Post-acquisition Integration as Sensemaking: Glimpses of Ambiguity, Confusion, Hypocrisy, and Politicization

Though many studies have examined post-acquisition integration challenges, they have mainly focused on rationalistic explanations for the difficulties encountered in post-acquisition integration. There remains little knowledge of how the ‘irrational’ features of post-acquisition decision-making may impede organizational integration. This study attempts to bridge that gap by examining post-acquisition decision-making from a sensemaking perspective. The paper presents an in-depth analysis of a merger between a large Finnish furniture manufacturer and three smaller Swedish furniture companies. By focusing on the sensemaking processes surrounding integration issues, we uncover four interrelated tendencies that illuminate why the frequent problem of slow progress during post-acquisition integration occurs: inherent ambiguity concerning integration issues; cultural confusion in social interaction and communication; organizational hypocrisy in integration decision-making; and the politicization of integration issues.

Essays on Market Microstructure: Price Discovery and Informed Trading

Market microstructure is “the study of the trading mechanisms used for financial securities” (Hasbrouck (2007)). It seeks to understand the sources of value and reasons for trade, in a setting with different types of traders, and different private and public information sets. The actual mechanisms of trade are a continually changing object of study. These include continuous markets, auctions, limit order books, dealer markets, or combinations of these operating as a hybrid market. Microstructure also has to allow for the possibility of multiple prices. At any given time an investor may be faced with a multitude of different prices, depending on whether he or she is buying or selling, the quantity he or she wishes to trade, and the required speed for the trade. The price may also depend on the relationship that the trader has with potential counterparties. In this research, I touch upon all of the above issues. I do this by studying three specific areas, all of which have both practical and policy implications. First, I study the role of information in trading and pricing securities in markets with a heterogeneous population of traders, some of whom are informed and some not, and who trade for different private or public reasons. Second, I study the price discovery of stocks in a setting where they are simultaneously traded in more than one market. Third, I make a contribution to the ongoing discussion about market design, i.e. the question of which trading systems and ways of organizing trading are most efficient. A common characteristic throughout my thesis is the use of high frequency datasets, i.e. tick data. These datasets include all trades and quotes in a given security, rather than just the daily closing prices, as in traditional asset pricing literature. This thesis consists of four separate essays. In the first essay I study price discovery for European companies cross-listed in the United States. I also study explanatory variables for differences in price discovery. In my second essay I contribute to earlier research on two issues of broad interest in market microstructure: market transparency and informed trading. I examine the effects of a change to an anonymous market at the OMX Helsinki Stock Exchange. I broaden my focus slightly in the third essay, to include releases of macroeconomic data in the United States. I analyze the effect of these releases on European cross-listed stocks. The fourth and last essay examines the uses of standard methodologies of price discovery analysis in a novel way. Specifically, I study price discovery within one market, between local and foreign traders.

The Impact of Cultural Factors on Post-Acquisition Integration: Domestic and Foreign Acquisitions of Finnish Companies in 1993-2004

Acquisitions are a central component of corporate strategy. They contribute to competitive advantage by offering possibilities for both cost reductions and for revenue enhancements. However, many acquisition benefits cannot be realized without a successful integration of the acquiring and the acquired firms. Previous research shows that national and organizational culture can play a major role in determining the integration outcomes. Therefore, the overall aim of the thesis is to map out and illustrate the impact mechanisms of cultural factors in post-acquisition integration in order to explain the cultural aspects of acquisitions. This study has three main contributions. First, the study shows that international and domestic acquisitions differ concerning both strategic and cultural fit. Second, the findings highlight the importance of acculturation and cultural integration in determining post-acquisition outcomes. Finally, the study uncovers several impact mechanisms that shed light to the contradictory results related to cultural differences in previous research.

The Value of Being on the Net- the effects of Web sites of companies on consumer decision making

The unique characteristics of marketspace in combination with the fast growing number of consumers interested in e-commerce have created new research areas of interest to both marketing and consumer behaviour researchers. Consumer behaviour researchers interested in the decision making processes of consumers have two new sets of questions to answer. The first set of questions is related to how useful theories developed for a marketplace are in a marketspace context. Cyber auctions, Internet communities and the possibilities for consumers to establish dialogues not only with companies but also with other consumers make marketspace unique. The effects of these distinctive characteristics on the behaviour of consumers have not been systematically analysed and therefore constitute the second set of questions which have to be studied. Most companies feel that they have to be online even though the effects of being on the Net are not unambiguously positive. The relevance of the relationship marketing paradigm in a marketspace context have to be studied. The relationship enhancement effects of websites from the customers’ point of view are therefore emphasized in this research paper. Representatives of the Net-generation were analysed and the results show that companies should develop marketspace strategies while Net presence has a value-added effect on consumers. The results indicate that the decision making processes of the consumers are also changing as a result of the progress of marketspace

Rethinking Service Companies’ Business Logic: Do We Need a Customer-Dominant Logic as a Guideline?

Purpose –This paper explores and expands the roles of customers and companies in creating value by introducing a new a customer-based approach to service. The customer’s logic is examined as being the foundation of a customer-based marketing and business logic. Design/methodology/approach – The authors argue that both goods-dominant logics and service-dominant logics are provider-dominant. Contrasting the customer-dominant logic with provider-dominant logics, the paper examines the creation of service value from the perspectives of value-in-use, the customer’s own context, and the customer’s experience of service. Findings –Moving from a provider-dominant logic to a customer-dominant logic uncovered five major challenges to service marketers: Company involvement, company control in co-creation, visibility of value creation, locus of customer experience, and character of customer experience. Research limitations/implications – The paper is exploratory. It presents and discusses a conceptual model and suggests implications for research and practice. Practical implications –Awareness of the mechanisms of customer logic will provide businesses with new perspectives on the role of the company in their customer’s lives. We propose that understanding the customer’s logic should represent the starting-point for the marketer’s business logic. Originality/value – The paper increases the understanding of how the customer’s logic underpins the customer-dominant business logic. By exploring consequences of applying a customer-dominant logic, we suggest further directions for theoretical and empirical research.

A capability-based view of organisational renewal : Combining opportunity- and advantage-seeking growth in large, established European and North American wood-industry companies

The purpose of this study was to extend understanding of how large firms pursuing sustained and profitable growth manage organisational renewal. A multiple-case study was conducted in 27 North American and European wood-industry companies, of which 11 were chosen for closer study. The study combined the organisational-capabilities approach to strategic management with corporate-entrepreneurship thinking. It charted the further development of an identification and classification system for capabilities comprising three dimensions: (i) the dynamism between firm-specific and industry-significant capabilities, (ii) hierarchies of capabilities and capability portfolios, and (iii) their internal structure. Capability building was analysed in the context of the organisational design, the technological systems and the type of resource-bundling process (creating new vs. entrenching existing capabilities). The thesis describes the current capability portfolios and the organisational changes in the case companies. It also clarifies the mechanisms through which companies can influence the balance between knowledge search and the efficiency of knowledge transfer and integration in their daily business activities, and consequently the diversity of their capability portfolio and the breadth and novelty of their product/service range. The largest wood-industry companies of today must develop a seemingly dual strategic focus: they have to combine leading-edge, innovative solutions with cost-efficient, large-scale production. The use of modern technology in production was no longer a primary source of competitiveness in the case companies, but rather belonged to the portfolio of basic capabilities. Knowledge and information management had become an industry imperative, on a par with cost effectiveness. Yet, during the period of this research, the case companies were better in supporting growth in volume of the existing activity than growth through new economic activities. Customer-driven, incremental innovation was preferred over firm-driven innovation through experimentation. The three main constraints on organisational renewal were the lack of slack resources, the aim for lean, centralised designs, and the inward-bound communication climate.

Adoption processes for EDM, EDI and BIM technologies in the construction industry

Three strategically important uses of IT in the construction industry are the storage and management of project documents on webservers (EDM), the electronic handling of orders and invoices between companies (EDI) and the use of 3-D models including non-geometrical attributes for integrated design and construction (BIM). In a broad longitudinal survey study of IT use in the Swedish Construction Industry the extent of use of these techniques was measured in 1998, 2000 and 2007. The results showed that EDM and EDI are currently already well-established techniques whereas BIM, although it promises the biggest potential benefits to the industry, only seems to be at the beginning of adoption. In a follow-up to the quantitative studies, the factors affecting the decisions to implement EDM, EDI and BIM as well as the actual adoption processes, were studied using semi-structured interviews with practitioners. The theoretical basis for the interview studies was informed by theoretical frameworks from IT-adoption theory, where in particular the UTAUT model has provided the main basis for the analyses presented here. The results showed that the decisions to take the above technologies into use are made on three differ- ent levels: the individual level, the organizational level in the form of a company, and the organiza- tional level in the form of a project. The different patterns in adoption can to some part be explained by where the decisions are mainly taken. EDM is driven from the organisation/project level, EDI mainly from the organisation/company level, and BIM is driven by individuals pioneering the technique.

Detecting Earnings Management Using Neural Networks

Detecting Earnings Management Using Neural Networks. Trying to balance between relevant and reliable accounting data, generally accepted accounting principles (GAAP) allow, to some extent, the company management to use their judgment and to make subjective assessments when preparing financial statements. The opportunistic use of the discretion in financial reporting is called earnings management. There have been a considerable number of suggestions of methods for detecting accrual based earnings management. A majority of these methods are based on linear regression. The problem with using linear regression is that a linear relationship between the dependent variable and the independent variables must be assumed. However, previous research has shown that the relationship between accruals and some of the explanatory variables, such as company performance, is non-linear. An alternative to linear regression, which can handle non-linear relationships, is neural networks. The type of neural network used in this study is the feed-forward back-propagation neural network. Three neural network-based models are compared with four commonly used linear regression-based earnings management detection models. All seven models are based on the earnings management detection model presented by Jones (1991). The performance of the models is assessed in three steps. First, a random data set of companies is used. Second, the discretionary accruals from the random data set are ranked according to six different variables. The discretionary accruals in the highest and lowest quartiles for these six variables are then compared. Third, a data set containing simulated earnings management is used. Both expense and revenue manipulation ranging between -5% and 5% of lagged total assets is simulated. Furthermore, two neural network-based models and two linear regression-based models are used with a data set containing financial statement data from 110 failed companies. Overall, the results show that the linear regression-based models, except for the model using a piecewise linear approach, produce biased estimates of discretionary accruals. The neural network-based model with the original Jones model variables and the neural network-based model augmented with ROA as an independent variable, however, perform well in all three steps. Especially in the second step, where the highest and lowest quartiles of ranked discretionary accruals are examined, the neural network-based model augmented with ROA as an independent variable outperforms the other models.

Determinants and Consequences of Information Sharing with Key Suppliers

As companies become more efficient with respect to their internal processes, they begin to shift the focus beyond their corporate boundaries. Thus, the recent years have witnessed an increased interest by practitioners and researchers in interorganizational collaboration, which promises better firm performance through more effective supply chain management. It is no coincidence that this interest comes in parallel with the recent advancements in Information and Communication Technologies, which offer many new collaboration possibilities for companies. However, collaboration, or any other type of supply chain integration effort, relies heavily on information sharing. Hence, this study focuses on information sharing, in particular on the factors that determine it and on its value. The empirical evidence from Finnish and Swedish companies suggests that uncertainty (both demand and environmental) and dependency in terms of switching costs and asset specific investments are significant determinants of information sharing. Results also indicate that information sharing improves company performance regarding resource usage, output, and flexibility. However, companies share information more intensely at the operational rather than the strategic level. The use of supply chain practices and technologies is substantial but varies across the two countries. This study sheds light on a common trend in supply chains today. Whereas the results confirm the value of information sharing, the contingent factors help to explain why the intensity of information shared across companies differ. In the future, competitive pressures and uncertainty are likely to intensify. Therefore, companies may want to continue with their integration efforts by focusing on the determinants discussed in this study. However, at the same time, the possibility of opportunistic behavior by the exchange partner cannot be disregarded.