| Adaptive Adjustments: An Interorganizational Extension of the Principle of Minimum Intervention |
| | Heppard, Kurt A. | U. S. Air Force Academy | heppardka.dfm.usafa@usafa.af.mil | 719-333-4130 |
| | Koberg, Christine S. | U. of Colorado, Boulder | christine.koberg@colorado.edu | 303-492-8677 |
| | This paper extends the principle of minimum intervention to the interorganizational level of analysis. Using the existing literature on interorganizational relationships, adaptation, and strategies as a foundation, this paper develops, tests, and finds support for the premise that a hierarchical repertoire of interorganizational adjustments exists. |
| | Keywords: Interorganizational; Adaptive; Adjustment |
| Antitrust and the Market for Corporate Control: Railroad Acquisitions, 1825-1922 |
| | Dobbin, Frank R. | Princeton U. | dobbin@princeton.edu | (609) 683-1569 |
| | Dowd, Timothy | Emory U. | tdowd@unix.cc.emory.edu | (404) 727-6259 |
| | What makes a firm buy another firm? What makes a firm sell? Economists
and sociologists have derived a number of propositions from post-WWII
acquisitions, but they have not been able to isolate the effects of
industrial regulation. How does antitrust -- which has set the parameters
for inter-firm competition since 1897 -- influence acquisitions?
To answer this question we consider the 167 acquisitions that occurred
among Massachusetts railroads between 1825 and 1922. We contend that
antitrust creates a particular form of competitive environment and thereby
conditions two of the key predictors of acquisitions -- industry
concentration and corporat profitability. Industry concentration increases
the likelihood that a railroad would sell only after the enforcement of
antitrust, because high concentration threatened weak firms only after
cartels were outlawed. A firm's profitability increased the likelihood it
would buy another railroad only after antitrust was enforced, because
only then did railroads with excess capital benefit from buying their
competitors to quash rate competition. We propose, then, that antitrust
law produced important characteristics of the modern market for corporate
control. |
| | Keywords: Stategy; Regulation; Antitrust |
| Managerial Hierarchies, Market Control, and the Risk of Organizational Disbanding |
| | Thornton, Patricia H. | Duke University | thornton@soc.duke.edu | (919) 660-5760 |
| | Ocasio, William | Northwestern U. | wocasio@nwu.edu | (847) 467-3504 |
| | This study examines how managerial hierarchies affect market control and determine organizational life chances. Using
the higher education publishing industry as our context, we analyze how organizational disbanding is affected by:
(1) divisional versus independent forms of organization, (2) vertical integration versus contractual relationships in marketing
and distribution, and (3) symbiotic and competitive interdependencies with acquiring firms. We find that divisions and
subsidiaries that are part of managerial hierarchies have a lower rate of disbanding than do independent organizations. Firms
that did not vertically integrate distribution functions but instead relied on contractual relations increased their rate of
disbanding. The effects of acquisition are contingent on the strategy of the acquiring firm. Acquisition by other domestic
firms with competitive interdependence increased the rate of disbanding as they sought to diminish competition, but
acquisition by foreign firms with symbiotic interdependence did not as they sought greater market access. In summary,
in the context of the higher education publishing industry, managerial hierarchies associated with decreased resource
dependence and increased market control, led to a decreased rate of organizational disbanding. |
| | Keywords: Hierarchies; Control; Disbanding |
| Structural Embeddedness and The Market for Corporate Control |
| | Piskorski, Mikolaj Jan | Harvard U. | mpiskorski@hbs.edu | (617) 495-1470 |
| | This paper extends Davis' focus on diversification as the key factor shaping the incidence of takeover bids in the 1980s. Unlike Davis et al. (1994), however, I propose a model in which takeover bids are driven by the logic of structural embeddedness, rather than by bust-up of firms with business units in disparate business. Drawing on resource dependence theory I elucidate the structural embeddedness model of the firm. The model suggests that when dependence and small numbers bargaining are present firms should internalize, or co-opt, the difficult transactions (Pfeffer and Salancik, 1979; Burt, 1982). The structural hole definition based on the inter-industry pattern of buying and selling (Burt, 1992) offers a great opportunity to measure incentive for cooptation of difficult transactions. Viewed in this way firms become collections of business units, which embed difficult transactions in the structure of interindustry buying and selling. Having discussed the structural embeddedness model of the firm, I argue that firms are at a lower risk of receiving a takeover bid when two conditions regarding the firm's business units are met simultaneously. First, firms own business units that would find exchange difficult if the transaction took place through market - i.e. they embed structural exchange problems well. Second, there are a few other business unit combinations that can embed exchange better. Empirical data on takeover bids for the Fortune 100 firms between 1978 and 1978 confirms this theory and offers a considerable improvement in model fit over the existing formulations. |
| | Keywords: Takeovers; Embeddedness; Diversification |