STRATEGIC ACQUISITION DECISIONS
Transcript: * Outlook for regions and sectors report - Deloitte 2017 Gomes et al., 2013 Gigerenzer, 2008 Qualitative research approach - Understand why and how things happen (Yin, 2003) Literature barely provides findings regarding how heuristics arise and how they influence the pre-merger stage. Case study research to get in-depth understanding Especially useful for relevant organizational processes that have heterogeneous opportunities, few experiences and a high level of unpredictability. (Bingham & Eisenhardt, 2013; Gigerenzer, 2008) Three major perspectives on Heuristics Empirical Part Most research qualifies failure rates to be 50-70% or higher. Bingham & Eisenhardt, 2011 Generation and analysis of data M&A can be seen as "important sources of external growth and corporate development". M&A transactions have a high level of risk and uncertainty. Information and time are limited and heuristics provide quick means of decision-making. M&A is a field of research with high practical implications. STRATEGIC ACQUISITION DECISIONS Merger Phase: Transaction Heuristics are "rules of thumb that provide cognitive shortcuts in decision making" (Gigernenzer & Goldstein, 2011) The M&A Literature "Heuristics are frugal - that is, they ignore part of the information." Why M&A? Post-Merger Phase: Integration Kale, Dyer, & Singh, 2002 Firms learn portfolios of heuristics Heuristic portfolios are initiated with selection and procedural heuristics In a developmental order priority and temporal heuristics are learned after selection and procedural heuristics and have a higher level of sophistication. Portfolio of Heuristics It is crucial to come to the right decision when selecting a possible target for an M&A transaction. Drawback of the learning literature that it is not examined what is actually learned. Almor, Tarba, & Margalit, 2014 Bauer & Matzler, 2014 Capron, 1999 Christensen et al., 2011 Haleblian et al., 2009 Idea and Research Interest Empirical Part The Heuristics and Organizational Learning Literature Field of research - Research gap This master thesis aims to answers the question on whether and if so, heuristics have an impact or exist in the pre-merger stage of M&A transactions. High managerial relevance for research in the field of M&A (Volume of M&A transactions 4.4 trillions*) Negative outcomes might come from cross-cultural mistakes, financial miscalculations and capability misalignment. Companies learn processes from prior experience. Likely to performance improves if companies repeat processes like M&A transactions. A comparative case study on the role of heuristics in the pre-merger stage "Strategic and Organizational Fit" Jansen, 2016 Gigerenzer, 2008 Research Cooperation between SMA Research Lab and GfPMI Definitions of Heuristics Heuristics Pre-Merger Phase Strategic Analysis & Conception Heuristics-and-biases paradigm Contribution Wang & Zajac, 2007 Bauer, Matzler, & Wolf, 2016 Cartwrigth & Schoenberg, 2006 Gomes et al., 2013 SMA Research Lab - prior projects Bingham & Eisenhardt, 2011 Mergers & Acquisitions Interviews with companies in the German-speaking area. Five step approach of data analysis: Broad background information Score heuristics that have influence on the pre-merger stage Consolidation of heuristics within a category Portfolio of heuristics? Analysis of heuristics and their influence on the pre-merger stage The research question Merger Phases "Simple Rules" Anand & Khanna, 2000 Baum & Wally, 2003 Cohan et al., 1996 Haunschild & Sullivan, 2002 Vermeulen & Barkema, 2002 Brueller, Carmeli, & Markman, 2016 "...heuristics rather satisfice (i.e. find a good-enough solution)..." Wolfgang Höck, 15th March 2018 External growth and corporate development Adjustments to existing business models Increased survival rates Cutting costs Acquiring technological knowledge Value creation (e.g. market power) Managerial self-interest Environmental factors Firm characteristics Theoretical and Managerial Contribution Cartwright & Schoenberg, 2006 Christensen et al., 2011 Gomes at al., 2013 Kahneman & Tversky, 1974 Gigerenzer, 2008; Goldstein & Gigerenzer, 2002 Bingham & Eisenhardt, 2011 "Heuristics constitute 'rational' strategy in unpredictable markets" (Bingham & Eisenhardt, 2011) Deriving further categories of heuristics Direct influence of heuristics in the pre-merger stage? Continuous change of portfolio of heuristics? Positive view of heuristics Practical relevance of heuristics in situations of high uncertainty, risk and lack of information M&A gives the unique potential to change organizations, restructure and further develop both internally and externally. Fast-and-frugal paradigm Antecedents of M&A transactions Gomes et al., 2013 Core literature review "...the basis of value-creating stretegies that can be more effective than information-intensive, cognitively demanding approaches" (Bingham & Eisenhardt, 2011) Bauer & Matzler, 2014 Topic of Master Thesis Idea & theoretical framework Core literature review