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Article
Publication date: 23 November 2012

Eric H. Goldman

The purpose of this paper is to examine the effectiveness of decision making in IT acquisition and security, and the disparity between the two domains. The paper postulates that…

878

Abstract

Purpose

The purpose of this paper is to examine the effectiveness of decision making in IT acquisition and security, and the disparity between the two domains. The paper postulates that improving decision processes during acquisition increases decision makers' security consciousness and security posture.

Design/methodology/approach

Semi‐structured interviews were conducted with 15 IT decision makers of small‐to‐medium sized organizations using questions derived from previous research in psychology, HCI, and MIS. Questions from the security and acquisition areas were coded based upon a predefined rubric and correlation testing was performed. The author chose to focus on small‐to‐medium sized organizations since they often lack sufficient background and resources to address IT security concerns.

Findings

Analysis suggests a significant positive correlation between the effectiveness of acquisition decision making and organizational security posture and attitudes, further suggesting that small improvements in acquisition decision making may result in substantial improvements in an organization's security posture.

Research limitations/implications

The sample size of 15 organizations is not sufficient for population generalization. This research instead focused on analyzing the effect of certain decisions, attitudes, and behaviours on acquisition and security.

Originality/value

Increased security concerns, such as cyber‐attacks and regulation, require organizations to proactively plan for and address security requirements. Tools/software are insufficient to properly address organizational security and do not address failure or flaws in human decision making. These findings can help organizations to better understand and improve their internal decision making processes and security consciousness, and avoid common pitfalls which allow for unaddressed risk.

Details

Information Management & Computer Security, vol. 20 no. 5
Type: Research Article
ISSN: 0968-5227

Keywords

Article
Publication date: 28 September 2010

Ramaraj Palanisamy, Jacques Verville, Christine Bernadas and Nazim Taskin

The purpose of this paper is to understand the decision process of enterprise software acquisition. The research aims to focus on identifying significant influences on enterprise…

1659

Abstract

Purpose

The purpose of this paper is to understand the decision process of enterprise software acquisition. The research aims to focus on identifying significant influences on enterprise software acquisition decisions.

Design/methodology/approach

As a research model and theoretical background, the organizational buying model (OBB) is proposed for the acquisition of enterprise systems. Influences on enterprise software acquisition decision processes were found by an empirical study carried out from a practitioner's perspective. The study collected data via a mail survey administered to information systems (IS) professionals involved in the acquisition of enterprise software (ES). The survey questionnaire was developed based on a previous research project and a literature review. Organizational buying behavior (OBB) models in the literature served as the basis for the influences included in the survey instrument. Factor analysis was carried out on the survey data to identify the most significant factors/influences.

Findings

The following five factors emerged as significant influences on the acquisition decision process of enterprise software: ES strategy and performance; BPR and adaptability; management commitment and user buy‐in; single vendor integrated solution; and consultants, team‐location, and vendor's financing. These factors are discussed and managerial implications are extracted. Conclusions are derived from the study findings and guidelines for further research are suggested.

Research limitations/implications

The present study provides a starting point for further research in understanding a more comprehensive list of influences on enterprise software acquisition. A bigger sample from more industries is required to examine whether the significance of the influences remains stable.

Originality/value

Using OBB models has proven to be useful for organizations in making effective decisions on enterprise software acquisition.

Details

Journal of Enterprise Information Management, vol. 23 no. 5
Type: Research Article
ISSN: 1741-0398

Keywords

Article
Publication date: 30 October 2009

Scott Fung, Hoje Jo and Shih‐Chuan Tsai

The purpose of this paper is to examine the ways in which stock market valuation and managerial incentives jointly affect merger and acquisition (M&A) decisions and post‐M&A…

3351

Abstract

Purpose

The purpose of this paper is to examine the ways in which stock market valuation and managerial incentives jointly affect merger and acquisition (M&A) decisions and post‐M&A performance, and to provide new evidence on the agency implications where such acquisitions are driven by the stock market.

Design/methodology/approach

Utilizing all publicly‐traded US firms in the NYSE, AMEX and NASDAQ during the period from 1992 to 2005 (excluding financial and utility firms), obtained from COMPUSTAT, CRSP, I/B/E/S, and the M&A database provided by SDC Platinum, this paper adopts a two‐stage approach: the first stage, predicts the probability of an M&A based on the market valuation variables; the second stage, regresses the post‐M&A firm performance on the predicted probability of a merger or acquisition from the first stage and other control variables.

Findings

Market valuation has a significant influence on corporate acquisition decisions, particularly for those firms whose compensation packages include less managerial equity ownership, more executive stock options and no long‐term incentive plans, and in those firms where CEOs are serving on the board of directors. The value‐destroying acquisitions made by these types of managers are likely to be financed using the firms' stocks, executed with high premiums and undertaken during periods of high market valuation.

Originality/value

The main finding suggests that market‐driven acquisitions could be value destroying when managers engage in opportunistic acquisitions for reasons of self‐interest. Managerial myopia, overconfidence, misaligned incentives, empire‐building motives and poor corporate governance can all exacerbate the agency problem of market‐driven acquisitions.

Details

Review of Accounting and Finance, vol. 8 no. 4
Type: Research Article
ISSN: 1475-7702

Keywords

Article
Publication date: 1 August 2005

F.M.E. Uzoka and O.A. Ijatuyi

Acquisition of books, serials and other educational materials by libraries involves a complex decision process; especially when there are many books to choose from and the…

2409

Abstract

Purpose

Acquisition of books, serials and other educational materials by libraries involves a complex decision process; especially when there are many books to choose from and the resources are meager. Attempts have been made in the past to take decisions concerning library acquisitions using structured information such as cost, availability of funds, and number of copies needed by the library, author and year of publication. The purpose of this research is to provide a framework for the combination of both structured and unstructured information in the library acquisitions decision process.

Design/methodology/approach

The research methodology involves the design of a knowledge‐based system, which is powered by the classical method of the analytical hierarchy process (AHP), which carries out a pairwise comparison (PWC) of acquisition decision variables.

Findings

The results of the study show that decision variables involved in library acquisitions can be grouped and hierarchically structured. The application of the pairwise comparison matrix produces eigenvectors that aid in stepwise refinement of the results of the conventional acquisition process in order to achieve some level of optimality in the decision process.

Originality/value

The framework provided in this study could be useful for library professionals and information scientists as a veritable library decision support tool that applies both structured and unstructured information in the acquisition decision process.

Details

The Electronic Library, vol. 23 no. 4
Type: Research Article
ISSN: 0264-0473

Keywords

Article
Publication date: 19 April 2023

Hyejin Cho and Yoon-Suk Baik

The purpose of this paper is to provide an understanding of how backward intelligence and forward-looking intelligence interact and impact decision making in the context of…

Abstract

Purpose

The purpose of this paper is to provide an understanding of how backward intelligence and forward-looking intelligence interact and impact decision making in the context of acquisitions. Past experiences provide essential information used for decision making, however, the ex ante nature of premiums, which require forward-looking intelligence, can change how experience is utilized.

Design/methodology/approach

The authors utilize a fixed effects model to examine acquisitions conducted by US public firms during the period of 1993–2015.

Findings

The authors find that as past acquisition returns increase, acquirers are likely to adopt a backward-looking perspective of past performance that leads to higher premiums, as opposed to a forward-looking perspective of consequences. The relationship between past performance and premium is moderated by differences in the target's industry and the target's slack levels relative to the acquirer. The study findings suggest that forward-looking intelligence can alter attention and ultimately behavior based on backward-looking intelligence. By focusing on how these two contrasting perspectives interact, our findings extend research on the tension between backward-looking and forward-looking logics of decision making.

Originality/value

Unlike extant literature of acquisition premiums that have mainly focused on the valence and magnitude of experience, the authors focus on how backward-looking decision behavior changes when the firm's expectations of the future are incorporated. The authors empirically demonstrate how a lower acquisition premium is achieved when the decision of how much to pay is an interaction of the past and the future.

Details

Journal of Strategy and Management, vol. 16 no. 3
Type: Research Article
ISSN: 1755-425X

Keywords

Book part
Publication date: 21 July 2004

Kwang-Hyun Chung

Acquisition is one of key corporate strategic decisions for firms’ growth and competitive advantage. Firms: (1) diversify through acquisition to balance cash flows and spread the…

Abstract

Acquisition is one of key corporate strategic decisions for firms’ growth and competitive advantage. Firms: (1) diversify through acquisition to balance cash flows and spread the business risks; and (2) eliminate their competitors through acquisition by acquiring new technology, new operating capabilities, process innovations, specialized managerial expertise, and market position. Thus, firms acquire either unrelated or related business based on their strategic motivations, such as diversifying their business lines or improving market power in the same business line. These different motivations may be related to their assessment of market growth, firms’ competitive position, and top management’s compensation. Thus, it is hypothesized that firms’ acquisition decisions may be related to their industry growth potential, post-acquisition firm growth, market share change, and CEO’s compensation composition between cash and equity. In addition, for the two alternative acquisition accounting methods allowed until recently, a test is made if the type of acquisition is related to the choice of accounting methods. This study classifies firms’ acquisitions as related or unrelated, based on the standard industrial classification (SIC) codes for both acquiring and target firms. The empirical tests are, first, based on all the acquisition cases regardless of the firm membership, and then, deal with the firms acquiring only related businesses or unrelated businesses exclusively.

The type of acquisitions was more likely related to industry growth opportunities, indicating that the unrelated acquisition cases are more likely to be followed by higher industry growth rate than the related acquisition cases. While there were a substantially larger number of acquisition cases using the purchase method, the related acquisition cases used the pooling-of-interest method more frequently than in the unrelated acquisition cases. The firm-level analysis shows that the type of acquisition decisions was still related to acquiring firms’ industry growth rate. However, the post-acquisition performance measures, using firm’s growth and change in market share, could support prior studies in that the exclusive-related acquisitions helped firms grow more and get more market share than the exclusive-unrelated acquisitions. CEO’s compensation composition ratio was not related to the types of acquisition.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-0-76231-118-7

Article
Publication date: 1 February 2013

Fei Peng, Lili Kang and Jun Jiang

This paper aims to investigate the role that institutional shareholders play in acquisition decisions using micro data in the Chinese stock market during 2003‐2008.

Abstract

Purpose

This paper aims to investigate the role that institutional shareholders play in acquisition decisions using micro data in the Chinese stock market during 2003‐2008.

Design/methodology/approach

Acquisition decision is the selection and coordination process of shareholders as strategic alliances, which is determined by corporate acquisition ability, composition of institutional shareholders and concentration of tradable share (TS) in China. The paper uses the Heckman selection model to surmount the selection biases in acquisition decision.

Findings

The paper finds that institutional shareholders, including qualified foreign institutional investors (QFII), social security funds (SSF), security firms (SF) and security investment funds (SIF), as well as TS concentration, affect acquisition probability rather than annual acquisition scale. SSF, SIF and TS concentration can increase acquisition probability while QFII decreases it.

Research limitations/implications

This paper suggests a strategic alliance model in which institutional shareholders choose whether to collaborate with controlling shareholders and management. However, detailed information of the selection and coordination process is unavailable in the authors' data. Future research need provide more evidence of this postulate.

Originality/value

The paper contributes to the published literature in three ways. First, it offers a model to understand the selection and coordination process of acquisition decision. Second, it investigates whether institutional shareholders could effectively monitor annual acquisition scale. Third, it identifies the Heckman selection problem that institutional shareholders could affect PLCs' acquisition decision on whether to acquire rather than how much to acquire.

Details

Management Decision, vol. 51 no. 1
Type: Research Article
ISSN: 0025-1747

Keywords

Book part
Publication date: 29 August 2007

Amy L. Pablo

This chapter outlines purpose, procedure, benefits and limitations of the policy capturing methodology. It further presents an example of use of the methodology.

Abstract

This chapter outlines purpose, procedure, benefits and limitations of the policy capturing methodology. It further presents an example of use of the methodology.

Details

Research Methodology in Strategy and Management
Type: Book
ISBN: 978-0-7623-1404-1

Book part
Publication date: 30 November 2020

Cyndi Man Zhang

This chapter presents a personal research journey starting from my interest in firms’ decision-making within the tradition of the behavioral theory of the firm to discovering…

Abstract

This chapter presents a personal research journey starting from my interest in firms’ decision-making within the tradition of the behavioral theory of the firm to discovering mergers and acquisitions (M&A) as an ideal decision context to advance the theory. Using my two articles published in the Academy of Management Journal as examples, I showcase how to leverage the specific attributes of M&A together with the institutional context in which they occur to develop and test new theories. Each paper addresses a distinctive research question and provides a unique angle of theoretical insights to the theory of decision-making. In particular, I was able to dig deeper into the mechanisms of institutional logic, power, and coalition building for explaining how firms make strategic decisions, all owing to the significance and versatility of M&A.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-83982-329-9

Keywords

Article
Publication date: 1 March 2006

Federal agencies are relying increasingly on contractors to perform their missions. With hundreds of billions of tax dollars spent each year on goods and services, it is essential…

Abstract

Federal agencies are relying increasingly on contractors to perform their missions. With hundreds of billions of tax dollars spent each year on goods and services, it is essential that federal acquisition be handled in an efficient, effective, and accountable manner. The Government Accountability Office (GAO), however--as well as other accountability organizations, inspectors general, and the agencies themselves--continue to identify systemic weaknesses in key areas of acquisition. In fact, the acquisition function at several agencies has been on GAO's high-risk list, which identifies areas in the federal government with greater vulnerability to fraud, waste, abuse, and mismanagement. In January 2005, we added interagency contracting to this list. Far too often, the result of poor acquisitions has been an inability to obtain quality goods and services on time and at a fair price. We can no longer afford such outcomes. Given current fiscal demands and the fiscal challenges we are likely to face in the 21st century, the federal government must improve its ability to acquire goods and services in a cost-effective manner. GAO developed this framework to enable high-level, qualitative assessments of the strengths and weaknesses of the acquisition function at federal agencies. Such assessments can help senior agency executives identify areas needing greater management attention, and enable accountability organizations (including GAO) to identify areas requiring more focused follow-up work. The framework consists of four interrelated cornerstones that our work has shown are essential to an efficient, effective, and accountable acquisition process: (1) organizational alignment and leadership, (2) policies and processes, (3) human capital, and (4) knowledge and information management. The framework supports an integrated evaluation approach, but each of these cornerstones can stand alone so users of this framework may tailor evaluations to an agency's specific needs.

Details

Journal of Public Procurement, vol. 6 no. 1/2
Type: Research Article
ISSN: 1535-0118

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