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In this study, we underline the importance of the relationship between absorptive capacity and an acquiring firm’s post-merger performance following the acquisition of a target firm’s knowledge through cross-border mergers and acquisitions (CBMAs). We analyzed CBMAs between developed countries to highlight how realized absorptive capacity plays a crucial part in a firm’s achievement of CBMA sustainability. Using United States CBMA transactions with other developed countries during 2000–2014, our findings suggest that an acquiring firm’s greater absorptive capacity leads to better post-merger performance. More interestingly, compared to for domestic M&As, the direct effect between absorptive capacity and post-merger performance was found to be more positively related in CBMA transactions, even when we applied propensity-score matching (PSM) and Heckman’s selection model to the same estimation. In addition, we introduce four moderating variables that could either intensify or lessen a firm’s effort to seek external knowledge for organizational growth. In terms of an acquiring firm’s strategic behavior, we find that paying in cash and past CBMA experiences positively influence a firm’s post-merger performance. For a target firm’s knowledge assets, we show that when a target firm possesses more strategic assets, they reinforce the acquiring firm’s post-merger performance, and when the target firm is in a high-tech industry, the acquiring firm’s post-merger performance is weakened. Our study contributes to the CBMA literature by incorporating the concept of a knowledge-based view and by empirically testing the different effects of absorptive capacity between domestic M&A and CBMA and how both strategic behavior and a target firm’s knowledge assets affect a firm’s post-merger performance related to CBMA sustainability.
Yunjae Bae; Kyungsuk Lee; Taewoo Roh. Acquirer’s Absorptive Capacity and Firm Performance: The Perspectives of Strategic Behavior and Knowledge Assets. Sustainability 2020, 12, 8396 .
AMA StyleYunjae Bae, Kyungsuk Lee, Taewoo Roh. Acquirer’s Absorptive Capacity and Firm Performance: The Perspectives of Strategic Behavior and Knowledge Assets. Sustainability. 2020; 12 (20):8396.
Chicago/Turabian StyleYunjae Bae; Kyungsuk Lee; Taewoo Roh. 2020. "Acquirer’s Absorptive Capacity and Firm Performance: The Perspectives of Strategic Behavior and Knowledge Assets." Sustainability 12, no. 20: 8396.
We investigate the impact of proactive divestitures on innovative activities at a firm-level. Research concerning the relationship between proactive divestiture and innovation performance remains unexplored and requires a close investigation. Furthermore, we argue that proactive-divestiture is an essential means to achieve corporate sustainability by fostering innovation outcomes. To explore such a relationship, this study integrates research on knowledge-based view and organizational inertia and encompasses the model of financial distress. We hypothesize that proactive divestiture increases both the firm’s R&D intensity and the number of patents and propose that prior divestiture experiences and divested-unit size would moderate this relationship. Results indicate that proactive post-divestiture firms have increased in R&D inputs but not significantly in output. We found mixed results for such a relationship as prior experiences increased, but interestingly, the relationship revealed to be more significant for both input and output as divested-unit size decreased. This study contributes to our understandings of how proactive divestiture can reinforce knowledge capacity, distant from a traditional resource-based view that mainly regarded divestiture as a mere responsive action vis-à-vis financial pressure.
Kyungsuk Lee; Taewoo Roh. Proactive Divestiture and Business Innovation: R&D Input and Output Performance. Sustainability 2020, 12, 3874 .
AMA StyleKyungsuk Lee, Taewoo Roh. Proactive Divestiture and Business Innovation: R&D Input and Output Performance. Sustainability. 2020; 12 (9):3874.
Chicago/Turabian StyleKyungsuk Lee; Taewoo Roh. 2020. "Proactive Divestiture and Business Innovation: R&D Input and Output Performance." Sustainability 12, no. 9: 3874.