Summary of the papers
L2: Diversification benefits & costs
Synergy, coordination costs, and diversification choices (Zhou, 2001)
Deductive:
H1: A firm is less likely to diversify into a new business when its existing business lines are
more complex
H2: a firm’s likelihood of diversifying into a new business decreases more with the complexity
in the firm’s existing business lines if they share more inputs with the new business
Conclusion: Similarity of inputs increases the probability that the firm diversifies into the target
business, but the firm is less likely to diversify into any new business when it has greater complexity
Does the diversification-firm performance relationship change over time? A meta-analytical
review(Schommer et al., 2019)
Deductive:
H1. Overall levels of diversification have decreased over time (partially supported)
H2: The relationship between diversification and firm performance has become more positive
over time
H3: the relationship between unrelated diversification and firm performance has improved
more over time than the relationship between related diversification and firm performance
Conclusion: Unrelated diversification seems to have declined in a linear fashion (Inherent inverted U-
shaped relationship historically true, but the right hand side has become flatter over time). Related
diversification appears to have increased again after initial decrease
L3: expansion mode choices
Ambidexterity under scrutiny: exploration and exploitation via internal organization, alliances, and
acquisitions (Stettner & Lavie 2014)
Deductive:
H1: balancing exploration and exploitation within a mode of operation (internal organization,
alliances, or acquisitions) will undermined firm performance relative to concentrating on
either exploration or exploitation in that mode
H2: balancing exploration and exploitation across modes of operation will enhance firm
performance relative to concentrating on either exploration in both modes or exploitation in
both modes
H3: Balancing exploration and exploitation across modes of operations will enhance firm
performance more than balancing exploration and exploitation within the corresponding
modes of operation
H4: When exploration and exploitation are balanced across modes of operation, exploration
will enhance firm performance more via an externally oriented mode than via an internally
oriented mode; likewise, exploitation will enhance firm performance more via an internally
oriented mode than via an externally oriented mode.
,Conclusion: Findings show how a firm enhances its performance when exploring in one mode while
exploiting in another (across modes) especially when balancing these activities across the internal
organization and acquisition mode. Explore via externally oriented modes (exploration) while
exploiting via internally oriented modes (internal organization), with alliances as an intermediate
alternative
Governance mode vs governance fit: performance implications of make-or-ally choices for product
innovation in the worldwide aircraft industry (Castañer et al., 2014)
Deductive:
H1: Product innovations undertaken through horizontal collaboration (H1a) achieve greater
unit sales and (H1b) incur longer time-to-market than product innovations undertaken
through autonomous governance
H2: the better the fit between governance mode chosen and the resource endowment of the
firm, as well as the resource requirements of a new product, (H2a) the greater the new
product’s unit sales and (H2b) the shorter its time-to-market
Conclusion: Firms whose product innovation modes are aligned with surrounding exchange and
production considerations achieve greater sales and shorter time-to-market than other firms.
Collaboration involves a direct combination advantage and direct governance disadvantage which
cannot be traded off against each other
L4: M&As
Acquisition motives and the distribution of acquisition performance (Rabier, 2017)
Deductive:
H1a: Operating synergy acquisitions are more likely to be extreme value-enhancing events for
acquirers than acquisitions primarily motivated by financial synergies
H1b: operating synergy acquisitions are more likely to be extreme value-decreasing events for
acquirers than acquisitions primarily motivated by financial synergies
Conclusion: relative to acquisitions due to financial synergies, acquisitions motivated by operating
synergies experience more extreme positive and negative buy-and-hold returns
Disentangling the performance effects of efficiency and bargaining power in horizontal growth
strategies: an empirical investigation in the global retail industry (Moatti et al., 2015)
Deductive:
H1: compared with organic growth, M&A result in greater bargaining power
H2: compared to organic growth, M&A result in lower operating efficiency
Conclusion: M&A affect performance negatively while organic growth positively affects
performance. M&A operating efficiency losses outweigh bargaining power gains negative net
impact on firm profitability
L5: CEOS and corporate strategy
Human capital and learning as a source of sustainable competitive advantage (Hatch & Dyer)
Deductive
, H1: greater female board representation will be associated with fewer acquisitions
H2: greater female board representation will be associated with smaller acquisition
Conclusion:Robust evidence that greater female board representation was negatively associated with
both overall firm acquisitiveness and target acquisition size
Ripple effects of CEO awards: investigating the acquisition activities of superstar CEOS’ competitors
(Shi et al., 2017)
Deductive
H1: competitor CEOs of award-winning CEOs will have a larger (a) number of acquisitions and
(b) value of acquisitions in the post award period than in the preaward period
H2A: the increase in the number of acquisitions from the preaward period to the post award
period conducted by competitor CEOs of award-winning CEOs will be stronger when the
competitor CEOs’ firms have greater product similarity with the award-winning CEOs’ firm
H2B: the increase in the value of acquisitions from the preaward period to the post award
period conducted by competitor CEOs of award-winning CEOS will be stronger when the
competitor CEOS’ firms have greater product similarity with the award-winning CEOs’ firms
H3A: the increase in the number of acquisitions from the preaward period to the post award
period conducted by competitor CEOs of award-winning CEOs had a higher likelihood of
winning CEO awards
H3B: the increase in the value of acquisitions from the preaward period to the post award
period conducted by competitor CEOs of award-winning CEOs will be stronger when the
competitor CEOs had a higher likelihood of winning award
H4: acquisitions conducted by competitor CEOs in the post award period will be associated
with lower stock market reactions than acquisitions conducted by the same competitor CEOs
in the preaward period
Conclusion: Superstar CEOs’ competitors undertake intensive acquisition activities in the post award
period, specially salient when they had a likelihood of winning CEO awards. Acquisitions conducted
post ward lead to lower ROA relative to pre award - Social status-driven acquisitions may be
oriented to self-interest rather than shareholder interest
L6: Divestitures
Adding by subtracting: the relationship between performance feedback and resource
reconfiguration through divestitures (Vidal & Mitchell, 2015)
Deductive:
H1a:The greater the decline in performance, the greater a firm’s divestiture activity, with the
strongest impact on full divestitures
H1b: the greater the increase in performance, the greater a firm’s divestiture activity, with
the strongest impact on partial divestitures
H2a: the lower the current performance, the more impact that declining performance will
have on divestitures, with the strongest effect on full divestitures
H2b: the higher the current performance, the more impact that increasing performance will
have on divestitures, with the strongest effect on partial divestitures
, Conclusion: Firms with increasing performance engage in divestiture as a way to free resources that
can be reinvested in opportunities maintaining or enhancing their superior performance. Firms that
perform higher than their historical aspiration appear to use (partial) divestitures to tighten their
operations context specific. No support for the idea that declining performance increases the
number of divestitures as a way of retrenching scared to further damage firms?
Legacy divestitures: motives and implications (Feldman, 2014)
Deductive:
H1: upon the announcement of a legacy divestiture, the stock market performance of a firm
that divests its legacy business will exceed that of a firm that retains a comparable legacy
business
H2: The shorter the tenure of a company’s CEO, the more likely that manager will be to divest
rather than retain his firm’s legacy business
H3: In the short-term following a legacy divestiture, the operating performance of a firm that
divests its legacy business will be lower than that of a firm that retains a comparable legacy
business
H4: When a legacy business is industrially related to other units in a firm, the operational cost
associated with divesting rather than retaining that business will be greater than it is when a
legacy business is industrially unrelated to other units in a company
H5: the shorter the tenure of a company’s CEO, the greater will be the operational cost
associated with divesting rather than retaining that firm’s legacy business
Conclusion: Taken-for-grantedness and external pressure help explain why legacy divestitures are
undertaken: Short tenure CEOs little history Susceptible to external pressure. Investors
response favorable to announcements of legacy divestitures < > Costly to divest Operating
performance is found to be lower in the four years after divestiture (no statistical difference in years
thereafter)
L2: Diversification benefits & costs
Synergy, coordination costs, and diversification choices (Zhou, 2001)
Deductive:
H1: A firm is less likely to diversify into a new business when its existing business lines are
more complex
H2: a firm’s likelihood of diversifying into a new business decreases more with the complexity
in the firm’s existing business lines if they share more inputs with the new business
Conclusion: Similarity of inputs increases the probability that the firm diversifies into the target
business, but the firm is less likely to diversify into any new business when it has greater complexity
Does the diversification-firm performance relationship change over time? A meta-analytical
review(Schommer et al., 2019)
Deductive:
H1. Overall levels of diversification have decreased over time (partially supported)
H2: The relationship between diversification and firm performance has become more positive
over time
H3: the relationship between unrelated diversification and firm performance has improved
more over time than the relationship between related diversification and firm performance
Conclusion: Unrelated diversification seems to have declined in a linear fashion (Inherent inverted U-
shaped relationship historically true, but the right hand side has become flatter over time). Related
diversification appears to have increased again after initial decrease
L3: expansion mode choices
Ambidexterity under scrutiny: exploration and exploitation via internal organization, alliances, and
acquisitions (Stettner & Lavie 2014)
Deductive:
H1: balancing exploration and exploitation within a mode of operation (internal organization,
alliances, or acquisitions) will undermined firm performance relative to concentrating on
either exploration or exploitation in that mode
H2: balancing exploration and exploitation across modes of operation will enhance firm
performance relative to concentrating on either exploration in both modes or exploitation in
both modes
H3: Balancing exploration and exploitation across modes of operations will enhance firm
performance more than balancing exploration and exploitation within the corresponding
modes of operation
H4: When exploration and exploitation are balanced across modes of operation, exploration
will enhance firm performance more via an externally oriented mode than via an internally
oriented mode; likewise, exploitation will enhance firm performance more via an internally
oriented mode than via an externally oriented mode.
,Conclusion: Findings show how a firm enhances its performance when exploring in one mode while
exploiting in another (across modes) especially when balancing these activities across the internal
organization and acquisition mode. Explore via externally oriented modes (exploration) while
exploiting via internally oriented modes (internal organization), with alliances as an intermediate
alternative
Governance mode vs governance fit: performance implications of make-or-ally choices for product
innovation in the worldwide aircraft industry (Castañer et al., 2014)
Deductive:
H1: Product innovations undertaken through horizontal collaboration (H1a) achieve greater
unit sales and (H1b) incur longer time-to-market than product innovations undertaken
through autonomous governance
H2: the better the fit between governance mode chosen and the resource endowment of the
firm, as well as the resource requirements of a new product, (H2a) the greater the new
product’s unit sales and (H2b) the shorter its time-to-market
Conclusion: Firms whose product innovation modes are aligned with surrounding exchange and
production considerations achieve greater sales and shorter time-to-market than other firms.
Collaboration involves a direct combination advantage and direct governance disadvantage which
cannot be traded off against each other
L4: M&As
Acquisition motives and the distribution of acquisition performance (Rabier, 2017)
Deductive:
H1a: Operating synergy acquisitions are more likely to be extreme value-enhancing events for
acquirers than acquisitions primarily motivated by financial synergies
H1b: operating synergy acquisitions are more likely to be extreme value-decreasing events for
acquirers than acquisitions primarily motivated by financial synergies
Conclusion: relative to acquisitions due to financial synergies, acquisitions motivated by operating
synergies experience more extreme positive and negative buy-and-hold returns
Disentangling the performance effects of efficiency and bargaining power in horizontal growth
strategies: an empirical investigation in the global retail industry (Moatti et al., 2015)
Deductive:
H1: compared with organic growth, M&A result in greater bargaining power
H2: compared to organic growth, M&A result in lower operating efficiency
Conclusion: M&A affect performance negatively while organic growth positively affects
performance. M&A operating efficiency losses outweigh bargaining power gains negative net
impact on firm profitability
L5: CEOS and corporate strategy
Human capital and learning as a source of sustainable competitive advantage (Hatch & Dyer)
Deductive
, H1: greater female board representation will be associated with fewer acquisitions
H2: greater female board representation will be associated with smaller acquisition
Conclusion:Robust evidence that greater female board representation was negatively associated with
both overall firm acquisitiveness and target acquisition size
Ripple effects of CEO awards: investigating the acquisition activities of superstar CEOS’ competitors
(Shi et al., 2017)
Deductive
H1: competitor CEOs of award-winning CEOs will have a larger (a) number of acquisitions and
(b) value of acquisitions in the post award period than in the preaward period
H2A: the increase in the number of acquisitions from the preaward period to the post award
period conducted by competitor CEOs of award-winning CEOs will be stronger when the
competitor CEOs’ firms have greater product similarity with the award-winning CEOs’ firm
H2B: the increase in the value of acquisitions from the preaward period to the post award
period conducted by competitor CEOs of award-winning CEOS will be stronger when the
competitor CEOS’ firms have greater product similarity with the award-winning CEOs’ firms
H3A: the increase in the number of acquisitions from the preaward period to the post award
period conducted by competitor CEOs of award-winning CEOs had a higher likelihood of
winning CEO awards
H3B: the increase in the value of acquisitions from the preaward period to the post award
period conducted by competitor CEOs of award-winning CEOs will be stronger when the
competitor CEOs had a higher likelihood of winning award
H4: acquisitions conducted by competitor CEOs in the post award period will be associated
with lower stock market reactions than acquisitions conducted by the same competitor CEOs
in the preaward period
Conclusion: Superstar CEOs’ competitors undertake intensive acquisition activities in the post award
period, specially salient when they had a likelihood of winning CEO awards. Acquisitions conducted
post ward lead to lower ROA relative to pre award - Social status-driven acquisitions may be
oriented to self-interest rather than shareholder interest
L6: Divestitures
Adding by subtracting: the relationship between performance feedback and resource
reconfiguration through divestitures (Vidal & Mitchell, 2015)
Deductive:
H1a:The greater the decline in performance, the greater a firm’s divestiture activity, with the
strongest impact on full divestitures
H1b: the greater the increase in performance, the greater a firm’s divestiture activity, with
the strongest impact on partial divestitures
H2a: the lower the current performance, the more impact that declining performance will
have on divestitures, with the strongest effect on full divestitures
H2b: the higher the current performance, the more impact that increasing performance will
have on divestitures, with the strongest effect on partial divestitures
, Conclusion: Firms with increasing performance engage in divestiture as a way to free resources that
can be reinvested in opportunities maintaining or enhancing their superior performance. Firms that
perform higher than their historical aspiration appear to use (partial) divestitures to tighten their
operations context specific. No support for the idea that declining performance increases the
number of divestitures as a way of retrenching scared to further damage firms?
Legacy divestitures: motives and implications (Feldman, 2014)
Deductive:
H1: upon the announcement of a legacy divestiture, the stock market performance of a firm
that divests its legacy business will exceed that of a firm that retains a comparable legacy
business
H2: The shorter the tenure of a company’s CEO, the more likely that manager will be to divest
rather than retain his firm’s legacy business
H3: In the short-term following a legacy divestiture, the operating performance of a firm that
divests its legacy business will be lower than that of a firm that retains a comparable legacy
business
H4: When a legacy business is industrially related to other units in a firm, the operational cost
associated with divesting rather than retaining that business will be greater than it is when a
legacy business is industrially unrelated to other units in a company
H5: the shorter the tenure of a company’s CEO, the greater will be the operational cost
associated with divesting rather than retaining that firm’s legacy business
Conclusion: Taken-for-grantedness and external pressure help explain why legacy divestitures are
undertaken: Short tenure CEOs little history Susceptible to external pressure. Investors
response favorable to announcements of legacy divestitures < > Costly to divest Operating
performance is found to be lower in the four years after divestiture (no statistical difference in years
thereafter)
