Organizational Learning And Corporate Merger&Acquisition

Worldwide mergers and acquisition activity become the dominant mode of firmgrowth and hit new record high of$3.79trillion in2006(Barkema&Schijven，2008).But a lot of literatures have revealed that on average acquisitions fail to create valuefor acquiring firm shareholders (Datta， Pinches，&Narayanan，1992; King，Dalton， Daily，&Covin，2004). Acquisitions represent strategic and marketopportunities in the corporate development process.For the purpose to make thesynergy realization more efficiently， corporates need to cumulate M&A experiencesand improve skills about M&A (Hitt，Harrison&Ireland，2001). So， it is veryimportant for corporates to learn the knowledge about M&A.This dessertation examines the influence of organizational learning uponcorporate acquisition using event history analysis and ordered probit regression basedon a sample of acquisitions of Chinese listed companies over a period from1998to2008.This research include four studies.1. Organizational learning and the decision of subsequent acquisition. Learningfrom the firm’s own experience and from the experience of other firms can improvethe capability and knowledge required to be successful in acquisition. The resultsshow that1)serial acquisition as a function of stage of learning shows an invertedU-shaped relationship between prior acquisitions and the likelihood of subsequentacquisition.2)The better the feedback of acquisition performance， the higher thelikelihood of the acquirer making a subsequent acquisition is.3)The relationshipbetween the number of vicarious experience and the likelihood of subsequentacquisition was inverted U-shaped.4)Vicarious learning is motivated by observingcompetitors who have received good acquisition performance.2. Organizational learning and the performance of acquisition. The results showthat1)serial acquisition as a function of stage of learning shows a U-shapedrelationship between prior acquisitions and realization of aspiration.2)The better thefeedback of acquisition performance， the higher the level of realization of aspirationis.3)The relationship between the number of vicarious experience and realization of aspiration was inverted U-shaped.4)Vicarious learning is motivated by observingcompetitors who have received good acquisition performance.5)The interactionbetween the number of acquisition experience and the feedback of acquisitionperformance is negatively related to the realization of aspiration.3. Organizational learning， corporate governance and the decision ofsubsequent acquisition.This paper examines the influence of the characteristics ofboards upon the strategic decision of learning corporate. The results show thatlearning corporate can increase the ability of strategic decision by improving internalexperience learning and vicarious learning. The effect of the characteristics of boardsupon the M&A decision making and execution differs from each other. The leadershipstructure， independence and size of boards have impacts on the efficiency oforganizational learning.4. Organizational learning， corporate governance and the performance ofacquisition. This paper examines the influence of corporate governance andexperience learning upon acquisition performance. The results show that the strongerat higher levels of managerial ownership and CEO power， the higher the likelihoodof the acquirer making a subsequent acquisition. Board independence has a negativerelation with the decision of making acquisition. The positive effect of acquisitionexperience on the likelihood of the acquirer’s subsequent acquisition decision will bestronger at higher levels of managerial ownership， CEO power and boardindependence.The results of this dissertation could be an extension to the theory of strategymanagement and organization behavior. The main points are as follows:First，the results extend the theory of organizational learning, especially internallearning and vicarious learning’s influence on M&A decision system. Thisdissertation discusses the organizational learning’s influence on acquisition abilitydevelopment from aspects of routine and performance feedback，and finds differentresults from the literature. At the same time，this dissertation analyzes the listedcompany’s competitor M&A experience learning and imitation behavior and testshow vicarious learning influence the M&A decision making and the performance of M&A strategy and the different among them in China. This dissertation also showsthe differences of M&A behavior among companies in China and adds to theempirical literature.Second，this dissertation combines the measurement based on accounting dataand stock market and constructs a new measurement comparing the actualperformance after M&A to the market expected performance which reflects bothmarket expected performance and actual performance.Third， this dissertation constructs the theory framework of the corporategovernance’s influence on organizational learning in M&A decision process and testsit by empirical methods adding to the theory and practice in this field. Thisdissertation analyzes how ownership concentration and board of directors influenceM&A decision making and the effect of organizational learning during this processfrom the aspect of institution. This dissertation also tests the corporate governance’sinfluence on internal learning and vicarious learning and discusses how routine andperformance feedback be influenced by corporate governance during the M&Adecision making and its implement. This dissertation gains some useful and helpfulconclusions for further research in this field.