A recursive perspective on discursive legitimation and organizational action in mergers and acquisitions

This paper challenges the predominant view that legitimation is merely a specific phase in merger or acquisition processes. We argue that a better understanding of postmerger organizational dynamics calls for conceptualization of discursive legitimation as an inherent part of unfolding merger processes. In particular, we focus on the recursive relationship between legitimation and organizational action. We have two objectives: to outline a theoretical model that helps one to understand the dynamics of discursive legitimation and organizational action in postmerger organizations, and to examine a revealing case to distinguish the inherent risks and problems in discursive legitimation. Our case analysis focuses on the merger between the French pharmaceutical companies BioMérieux and Pierre Fabre. We adopt a critical multimethod approach and distinguish specific discursive dynamics and pathological tendencies in this case. The analysis highlights the unintended consequences of discursive legitimation, the central role of sensegiving and sensehiding in discursive legitimation, the inherently political nature of legitimation and the risks associated with politicization, the special problems associated with fashionable discourses and the role of the media, the use of specific discursive strategies for legitimation and delegitimation, and the crucial role of actual integration results. This analysis adds to the existing research on mergers and acquisitions by treating discursive legitimation as part of the merger dynamics. In particular, our case analysis provides a new explanation for merger failure. We also believe that the recursive model connecting discursive legitimation and delegitimation strategies to concrete organizational action makes a more general contribution to our understanding of organizational legitimation.

Finnish Short-Term Stock Returns

Functioning capital markets are a crucial part of a competitive economy since they provide the mechanisms to allocate resources. In order to be well functioning a capital market has to be efficient. Market efficiency is defined as a market where prices at any time fully reflect all available information. Basically, this means that abnormal returns cannot be predicted since they are dependent on future, presently unknown, information. The debate of market efficiency has been going on for several decades. Most academics today would probably agree that financial markets are reasonably efficient since virtually nobody has been able to achieve continuous abnormal positive returns. However, it is clear that a set of return anomalies exists, although they are apparently to small to enable substantial economic profit. Moreover, these anomalies can often be attributed to market design. The motivation for this work is to expand the knowledge of short-term trading patterns and to offer some explanations for these patterns. In the first essay the return pattern during the day is examined. On average stock prices move during two time periods of the day, namely, immediately after the opening and around the formal close of the market. Since stock prices, on average, move upwards these abnormal returns are generally positive and cause the distinct U-shape of intraday returns. In the second essay the results in the first essay are examined further. The return pattern around the former close is shown to partly be the result of manipulative action by market participants. In the third essay the focus is shifted towards trading patterns of the underlying stocks on days when index options and index futures on the stocks expire. Generally no expiration day effect was found. However, some indication of an expiration day effect was found when a large amount of open in- or at-the-money contracts existed. Also, the effects were likelier to be found for shares with high index-weight but fairly low trading volume. Last, in the forth essay the attention is turned to the behaviour of different tax clienteles around the dividend ex-day. Two groups of investors showed abnormal trading behaviour. Domestic non-financial investors, especially domestic companies, showed a dividend capturing behaviour, i.e. buying cum-dividend and selling ex-dividend shares. The opposite behaviour was found for foreign investors and domestic financial institutions. The effect was more notable for high yield, high volume stocks.

Essays on Stock Options, Incentives, and Managerial Action

Executive compensation and managerial behavior have received an increasing amount of attention in the financial economics literature since the mid 1970s. The purpose of this thesis is to extend our understanding of managerial compensation, especially how stock option compensation is linked to the actions undertaken by the management. Furthermore, managerial compensation is continuously and heatedly debated in the media and an emerging consensus from this discussion seems to be that there still exists gaps in our knowledge of optimal contracting. In Finland, the first executive stock options were introduced in the 1980s and throughout the last 15 years it has become increasingly popular for Finnish listed firms to use this type of managerial compensation. The empirical work in the thesis is conducted using data from Finland, in contrast to most previous studies that predominantly use U.S. data. Using Finnish data provides insight of how market conditions affect compensation and managerial action and provides an opportunity to explore what parts of the U.S. evidence can be generalized to other markets. The thesis consists of four essays. The first essay investigates the exercise policy of the executive stock option holders in Finland. In summary, Essay 1 contributes to our understanding of the exercise policies by examining both the determinants of the exercise decision and the markets reaction to the actual exercises. The second essay analyzes the factors driving stock option grants using data for Finnish publicly listed firms. Several agency theory based variables are found to have have explanatory power on the likelihood of a stock option grant. Essay 2 also contributes to our understanding of behavioral factors, such as prior stock return, as determinants of stock option compensation. The third essay investigates the tax and stock option motives for share repurchases and dividend distributions. We document strong support for the tax motive for share repurchases. Furthermore, we also analyze the dividend distribution decision in companies with stock options and find a significant difference between companies with and without dividend protected options. We thus document that the cutting of dividends found in previous U.S. studies can be avoided by dividend protection. In the fourth essay we approach the puzzle of negative skewness in stock returns from an altogether different angle than in previous studies. We suggest that negative skewness in stock returns is generated by management disclosure practices and find proof for this. More specifically, we find that negative skewness in daily returns is induced by returns for days when non-scheduled firm specific news is disclosed.

Singularity and controllability analysis of parallel manipulators and closed-loop mechanisms

This paper presents a study of kinematic and force singularities in parallel manipulators and closed-loop mechanisms and their relationship to accessibility and controllability of such manipulators and closed-loop mechanisms, Parallel manipulators and closed-loop mechanisms are classified according to their degrees of freedom, number of output Cartesian variables used to describe their motion and the number of actuated joint inputs. The singularities in the workspace are obtained by considering the force transformation matrix which maps the forces and torques in joint space to output forces and torques ill Cartesian space. The regions in the workspace which violate the small time local controllability (STLC) and small time local accessibility (STLA) condition are obtained by deriving the equations of motion in terms of Cartesian variables and by using techniques from Lie algebra.We show that for fully actuated manipulators when the number ofactuated joint inputs is equal to the number of output Cartesian variables, and the force transformation matrix loses rank, the parallel manipulator does not meet the STLC requirement. For the case where the number of joint inputs is less than the number of output Cartesian variables, if the constraint forces and torques (represented by the Lagrange multipliers) become infinite, the force transformation matrix loses rank. Finally, we show that the singular and non-STLC regions in the workspace of a parallel manipulator and closed-loop mechanism can be reduced by adding redundant joint actuators and links. The results are illustrated with the help of numerical examples where we plot the singular and non-STLC/non-STLA regions of parallel manipulators and closed-loop mechanisms belonging to the above mentioned classes. (C) 2000 Elsevier Science Ltd. All rights reserved.

Knowledge Transfer within Western Multinationals' Subsidiary Units in China and Finland - The Impact of Headquarter Control Mechanisms, Subsidiary Location and Social Capital (summary section only)

It is suggested that the ability and practices of how the multinational corporation (MNC) manages knowledge transfer among its geographically dispersed subsidiary units are crucial for the building and development of firm competitive advantage. However, cross-border transfer of valuable organizational knowledge is likely to be problematic and laborious, especially within diversified and differentiated MNCs. Using data collected from 164 western multinational companies’ subsidiary units located in China and Finland, this study aims to investigate cross-border knowledge transfer within the MNC. It explores a number of factors that influence the transfer of knowledge among units in the differentiated MNC. The study consists of five individual papers. Paper 1 investigates a range of organizational mechanisms that may positively influence a subsidiary’s propensity to undertake knowledge transfers to other parts of the corporation. Paper 2 explores the impact of subsidiary location on the motivational dispositions of knowledge receiving units to value and accept knowledge from subsidiaries located in economically less advanced countries. Paper 3 examines the influence of social capital variables on knowledge transfer in dyadic relationships between foreign-owned subsidiaries and their sister and patent units. Paper 4 provides some initial insights into potentially different effects of trust and shared vision in intra-organizational vs. inter-organizational relationships. Using a case study setting, Paper 5 explores means and mechanisms used in transferring human resource management practices to Western MNCs’ business units in China from a cultural perspective. The results of the study show that MNC management through choices regarding organizational controls can encourage and enhance corporate-internal knowledge transfer. It also finds evidence that more knowledge is transferred from subsidiaries located in an industrialized country (e.g., Finland) than subsidiaries located in a developing country (e.g., China). While the study has highlighted the importance of social capital in promoting knowledge transfer, it has also uncovered some new findings that the effect of trust and shared vision may be contingent upon different contexts. Finally, in Paper 5, a number of mechanisms used in transferring selected HRM practices and competences to the Chinese business units have been identified. The findings suggest that cultural differences should be taken into consideration in the choice and use of different transfer mechanisms.

Towards Explaining the Use of Control Mechanisms in Foreign Subsidiaries of MNCs (summary section only)

Control is central to management and there is already a considerable body of research on control. However, the emergence and growth of multinational corporations (MNCs) has renewed the interest in control, as MNCs are complex (often large) organizations that face circumstances beyond those of national business organizations. The geographical dispersion of MNC activities means that the headquarters controls subsidiaries that differ with regard to power and that are embedded in different cultural, political, legal and educational systems. Foreign subsidiary control also takes place across language boundaries and physical (i.e. geographical) distances. In face of these challenges, how are foreign subsidiaries controlled? The thesis explores different types of control mechanisms and attempts to explain the degree to which they are used to control foreign subsidiaries. It contributes to existing knowledge on control by exploring how five different control mechanisms are related to each other. Previous research has tended to focus only on one or two control mechanisms and seldom has their effect on each other been explored. The thesis also contributes by including two central aspects of the MNC that have been neglected in much of the research on foreign subsidiary control: language competence of subsidiary staff and physical distance between the headquarters and its subsidiaries. The findings indicate that specific control mechanisms should not be studied in isolation as there are intricate relationships among the different control mechanisms. Language competence of the subsidiary staff can furthermore affect the type and degree of control that the headquarters can exercise over a subsidiary. The findings also indicate that changes in the physical distance between subsidiaries and its headquarters (i.e. a relocation of the headquarters as part of a restructuring process) can have great consequences for the headquarters-subsidiary relationship.

Service firms´ action upon negative incidents in high touch services: A narrative study

The study concerns service management, and specifically the action service firms take with regard to customer dissatisfaction, customer complaints and complaining customers in high touch services. Customer dissatisfaction, customer complaints and complaining customers are called negative incidents in the study. The study fills a research gap in service management studies by investigating negative incidents as a part of an open service system. In contrast to main stream service management studies defining service quality as how the customer as a consumer defines it, in the present study, the concept of interactive service quality is adopted. The customer is considered as a co-producer of service who thus has a role to play in service quality and productivity. Additionally, the study juxtaposes the often opposed perspectives of the manager and the customer as well as the often forgotten silent voices of service employees and supervisors. The study proposes that the service firm as an entity does not act but it is the actors at the different hierarchical layers who act. Additionally, it is acknowledged in the study that the different actors at the different hierarchical layers have different knowledge of the service system and different objectives for service encounters. Therefore, they interpret the negative incidents from different perspectives and their actions upon negative incidents are subsequently guided by their interpretations. The research question is: how do service firms act upon negative incidents in high touch services? In order to answer to the research question a narrative research approach was chosen. The actors at the different hierarchical layers acted as informants of the study and provided stories about customer dissatisfaction, customer complaining and complaint handling in high touch services. Through storytelling, access to the socially constructed reality of service firms’ action was achieved. Stemming from the literature review, analysis of empirical data and my theoretical thinking, a theory about service firms’ action upon negative incidents in high touch services was developed and the research question was answered. The study contributes to service recovery and complaint management studies as well as to studies on customer orientation and its implementation in service firms. Additionally, the study has a methodological contribution to service management studies since it reflects service firms’ action with narratives from multiple perspectives. The study is positioned in the tradition of the Nordic School of Marketing Thought and presents service firms’ action upon negative incidents in high touch services as a complex human-centered phenomenon in which the actors at the different hierarchical layers have crucial roles to play. Ritva Höykinpuro is associated with CERS, the Centre for Relationship Marketing and Service Management at Hanken School of Economics.

Customer asset management in action: using customers portfolio for allocating resources across business-to-business relationships for improved shareholder value

Suvi Nenonen Customer asset management in action: using customer portfolios for allocating resources across business-to-business relationships for improved shareholder value Customers are crucial assets to all firms as customers are the ultimate source of all cash flows. Regardless this financial importance of customer relationships, for decades there has been a lack of suitable frameworks explaining how customer relationships contribute to the firm financial performance and how this contribution can be actively managed. In order to facilitate a better understanding of the customer asset, contemporary marketing has investigated the use of financial theories and asset management practices in the customer relationship context. Building on this, marketing academics have promoted the customer lifetime value concept as a solution for valuating and managing customer relationships for optimal financial outcomes. However, the empirical investigation of customer asset management lags behind the conceptual development steps taken. Additionally, the practitioners have not embraced the use of customer lifetime value in guiding managerial decisions - especially in the business-to-business context. The thesis points out that there are fundamental differences between customer relationships and investment instruments as investment targets, effectively eliminating the possibility to use financial theories in a customer relationships context or to optimize the customer base as a single investment portfolio. As an alternative, the thesis proposes the use of customer portfolio approach for allocating resources across the customer base for improved shareholder value. In the customer portfolio approach, the customer base of a firm is divided into multiple portfolios based on customer relationships’ potential to contribute to the shareholder value creation. After this, customer management concepts are tailored to each customer portfolio, designed to improve the shareholder value in their own respect. Therefore, effective customer asset management with the customer portfolio approach necessitates that firms are able to manage multiple parallel customer management concepts, or business models, simultaneously. The thesis is one of the first empirical studies on customer asset management, bringing empirical evidence from multiple business-to-business case studies on how customer portfolio models can be formed, how customer portfolios can be managed, and how customer asset management has contributed to the firm financial performance.

Customer asset management in action: using customers portfolio for allocating resources across business-to-business relationships for improved shareholder value

Suvi Nenonen Customer asset management in action: using customer portfolios for allocating resources across business-to-business relationships for improved shareholder value Customers are crucial assets to all firms as customers are the ultimate source of all cash flows. Regardless this financial importance of customer relationships, for decades there has been a lack of suitable frameworks explaining how customer relationships contribute to the firm financial performance and how this contribution can be actively managed. In order to facilitate a better understanding of the customer asset, contemporary marketing has investigated the use of financial theories and asset management practices in the customer relationship context. Building on this, marketing academics have promoted the customer lifetime value concept as a solution for valuating and managing customer relationships for optimal financial outcomes. However, the empirical investigation of customer asset management lags behind the conceptual development steps taken. Additionally, the practitioners have not embraced the use of customer lifetime value in guiding managerial decisions - especially in the business-to-business context. The thesis points out that there are fundamental differences between customer relationships and investment instruments as investment targets, effectively eliminating the possibility to use financial theories in a customer relationships context or to optimize the customer base as a single investment portfolio. As an alternative, the thesis proposes the use of customer portfolio approach for allocating resources across the customer base for improved shareholder value. In the customer portfolio approach, the customer base of a firm is divided into multiple portfolios based on customer relationships’ potential to contribute to the shareholder value creation. After this, customer management concepts are tailored to each customer portfolio, designed to improve the shareholder value in their own respect. Therefore, effective customer asset management with the customer portfolio approach necessitates that firms are able to manage multiple parallel customer management concepts, or business models, simultaneously. The thesis is one of the first empirical studies on customer asset management, bringing empirical evidence from multiple business-to-business case studies on how customer portfolio models can be formed, how customer portfolios can be managed, and how customer asset management has contributed to the firm financial performance.

Multidimensionality of Actors in Business Networks: The Influence of Social Action in Pharmacy Networks in Finland

In the markets-as-networks approach business networks are conceived as dynamic actor structures, giving focus to exchange relationships and actors’ capabilities to control and co-ordinate activities and resources. Researchers have shared an understanding that actors’ actions are crucial for the development of business networks and for network dynamics. However, researchers have mainly studied firms as business actors and excluded individuals, although both firms and individuals can be seen as business actors. This focus on firms as business actors has resulted in a paucity of research on human action and the exchange of intangible resources in business networks, e.g. social exchange between individuals in social networks. Consequently, the current conception of business networks fails to appreciate the richness of business actors, the human character of business action and the import of social action in business networks. The central assumption in this study is that business actors are multidimensional and that their specific constitution in any given situation is determined by human interaction in social networks. Multidimensionality is presented as a concept for exploring how business actors act in different situations and how actors simultaneously manage multiple identities: individual, organisational, professional, business and network identities. The study presents a model that describes the multidimensionality of actors in business networks and conceptualises the connection between social exchange and human action in business networks. Empirically the study explores the change that has taken place in pharmaceutical retailing in Finland during recent years. The phenomenon of emerging pharmacy networks is highly contemporary in the Nordic countries, where the traditional license-based pharmacy business is changing. The study analyses the development of two Finnish pharmacy chains, one integrated and one voluntary chain, and the network structures and dynamics in them. Social Network Analysis is applied to explore the social structures within the pharmacy networks. The study shows that emerging pharmacy networks are multifaceted phenomena where political, economic, social, cultural, and historical elements together contribute to the observed changes. Individuals have always been strongly present in the pharmacy business and the development of pharmacy networks provides an interesting example of human actors’ influence in the development of business networks. The dynamics or forces driving the network development can be linked to actors’ own economic and social motives for developing the business. The study highlights the central role of individuals and social networks in the development of the two studied pharmacy networks. The relation between individuals and social networks is reciprocal. The social context of every individual enables multidimensional business actors. The mix of various identities, both individual and collective identities, is an important part of network dynamics. Social networks in pharmacy networks create a platform for exchange and social action, and social networks enable and support business network development.

Diversity of DNA methyltransferases that recognize asymmetric target sequences

DNA methyltransferases (MTases) are a group of enzymes that catalyze the methyl group transfer from S-adenosyl-L-methionine in a sequence-specific manner. Orthodox Type II DNA MTases usually recognize palindromic DNA sequences and add a methyl group to the target base (either adenine or cytosine) on both strands. However, there are a number of MTases that recognize asymmetric target sequences and differ in their subunit organization. In a bacterial cell, after each round of replication, the substrate for any MTase is hemimethylated DNA, and it therefore needs only a single methylation event to restore the fully methylated state. This is in consistent with the fact that most of the DNA MTases studied exist as monomers in solution. Multiple lines of evidence suggest that some DNA MTases function as dimers. Further, functional analysis of many restriction-modification systems showed the presence of more than one or fused MTase genes. It was proposed that presence of two MTases responsible for the recognition and methylation of asymmetric sequences would protect the nascent strands generated during DNA replication from cognate restriction endonuclease. In this review, MTases recognizing asymmetric sequences have been grouped into different subgroups based on their unique properties. Detailed characterization of these unusual MTases would help in better understanding of their specific biological roles and mechanisms of action. The rapid progress made by the genome sequencing of bacteria and archaea may accelerate the identification and study of species- and strain-specific MTases of host-adapted bacteria and their roles in pathogenic mechanisms.

Ultimate Strength of RC Wall Panels in One-Way In-Plane Action

Test results of 24 reinforced concrete wall panels in one-way in-plane action are presented. The panels were loaded at a small eccentricity to reflect possible eccentric loading in practice. Influences of slenderness ratio, aspect ratio, vertical steel, and horizontal steel on the ultimate load are studied. An empirical equation modifying two existing methods is proposed for the prediction of ultimate load. The modified equation includes the effects of slenderness ratio, amount of vertical steel, and aspect ratio. The results predicted by the proposed modified method and five other available equations are compared with 48 test data. The proposed modified equation is found to be satisfactory and, additionally, includes the effect of aspect ratio which is not present in other methods.

Developmental-like responses in injured mature central neurons

Traumatic insults to the central nervous system are frequently followed by profound and irreversible neuronal loss as well as the inability of the damaged neurons to regenerate. One of the major therapeutic challenges is to increase the amount of surviving neurons after trauma. Thus it is crucial to understand how injury affects neuronal responses and which conditions are optimal for survival to prevent neuronal loss. During development neuronal survival is thought to be dependent on the competition for the availability of survival-promoting molecules called neurotrophic factors. Much less is known on the survival mechanisms of mature neurons under traumatic conditions. Increasing amount of evidence points towards the possibility that after injury neuronal responses might aquire some developmental characteristics. One of the important examples is the change in the responses to the neurotransmitter GABA: it is inhibitory in the intact mature neurons, but can induce excitation during development and after trauma. An important step in the maturation of GABAergic transmission in the CNS is the developmental shift in the action of GABAA receptor from depolarization in immature neurons to hyperpolarization in mature neurons. GABAA-mediated responses are tightly linked to the homeostasis of the chloride anion (Cl-), which in neurons is mainly regulated by Na+-K+-2Cl- cotransporter NKCC1 and K+-Cl- cotransporter KCC2. Trauma-induced functional downregulation of KCC2 promotes a shift from hyperpolarizing GABAA-mediated responses to depolarizing. Other important consequences of neuronal trauma are the emergence of dependency of central neurons on brain-derived neuro¬trophic factor (BDNF) for survival, as well as the upregulation of neurotrophin receptor p75NTR. Our aim was to answer the question whether these post-traumatic events are interrelated, and whether the regulation of BDNF and KCC2 expression is different under traumatic conditions and in intact neurons. To study responses of injured mature central neurons, we used an in vitro and in vivo axotomy models. For in vitro studies, we lesioned organotypic hippocampal slices between CA3 and CA1 regions, which resulted in selective axotomy of the CA3 neurons and denervation of the CA1 neurons. Some experiments were repeated in vivo by lesioning the neurons of the corticospinal tract at the internal capsule level, or by lesioning spinal motoneurons at the ventral root. We show that intact mature neurons do not require BDNF for survival, whereas in axotomized neurons apoptosis is induced upon BDNF deprivation. We further show that post-traumatic dependency on BDNF is mediated by injury-induced upregulation of p75NTR. Post-traumatic increase in p75NTR is induced by GABAA-mediated depolarization, consequent opening of voltage-gated Ca2+ channels, and the activation of Rho kinase ROCK. Thus, post-traumatic KCC2 downregulation leads to the dependency on BDNF through the induction of p75NTR upregulation. Neurons that survive after axotomy over longer period of time lose BDNF dependency and regain normal KCC2 levels. This phenomenon is promoted by BDNF itself, since after axotomy contrary to normal conditions KCC2 is upregulated by BDNF. The developmentally important thyroid hormone thyroxin regulates BDNF expression during development. We show that in mature intact neurons thyroxin downregulates BDNF, whereas after axotomy thyroxin upregulates BDNF. The elevation of BDNF expression by thyroxin promoted survival of injured neurons. In addition, thyroxin also enhanced axonal regeneration and promoted the regaining of normal levels of KCC2. Thus we show that this hormone acts at several levels on the axotomy-initiated chain of events described in the present work, and could be a potential therapeutic agent for the injured neurons. We have also characterized a previously unknown downregulatory interaction between thyroxin and KCC2 in intact neurons. In conclusion, we identified several important interactions at the neurotrophin-protein and hormone-neurotrophin level that acquire immature-like characteristics after axotomy and elucidated an important part of the mechanism by which axotomy leads to the requirement of BDNF trophic support. Based on these findings, we propose a new potential therapeutic strategy where developmentally crucial agents could be used to enhance survival and regeneration of axotomized mature central neurons.

Experimental approach for studying structural changes in axonal membrane upon nerve excitation

The Hodgkin and Huxley (HH) model of action potential has become a central paradigm of neuroscience. Despite its ability to predict action potentials with remarkable accuracy, it fails to explain several biophysical findings related to the initiation and propagation of the nerve impulse. The isentropic heat release and optical phenomena demonstrated by various experiments suggest that action potential is accompanied by a transient phase change in the axonal membrane. In this study a method was developed for preparing a giant axon from the crayfish abdominal cord for studying the molecular mechanisms of action potential simultaneously by electrophysiological and optical methods. Also an alternative setup using a single-cell culture of an Aplysia sensory neuron is presented. In addition to the description of the method, the preliminary results on the effect of phloretin, a dipole potential lowering compound, on the excitability of a crayfish giant axon are presented.