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This paper investigates how a firm's human resource capability can affect the deployment and effectiveness of corporate mergers and acquisitions strategy.

Mergers and acquisitions (M&A) is treated as a long‐term strategic orientation based on human resource advantage rather than a tactic to pursue short‐term goals. Using a sample of 267 US banking firms, the main and interaction effects of M&A intensity, HR capability, and in‐state propensity on four firm performance measures were examined.

The findings confirm that banking M&A could be very effective when the firm had high HR capability. Evidence was also found that HR capability had a direct impact on firm performance. Although in‐state M&A strategy was in general superior to out‐of‐state M&A strategy, a firm with excellent HR capability might narrow the performance difference between in‐state and out‐of‐state M&A.

An obvious drawback of using this sample of banking firms is that it raises questions about the generalizability of these findings to smaller financial firms and firms in other industries. This study considers firms having at least one M&A over a three‐year period, so we should not generalize our findings to those firms preferring to use internal growth strategies or greenfield start‐ups.

The main message of this paper is that human resource capability is critical for M&A strategy to be effective.

By extending previous investigations which showed that M&A strategy and HR capacity should be independently treated, this study highlights the critical role of internal HR capability in performance implications of M&A strategy.

Most studies explore the success of mergers and acquisitions through ex ante analyses based on the compatibility of resources and capabilities between the acquirer and target. As more than half of them fail, there seems to be room for enhancing our understanding of when and how acquisitions can actually improve firms' competitiveness. Diverging from these conventional approaches, the authors posit that attention should be at the strategic level. The purpose of this paper, therefore, is to explore the existence of compatibility between acquirers’ and targets’ competitive strategies and its effect on post-acquisition business performance.

Through the Thomson Reuters Eikon financial and acquisition databases, the authors built a unique data panel of 174 acquirer–target matched acquisitions in the manufacturing sector from 24 different countries between 2000 and 2020. The authors used a two-step System-GMM approach to address the hypotheses proposed in this paper. This methodology allowed to isolate and easily compare the differential effects of each possible combination of strategic similarity and dissimilarity between the target and acquiring company on the latter’s post-acquisition strategies.

The need to unravel the motives behind successful acquisitions has gained enormous interest in recent years among academics and managers to improve – or maintain – firm competitiveness. Through a panel data of 174 acquisitions among manufacturing firms (2000–2020), this study shows that differentiated firms improve their business performance by acquiring firms with similar strategies; nevertheless, their performance worsens if the acquired firm follows a cost-leadership strategy. Concerning acquirers with a cost-leadership strategy, the lack of clear behavioral patterns suggests that the lower knowledge absorption capacity associated with these firms might be a decisive factor in being able to assimilate and efficiently exploit the acquired firm's knowledge.

Overall, this approach offers a new and valuable perspective for practitioners because it improves understanding of the possible causes of merger failure and opens new attentions to consider in maximizing success and long-term competitiveness. The results of this study bring, thus, an unexpected result to this research: the importance of the acquirer’s strategy beyond the similarity or dissimilarity of the strategies of the acquirer and the acquired company.

More and more firms view the acquisition of foreign firms as an important component of their internationalization strategy. An important but frequently overlooked condition for the successful implementation of such a strategy is the consistent and appropriate integration of human resource management into the overall internationalization strategy (global, multilocal, hybrid). Offers guidelines on the significance and contents of human resource management practices in this context. The emphasis is on the strategically appropriate integration of the target organization with the acquiring corporation.

The students should be able to understand the potential and competitive advantage of community-based business model. The students should be able to familiarise themselves with the concept of entrepreneurship through acquisitions. The students should be able to decide when a firm should use acquisition as a key driver coupled with fewer efforts on organic growth or vice-versa. The student should be able to evaluate the success or failure acquisition as a growth strategy. The student should be able to evaluate the key metrics and other variables in the acquisition of target companies. The students should be able to wear the shoes of the protagonist and resolve the dilemma.

The teaching case looks at the dilemma of Sairee Chahal. Chahal is the founder of SHEROES, an online community for women. SHEROES started as an online career ecosystem for women. As time progressed Chahal witnessed conversations beyond career and moved towards women-centric themes. Chahal decided to pivot it into an online community for women. Her growth strategy for SHEROES has primarily been driven by serial acquisitions coupled with dispersed efforts on organic growth. In the meanwhile, Chahal had harboured an ambition to bring 100 million users to SHEROES by the year 2024. In a period spanning from 2016–2020, SHEROES acquired six niche women-centric companies. SHEROES grew to be a community of 1 million users to 20+million women users by 2020. On the other hand, the industry leader, Mogul used a diametrical approach to grow the platform into 30+million users by 2020. It had primarily used organic growth strategies such as content development, designing courses, referrals and many more. However, Chahal found herself in a dilemma when a reporter posed a question to Chahal. Chahal’s growth strategy depended on acquisitions, coupled with less effort in organic growth. Conversely, Mogul grew primarily via organic growth strategies. The reporter’s question forced her to question and revisit her growth strategies. She wondered if a target of 100 million users could be achieved with the acquisition as a major driver and less effort invested in organic growth or whether it might be better to make organic growth the key growth strategy while pushing acquisitions to the back seat. The uniqueness of the case lies in the female protagonist who is trying to build a larger-than-life community primarily via acquisitions with little effort on organic growth. Such a phenomenon has rarely been explored in teaching cases. The case is based on secondary data and the information is available in the public domain.

The case is designed for post-graduate students in the entrepreneurship curriculum. Within entrepreneurship, it is well-suited for use in specialised courses on “growth of an entrepreneurial venture” or “entrepreneurial strategies”. An instructor may take it up in the middle of the module as students would have familiarised themselves with various growth strategies. An instructor may use the case for a very niche course such as entrepreneurship through acquisition. An instructor may take it up as an introductory case in such a course. It can also be used in the executive programme aimed at “women entrepreneurship”, “community-based model” and “serial acquisitions” to teach how women or founders create and grow entrepreneurial ventures with acquisitions or communities as their focal tenet. The case has been tested in the authors’ post-graduate student’s entrepreneurship course. An instructor can use it when the instructor wants to discuss the various growth strategies available to an entrepreneurial firm.

Teaching Notes are available for educators only.

CSS 3: Entrepreneurship.

Contingency models have enabled researchers to develop system‐based decision‐making approaches to organizational studies. Two contingency decision‐making models ‐ rational and political choice ‐ have been applied to identify those organizational characteristics and strategic leadership qualities associated with acquisitive growth through “absorption” and “diversification”. A study of the International Telephone and Telegraph Company (ITT) organizational growth strategies from 1920 to 1997 reveals that senior managers adopt the rational decision‐making model when organizational growth through acquisition involves absorption, and the political model when organizational growth calls for diversification. A contingency historical study of ITT demonstrates two important periods in ITT’s organizational life cycles ‐ one of growth (1920‐early 1970s) and one of consolidation/stability (from mid‐1970 to the present time). Contingency models indicate that differences in organizational growth strategies arise due to differences in environmental factors characterizing each period as organizations pass through several stages of growth in their life cycles.

This qualitative study, which is based on multiple cases, aims to analyze the pattern of acquisitions by Brazilian multinationals, such as Gerdau in the steel industry, Petrobrás in the oil and gas industry and Vale in the mining industry, to infer the likely knowledge motivations underlying the acquisitions of these firms.

The analyses of the three cases, with secondary data collected for the period from 2003 to 2007, classify the acquisitions according to the extent of the exploration or exploitation of resources and in two dimensions: business knowledge and location knowledge, in accordance with Ferreira’s (2005) model based on March (1991) and Chandler (1962).

The findings showed that the acquisitions by Gerdau, Petrobrás and Vale favored the exploitation of their resources and capabilities developed in the home market more than the exploration of new resources and capabilities. Regarding the ownership acquired, this study failed to observe the likely expected pattern of acquiring a majority stake for sustaining an exploitation strategy or a minority stake for sustaining an exploration strategy.

This study makes three contributions. First, the need to analyze the potential gains of new knowledge acquisition in domestic and cross-border expansion. Second, considering the opportunity to explore new resources and knowledge even for firms in commodity industries. Third, considering how the equity held is a structural solution that needs to be adjusted to the knowledge strategy.

Research examining the joint role of serial acquisitions and subsidiary autonomy in holistic value provision within servitizing industrial firms is scarce. Thus, this paper aims to investigate the role of serial acquisition and subsidiary autonomy in providing value within servitizing industrial networks.

A conceptual framework is developed based on the case study of a large Swedish industrial group specializing in selling industrial products and providing industrial solutions to business customers through its numerous subsidiaries.

The analysis of 14 interviews with the five subsidiaries and seven customer firms and secondary data reveals interesting findings concerning the role of serial niche acquisition strategy and subsidiary autonomy in customer value provision in servitizing organizations. In particular, the authors find that the role of acquisitions in industrial firms extends beyond growth to customer sensing and proximity. Likewise, the authors find that subsidiary autonomy facilitates value provision to customers in industrial networks.

The paper provides a more nuanced understanding of how serial acquisitions and subsidiary autonomy are intertwined and jointly affect industrial firms’ value provision activities amidst the servitization transition in an intraorganizational network.

To achieve business success in a competitive market, hospitality firms are urged to search for different ways to enhance the firms' innovation capabilities. Drawing on dynamic capability theory, this study examined the role of entrepreneurial leadership in promoting product and process innovation through the mediating effect of innovation strategy and the moderating effect of knowledge acquisition.

Data were collected through a time-lagged (two waves, two months apart) survey from 137 managers and 322 employees working in 103 Vietnamese hotels. Structural equation modeling (SEM) was used to test the proposed hypotheses in our conceptual model.

The findings revealed that entrepreneurial leadership is positively associated with both product and process innovation. In addition, these relationships are mediated by innovation strategy. While the relationship between innovation strategy and product innovation is moderated by knowledge acquisition, evidence was not obtained for the moderation effect of knowledge acquisition on the link between innovation strategy and process innovation.

The findings advance innovation and leadership literature by identifying the roles of entrepreneurial leaders in managing an organization as a dynamic system and developing appropriate innovation strategy to adapt to rapidly changing environments. In addition, this study offers important implications for hospitality firms that are investing in innovation activities and are seeking ways to promote the firms' innovation of products and processes.

The purpose of this paper is to enlighten the intriguing process of industry asset consolidation. It is critical for firms to manage their business acquisitions strategically for survival in this industry life cycle process, which develops through multiple company mergers. The companies extensively acquiring industry assets have utilized acquisition programs consisting of both pre-acquisition strategizing and post-acquisition integration; however, the existing literature on acquisition programs focuses on post-acquisition integration activities. This study aims to bridge this gap.

This study focuses on pre-acquisition strategizing of acquisition programs and proposes a model in which an acquiring company could manage its acquisitions for industry asset consolidation over the industry evolution.

Empirically, in the multi-case study of telecommunications infrastructure companies, the authors collect an extensive set of archival records accumulated over the whole industry life-cycle, spanning more than 30 years, and they apply a qualitative data analysis to reveal strategic actions within the companies.

The discoveries elaborate on activities comprising the acquisition process model: social legitimacy, strategic alignment, resource fulfillment, consolidation pursuit and merging.

The counterintuitive findings are that the companies strived to ensure legitimacy early in the telecommunication infrastructure markets before they reached strategic alignment with their owners.

The results extend the understanding of industry asset consolidation as an organization-level phenomenon and show how contextual factors connected to industry life-cycle phases, such as regulatory regimes and financial cycles and industry evolution, influence the attributions of an acquisition program.

This paper explores how the manufacturer’s strategic choice (acquisition or investment) impacts product quality in a supply chain comprising two complementary suppliers and a common manufacturer.

The manufacturer faces six strategic choices to improve product quality: acquiring or investing in the high-capable supplier, the low-capable supplier, or both. As the Stackelberg leader, the manufacturer determines which strategy is adopted, while suppliers are separately responsible for components’ quality and wholesale prices. The authors use game theory and calculate the model with Mathematica.

The authors develop analytical models to analyze how acquisition costs, investment proportions, component importance and quality improvement coefficients influence decision-makers. The results show that the highest quality may not benefit the manufacturer. Investing in or acquiring a low-capable supplier is better than a high-capable supplier under certain conditions. If the gaps between two suppliers’ quality improvement coefficients and the importance of two components are dramatic, the manufacturer should choose an investment strategy.

This study contributes to the complementary supply chain management by comparing two kinds of strategies-acquisition and investment, with a high-capable supplier and a low-capable supplier.