D project portfolios in the German biotechnology industry covering project partnerships with both new and recurrent partners. Our results show that ambidextrous project portfolios hamper firm performance and that portfolio maturity mitigates these negative effects. By introducing a new perspective on project portfolios that accounts for overlooked temporal dimensions, this study provides a new contingency that has the potential to ease the tensions that result from projects with new and recurrent partners. We thereby add to the literatures on temporary organising, project portfolios, and ambidexterity.

Purpose – Recent research suggests that the positive effect of knowledge diversification on the value of corporate knowledge is limited.

Design/methodology/approach – This study uses an information processing perspective to explore the highest value that firms can draw from knowledge diversification and to argue that R&D cooperation and foreign direct investment help develop this value.

Findings: Regressions on a sample of 21.434 patents of German manufacturing firms show that technologically diversified knowledge has an inverted U-shaped influence on the value of technological knowledge. The findings also suggest that R&D cooperation increases the value generated by technologically diversified knowledge. However, foreign direct investment does not seem to have a moderating influence on the relationship between technological diversification and value.

Research limitations – We use patent citations to measure knowledge transfers. However, not all inventions are patented.

Originality/value – The information processing theory, which we apply in this chapter, provides consistent explanations for both the inverted U-shape of diversification and the extension of the optimal diversification of knowledge by R&D cooperation.

Recent developments in the competitive landscape of the management support software industry sub-sector — characterised by saturation, consolidation and defragmentation — have also attracted attention to the phenomenon of cluster formation. Layers of SMEs forming satellite systems centred on large players in this industry fill in structural holes in the competitive fabric of the market which are left open — at least temporarily — by the large ‘incubator’ company, while at the same time also acting as a type of capacity buffer or technology spearhead for the larger player which does not need to invest its own capacities into certain niches. This paper discusses the significance of clustering in the management support software sector and aims to offer explanations predicated on intangible constructs which may retrofit traditional agglomeration economies approaches. The findings of a pilot study corroborate the implications of clustering in relation to knowledge spillover effects, labour mobility, network formation, the generation of social capital, reputation building and effects of the urban ambience as factors potentially moderating the competitive environment within clusters vis-à-vis outside. Moreover, effects of the density of cluster labour pools and spin-off are considered. Simultaneously, the unique efficacy of these effects by means of mitigation of the idiosyncratic growth constraints affecting SMEs in this industry context — such as high levels of customer dependence, lack of legitimacy and the importance of reputation as well as customer references — is proposed.

This article analyzes the interplay between regulation and social and environmental reporting in northern Italian social enterprises. Specifically, it investigates how “non-accredited” social enterprises discharge voluntary accountability before and after the introduction of regulation making social and environmental reporting compulsory for “accredited-social enterprises.” By developing a content analysis on 170 stand-alone social and environmental reports, this article provides a longitudinal analysis of voluntary disclosures in a regulated context from 2006 (before regulation) to 2009 (after regulation). Based on the total number of disclosures and the average number of sentences per report, Italian “non-regulated” social enterprises showed increased voluntary disclosure on social and environmental matters from 2006 to 2009; however, when analyzing the average sentences per report, it emerges that the information contained in the stand-alone social and environmental reports decreased, especially disclosures related to “social-related issues.” This article looks beyond crude noncompliance analysis with legislation and analyzes if the regulation influences organizations’ voluntary disclosure. It analyzes all of the social and environmental disclosures provided by northern Italian “non-accredited” social enterprises before and after the introduction of regulation. The novelty of this article rests in the fact that it does not analyze the social and environmental disclosure of “legal social enterprises”; rather, it considers the whole voluntary disclosure context for “non-accredited” social enterprises in a regulated environment.