SOLVING THE ALLY-VERSUS-ACQUIRE DILEMMA THROUGH THE DUAL LENSES OF SUBJECTIVE AND OBJECTIVE VIEWS

Chiung-Hui Tseng

doi:10.3846/16111699.2017.1312512

Abstract

Nowadays many firms seek hard-to-imitate assets via allying with or acquiring other firms that own desired resources. As such, how to choose between alliances and acquisitions becomes a critical decision, and one important determinant is interfirm factors. This study probes three crucial yet underexplored interfirm differences, and develops scales to capture managers’ perceptions of the differences that, based on managerial cognition literature, dictate the ally-versus-acquire choice. Further, we argue that managers adjust their judgement across varying objective conditions. Each perceived difference is thus paired with a moderator identified respectively from the resource-based view, competitive dynamics, and collaborative capability literature. Evidences on Taiwanese firms show that a larger resource-deployment difference enhances acquisition likelihood, while greater differences in marketing praxis and human resource management increase alliance formation. Moreover, the resource-deployment difference leads to alliances for relatively younger partners, and the difference in human resource management favors acquisitions when focal firms have more interfirm governance experience.

Highlights

Alliances and acquisitions are vehicles through which firms access hard-to-imitate assets owned by others (Cuypers et al 2017; Wassmer et al 2017)
We identify three critical organizational routines, and argue that the effects of the three perceived interfirm differences are moderated by respective objective conditions
Our binary dependent variable dictates us to use binomial logistic regression in which positive coefficients signify that independent variables or interaction terms increase the probability of choosing acquisitions over alliances

Summary

Introduction

Alliances and acquisitions are vehicles through which firms access hard-to-imitate assets owned by others (Cuypers et al 2017; Wassmer et al 2017) Both practices entail interfirm interaction and coordination, alliances (whether equity- or nonequity-based) are exercised by cooperation between firms that maintain their independent identities and ownerships (Lioukas et al 2016; Reuer, Devarakonda 2016), while acquisitions are executed via internalization in which a target firm surrenders its ownership and control to the acquirer (Glendening et al 2016; Graffin et al 2016). Solving the ally-versus-acquire dilemma through the dual lenses of subjective and objective views rely heavily on objective proxies to capture the differences (Wang, Zajac 2007; Yang et al 2010)

Methods

Results

Conclusion