Matthias Brauer

Based on learning theory, this study introduces a distinction into three orders (zero, first, second) of path dependence. Applying econometric time series analysis (VAR models), we explore the order of path dependence in firms' investment, divestment and cooperation decisions. In extension to prior research, we not only investigate the order of path dependence for each type of portfolio decision but also investigate the order of path dependence in firms' collective portfolio decision-making. Results show differences in the orders of path dependence for the three types of portfolio decisions between firms. Moreover, the firms' collective portfolio activities display a different order of path dependence than when analyzing each portfolio activity separately indicating substantial interactions among them. In sum, our empirical analyses indicate the need to distinguish between different orders of path dependence, and demonstrate that an organizational activity is not only dependent on its general conditions as contingency theory argues, nor solely dependent on its own history as classical path dependence theory argues, but also dependent on the history of related activities

We provide a comparative analysis of acquirer returns in acquisitions of public firms, private firms, and divested assets. On the basis of a sample of 5,079 acquisitions by U.S. software industry companies during 1988–2008, we find that acquisitions of divested assets outperform acquisitions of privately held firms, which in turn outperform acquisitions of publicly held firms. While the higher returns for acquisitions of divested assets relative to stand-alone acquisition targets can be explained by market efficiency arguments, seller distress and improved asset fit further enhance the positive returns of acquirers of divested assets consistent with the relative bargaining power explanation. Finally, we find that the effects of these buyer bargaining advantages are mutually strengthening and that they also hold for longer-term acquirer Performance.

Coordinating consistent strategy implementation has been identified a key challenge for multi-national corporations. Based on intraorganizational evolutionary models of strategy formation, this paper thus empirically investigates the antecedents and temporal dynamics of strategic divergence. Strategic divergence is the deviation of a firm's resource allocation decisions with its articulated concept of corporate strategy. Large-scale empirical analysis of 11,406 resource allocation decisions of twenty-five publicly listed, multi-national and multi-business European firms indicates that decision type, operational and divisional manager involvement in decision making and structural context changes exert a significant influence on strategic divergence. Importantly, results further suggest that firms' levels of strategic divergence tend to increase over time and that the antecedents of strategic divergence have a differential impact as time passes.

Due to the "opaque" nature of divestitures, investors face considerable uncertainty in evaluating divestiture decisions and thus may look to the firm's social context in terms of the pervasiveness of divestiture activity within an industry to infer the quality of the decision. Specifically, we propose that a firm's position in the industry divestiture wave conveys information about whether or not managers are imitating their industry peers, which in turn will influence how investors perceive and assess the quality of the decision and its likely performance consequences. Consistent with this theoretical argument, we find that the relationship between divestiture position and stock market returns exhibits a U-shaped pattern, with divestitures that occur at the peak of an industry divestiture wave generating the lowest stock market returns. We also find that industry characteristics (i.e. munificence) reinforce the effect of position in wave on investor response. Our study is the first to incorporate the role of the firm's social context, in terms of the pervasiveness of an activity, as an important factor that influences how investors perceive and evaluate divestiture decisions.

Previous studies on strategic group dynamics have generated valuable insights into the industry-level determinants of changes in strategic group membership and group strategy. Complementary to this line of research, the present study focuses on the firm-level determinants underlying shifts in firm positioning within strategic group structures. Drawing on the behavioral theory of the firm, the study examines the influence of firm performance and performance aspirations on the extent to which firms strategically diverge from or converge towards their strategic groups. Empirical results from a longitudinal analysis of the strategic repositioning by 1191 US insurance firms over a 10-year time period (1999-2008) suggest that firms performing below aspirations show a greater inclination to diverge from their current strategic group than firms performing above aspirations. Industry conditions are found to moderate the relationship between performance aspirations and strategic divergence-convergence. The study's findings highlight the influence of performance feedback on strategic group dynamics, and the importance of considering the interplay between firm-level and industry-level characteristics in explaining strategic group dynamics.

The paper aims at extending extant research on sources of divestiture gains by suggesting a novel program-based perspective on divestitures and analyzing the performance of program divestitures in comparison to single "stand-alone" divestitures. Based on event study methodology, the authors analyze the abnormal returns of 160 divestiture announcements within the global insurance industry between 1998 and 2007. In contrast to prior research which relied on ex post statistical clustering to identify transaction programs, ad hoc corporate press releases issued with the divestiture announcements are used to categorize program divestitures. Empirical results suggest that program divestitures generate higher abnormal returns than stand-alone divestitures. Further analyses into the sources for these higher gains, however, do not provide support for experience effects as significant explanatory factors. Instead, results suggest that the scheduling of divestitures significantly impacts announcement returns. The scope and single industry setting of the study suggest future cross-industry research on the influence of divestiture program characteristics on divestiture performance and the conditions under which these programs improve divestiture performance. Managers are advised to refrain from piecemeal divestiture behavior lacking clear strategic focus. Instead, they are encouraged to bundle their divestitures as part of a divestiture program with a clear strategic intent and shared business logic. While prior research on divestitures has treated divestitures as isolated events, the paper directs attention towards the analysis of divestiture programs. Further, experience and timing effects, which have been widely absent from prior divestiture studies, are considered.