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Corporate acquisitions have received less attention than the “make-versus-buy” paradigm problem within transaction cost economics. However, recent research that has been conducted on acquisitions is a valuable source of ideas that can be put to use in organizational governance studies more broadly. In this paper, I provide a brief review of the M&A literature with the aim of developing two arguments. First, information economics has provided important theoretical underpinnings for this literature and complements transaction cost economics by emphasizing the ex ante exchange hazards that economic actors face. Second, research using information economics offers the potential to enrich the organizational economics research agenda in strategic management and vice versa.

We discuss recent developments in real options theory and its applications to strategic management research, examine the potential difficulties in implementing real options in theory and practice, and propose several areas for future research. Our review shows that real options theory has provided substantial insights into investment and exit decisions as well as into the choice of investment modes. In addition, extant research studies have contributed significantly to our understanding of whether and how organizations can benefit from real options. Future research that addresses difficulties in applications will further advance both real options theory and practice in strategic management. We call for future generations of research to enhance the impact of real options as an emerging dominant conceptual lens in strategic management.

We provide a comprehensive synthesis and extension of the real option (RO) literature on joint ventures (JVs), contributing in three main areas. First, we examine major alternative theoretical perspectives on JVs – learning, bargaining, transaction cost and agency theory – to elaborate how they complement or contradict RO predictions. Second, we compare arguments and variables used to explain different JV stages – initial RO explicitness and equity shares, JV stability, and performance consequences – and highlight research opportunities. Third, we discuss and extend research about behavioral aspects of making RO (JV) investments. Overall, we offer new predictions and suggestions for a better integration within the RO literature, and between RO and related literatures on JVs.

In recent years, alliances have become even more popular than mergers and acquisitions. Alliance formation has led to the emergence of interconnected firms, which are embedded in alliance networks. This paper offers a theory of network resources to evaluate the competitive advantage of interconnected firms. It distinguishes shared resources from non-shared resources, identifies various types of rent, and illustrates how firm-, relation-, and partner-specific factors determine the contribution of network resources to the rents that interconnected firms extract from their alliance networks. This paper revisits traditional assumptions of the resource-based view and suggests that the nature of relationships may matter more than the nature of resources in creating and sustaining the competitive advantage of interconnected firms.

This paper categorizes and critiques the empirical research strategies that have been employed to test real options theory. Existing research has sought to detect valuable options in firms’ strategic investments as well as to investigate the payoffs from these investments. Our review highlights some of the evidence that has accumulated in recent years for real options theory. We flag some of the most important challenges and tradeoffs associated with the use of different empirical research approaches for testing real options theory in strategic management. The paper concludes by offering a number of research priorities to advance the theory by probing its descriptive validity as well as by addressing its normative aspirations to bridge corporate finance and strategy.

Alliances often turn into acquisitions (i.e., one alliance partner is acquired by the other). In these transitional governance trajectories, geography-related factors can play a crucial role. Factors like location and distance can notably influence the decision to acquire the alliance partner, as well as the performance implications of such a transition. However, existing studies on transitional governance tend to underemphasize the geographic dimension of the phenomenon. In this chapter, we take a first step toward connecting the field of transitional governance and the discipline of economic geography, which does emphasize location and distance as critical determinants of economic activities. We discuss how economic geography can inform the field of transitional governance and propose some promising avenues for future studies linking organization, place, and space in transitional governance trajectories.

Scholars of business, economics, and law have long recognized that rights to intellectual property (IP) intimately shape innovative activity and the pursuit of profits. More than 60 years ago, Michal Polanyi voiced the following concerns about awarding property rights to creations of the “intellect”:The law…aims at a purpose which cannot be rationally achieved. It tries to parcel up a stream of creative thought into a series of distinct claims, each of which is to constitute the basis of a separately owned monopoly. But the growth of human knowledge cannot be divided into such sharply circumscribed phases. Ideas usually develop gradually by shades of emphasis, and even when, from time to time, sparks of discovery flare up and suddenly reveal a new understanding, it usually appears that the new idea has been at least partly foreshadowed in previous speculations. (Polanyi, 1944, pp. 70–71)

Political risk is a complex phenomenon. This complexity has incentivized scholars to take a piecemeal approach to understanding it. Nearly all scholarship has targeted a single type of political risk (expropriation) and, within this risk, a single type of firm (MNCs) and a single type of strategic mechanism through which that risk may be mitigated (entry mode). Yet “political risk” is actually a collection of multiple distinct risks that affect the full spectrum of foreign firms, and these firms vary widely in their capabilities for resisting and evading these risks. We offer a unified theoretical model that can simultaneously analyze: the three main types of political risk (war, expropriation, and transfer restrictions); the universe of private foreign investors (direct investors, portfolio equity investors, portfolio debt investors, and commercial banks); heterogeneity in government constraints; and the three most relevant strategic capabilities (information, exit, and resistance). We leverage the variance among foreign investors to identify effective firm strategies to manage political risk. By employing a simultaneous and unified model of political risk, we also find counterintuitive insights on the way governments trade off between risks and how investors use other investors as risk shields.