ZHOU – SYNERGY, COORDINATION COSTS + DIVERSIFICATION CHOICES
- Trade-off between synergy gains and coordination costs shaping firms diversification choices
o Related diversification driven by potential synergies from sharing inputs, this can create
coordination costs
- Input sharing = double edged sword à enables economies of scope, increases managerial
complexity à must when inputs are indivisible (input indivisibility)
- Complexity limits coordination of shared resources, reduces likelihood of adding more related
activities
- Input similarity positively predicts diversification likelihood
- Complexity negatively predicts diversification likelihood
o Negative interaction between the two, complexity is stronger so makes it stronger
- Avoid related diversification when marginal coordination costs surpass marginal synergy benefits
- Unrelated diversification explained by risk reduction, agency motives, imitation
- Inverted U-shape for performance
GIUSTIZIERO – HYPERSPECIALIZATION AND HYPERSCALING – A RBV
- Why digital firms narrow in scope (hyper specialization) and large in scale (hyperscaling) à in
contrast to industrial firms combine both
o Scalability = capacity to create more value at larger scales
§ Value increases as used more
- Digital resources highly scalable due to low marginal costs + network effects
o Fungibility (=reusability) = ease with which resources can be redeployed
- Hyper specialization = tendency to remain narrowly focused
o Diverting = high costs
- Hyperscaling = exponential growth of specialized activity
o Enabled by scalable resources + markets
- Scale + scope reinforce eachother (narrower = faster scaling) not the costs
MOATTI – PERFORMANCE EFFECTS OF EFFICIENCY AND BARGAINING IN
HORIZONTAL GROWTH STRATEGIES
- Two distinct performance effects of horizontal growth
o Efficiency gains = cost savings, synergies, rationalization
o Bargaining power = stronger position towards suppliers, customers and regulators
- Examine whether M&A (BUY) and organic growth (BUILD) produce these differently
- Impact depends on strategic logic + chosen mode
- Endogeneity = firms self-select the mode, empirically diffuclt
- M&A (BUY)
o Bargaining power over suppliers à p-c
o Interfirm learning
o Efficiency losses
- Organic growth (BUILD)
o Efficiency gains à operating costs/sales
o Optimal combination of assets
o Bargaining limited
- M&A = stronger bargaining power, weaker efficiency (2 and 5 years)
- Organic growth = weaker bargaining power, stronger efficiency (overtime)
, CASTANER – GOVERNANCE MODE VS GOVERNANCE FIT – MAKE OR ALLY FOR
INNOVATION
- How governance mode and fit affect performance of product innovations
o Governance mode
§ Autonomous = bears all costs + risks and full decision making
§ Collaborative = cost, risks, decision making are shared
o Governance fit = alignment between chosen mode and resource endowment +
requirements
- Both mode and fit have individual and direct effect on performance
- Endogeneity issue = firms self-select mode
- Collaborative à higher sales, slower time-to-market
- Autonomy à lower sales, faster time-to-market
- Governance fit à when resources + requirements align à performance improved in both
dimensions
RABIER – ACQUISITION MOTIVES AND THE DISTRIBUTION OF ACQUISITION
PERFORMANCE
- How different acquisition motives relate to distribution of acquisition performance
- Acquisition motives
o Operating synergies = gains from combining resources (recombination)
o Financial synergies = gains from combining financial structures
- Operating synergies are less imitable, high value creating
- Financial synergies are easy imitable, less complex
- Public sources + managers surveys
- DV = buy-hold abnormal return (2 years post)
- Financial markets are assumed to anticipate
- Quantile regression
- Operating synergies à higher upside and downside (greater variance)
- Financial synergies à narrower distribution, lower upside and downside
o Prior alliance = no effect
o Prior acquisition = reduces downside of operating synergies
o Geographic proximity = reduces downside of operating synergies
- Trade-off between synergy gains and coordination costs shaping firms diversification choices
o Related diversification driven by potential synergies from sharing inputs, this can create
coordination costs
- Input sharing = double edged sword à enables economies of scope, increases managerial
complexity à must when inputs are indivisible (input indivisibility)
- Complexity limits coordination of shared resources, reduces likelihood of adding more related
activities
- Input similarity positively predicts diversification likelihood
- Complexity negatively predicts diversification likelihood
o Negative interaction between the two, complexity is stronger so makes it stronger
- Avoid related diversification when marginal coordination costs surpass marginal synergy benefits
- Unrelated diversification explained by risk reduction, agency motives, imitation
- Inverted U-shape for performance
GIUSTIZIERO – HYPERSPECIALIZATION AND HYPERSCALING – A RBV
- Why digital firms narrow in scope (hyper specialization) and large in scale (hyperscaling) à in
contrast to industrial firms combine both
o Scalability = capacity to create more value at larger scales
§ Value increases as used more
- Digital resources highly scalable due to low marginal costs + network effects
o Fungibility (=reusability) = ease with which resources can be redeployed
- Hyper specialization = tendency to remain narrowly focused
o Diverting = high costs
- Hyperscaling = exponential growth of specialized activity
o Enabled by scalable resources + markets
- Scale + scope reinforce eachother (narrower = faster scaling) not the costs
MOATTI – PERFORMANCE EFFECTS OF EFFICIENCY AND BARGAINING IN
HORIZONTAL GROWTH STRATEGIES
- Two distinct performance effects of horizontal growth
o Efficiency gains = cost savings, synergies, rationalization
o Bargaining power = stronger position towards suppliers, customers and regulators
- Examine whether M&A (BUY) and organic growth (BUILD) produce these differently
- Impact depends on strategic logic + chosen mode
- Endogeneity = firms self-select the mode, empirically diffuclt
- M&A (BUY)
o Bargaining power over suppliers à p-c
o Interfirm learning
o Efficiency losses
- Organic growth (BUILD)
o Efficiency gains à operating costs/sales
o Optimal combination of assets
o Bargaining limited
- M&A = stronger bargaining power, weaker efficiency (2 and 5 years)
- Organic growth = weaker bargaining power, stronger efficiency (overtime)
, CASTANER – GOVERNANCE MODE VS GOVERNANCE FIT – MAKE OR ALLY FOR
INNOVATION
- How governance mode and fit affect performance of product innovations
o Governance mode
§ Autonomous = bears all costs + risks and full decision making
§ Collaborative = cost, risks, decision making are shared
o Governance fit = alignment between chosen mode and resource endowment +
requirements
- Both mode and fit have individual and direct effect on performance
- Endogeneity issue = firms self-select mode
- Collaborative à higher sales, slower time-to-market
- Autonomy à lower sales, faster time-to-market
- Governance fit à when resources + requirements align à performance improved in both
dimensions
RABIER – ACQUISITION MOTIVES AND THE DISTRIBUTION OF ACQUISITION
PERFORMANCE
- How different acquisition motives relate to distribution of acquisition performance
- Acquisition motives
o Operating synergies = gains from combining resources (recombination)
o Financial synergies = gains from combining financial structures
- Operating synergies are less imitable, high value creating
- Financial synergies are easy imitable, less complex
- Public sources + managers surveys
- DV = buy-hold abnormal return (2 years post)
- Financial markets are assumed to anticipate
- Quantile regression
- Operating synergies à higher upside and downside (greater variance)
- Financial synergies à narrower distribution, lower upside and downside
o Prior alliance = no effect
o Prior acquisition = reduces downside of operating synergies
o Geographic proximity = reduces downside of operating synergies
