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Value Constraining or Value Enabling? The Impact of Business Group Affiliation on Post-Acquisition Performance by Emerging Market Firms

Published online by Cambridge University Press:  10 March 2020

Manish Popli Open the ORCID record for Manish Popli [Opens in a new window]  and
Radha Mukesh Ladkani
Manish Popli*
Affiliation:
Indian Institute of Management, India
Radha Mukesh Ladkani
Affiliation:
Indian Institute of Management, India
*
Corresponding author: Manish Popli (manishp@iimidr.ac.in)
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Abstract

Literature has advanced two contrasting theoretical perspectives related to the governance structure of business groups: the ‘value-constraining’ perspective, which focuses on principal–principal agency conflict and organizational inertia theory, and the ‘value-enabling’ perspective, which emphasizes the role of business groups in mitigation of institutional voids. Building on these two competing lenses, we develop hypotheses to examine post-acquisition performance of affiliate firms relative to stand-alone firms. As our empirical context, we study 440 majority-stake, domestic and cross-border merger and acquisition deals closed by Indian firms during the period 2002–2013. The results imply that in emerging markets, despite concerns of organizational inertia and principal–principal agency issues, the value-enabling impact of group affiliation persists. We also examine the contextual impact of intergroup heterogeneity owing to group diversification on post-acquisition performance and find that greater group diversification leads to better performance for affiliate acquirers.

摘要

摘要

已有文献针对商业群体的治理结构提出了两个相反的理论观点。“价值约束”观点聚焦委托代理冲突和组织惰性理论，“价值赋能”观点则强调商业群体在减少制度空白中的作用。基于两种对立的视角，我们建立了假设检验附属公司相对于独立公司完成并购后的业绩。我们研究了印度公司在2002-2013年间完成的440个国内和跨国的大股东并购案例，结果表明在新兴市场中，尽管存在组织惰性和委托代理方面的顾虑，群体隶属的价值赋能影响依然存在。我们还考察了因群体多样化而产生的群体间的异质性对于并购后业绩所产生的情境影响，发现更大的群体多样化导致附属的并购企业产生更好的业绩。

Аннотация

АННОТАЦИЯ

В научной литературе существуют две противоположные теоретические перспективы, которые связаны со структурой управления в деловых кругах: перспектива «ограничения ценности», которая основана на конфликте «принципал-принципал» и теории организационной инерции, и перспектива «создания ценности», которая подчеркивает роль деловых кругов в ослаблении влияния институционального вакуума. Опираясь на эти две противоположные точки зрения, мы разрабатываем гипотезы для изучения производительности дочерних компаний после приобретения по сравнению с самостоятельными компаниями. В качестве нашего эмпирического контекста, мы изучаем 440 внутренних и международных сделок по слиянию и поглощению с мажоритарным участием, которые заключили индийские компании в период 2002–2013 годов. Результаты показывают, что на развивающихся рынках, несмотря на организационную инерцию и проблему «принципал-принципал», принадлежность деловых кругов способствует созданию ценности. Мы также изучаем контекстуальное влияние межгрупповой неоднородности, основанной на групповой диверсификации, на производительность после приобретения и обнаруживаем, что большая групповая диверсификация ведет к повышению производительности для аффилированных приобретателей.

Resumen

RESUMEN

La literatura ha avanzado dos perspectivas teóricas contrastantes relacionadas con la estructura de gobierno de los grupos empresariales: la perspectiva de “limitador de valor” la cual se enfoca en la teoría de inercia organizacional y del conflicto de la agencia principal y la principal, y la perspectiva de “habilitador de valor”, la cual enfatiza el rol de los grupos empresariales en la mitigación de los vacíos institucionales. Sobre la base de estos dos lentes que compiten, desarrollamos hipótesis para examinar el desempeño posterior a la adquisición de las empresas afiliadas en relación con las empresas independientes. En nuestro contexto empírico, estudiamos 440 acuerdos de fusiones y adquisiciones mayoritarios cerrados por empresas indias durante el periodo 2002-2013. Los resultados implican que, en los mercados emergentes, a pesar de las preocupaciones de la inercia organizacional y los asuntos de agencia principal a principal, el impacto habilitador de valor de la afiliación del grupo persiste. También examinamos el impacto del contexto de la heterogeneidad intergrupal debido a la diversificación grupal en el desempeño posterior a la adquisición y encontramos que una mayor diversificación grupal lleva a un mejor desempeño para los adquirientes afiliados.

Keywords

business group affiliationpost-acquisition performancevalue-constraining perspectivevalue-enabling perspective商业群体隶属并购后业绩价值约束观点价赋能观点принадлежность деловых круговпроизводительность после приобретенияперспектива ограничения ценностиперспектива создания ценностиafiliación al grupo empresarialdesempeño posterior a la adquisiciónperspectiva de limitador de valorperspectiva de habilitador de valor
Type
Article
Information
Management and Organization Review , Volume 16 , Issue 2 , May 2020 , pp. 261 - 291
Open Practices
Open data
Copyright
Copyright © 2020 The International Association for Chinese Management Research

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Footnotes

Accepted by: Senior Editor Sai Yayavaram

The Open Data badge recognizes authors who deposit their data (and statistical code, if necessary) in an open-access repository. The data used in this study can be found at [https://osf.io/nd4af/]. Details about the badge are available on the journal's website.

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