IDEAS home Printed from https://ideas.repec.org/a/bla/jomstd/v61y2024i4p1562-1589.html
   My bibliography  Save this article

Acquisition Relatedness in Family Firms: Do the Environment and the Institutional Context Matter?

Author

Listed:
  • Michele Pinelli
  • Francesco Chirico
  • Alfredo De Massis
  • Alessandro Zattoni

Abstract

Research on the acquisition behaviour of family firms has produced conflicting theoretical arguments and mixed empirical findings on their propensity to acquire related or unrelated targets. While previous work has mainly focused on firm‐level variables, this study examines the environment in which family firms operate and the institutional context where acquisitions take place. Drawing on the mixed gambles logic of the behavioural agency model, we theorize that family firms are more likely than nonfamily firms to undertake related acquisitions when they operate in uncertain environments to avoid losses to the family's current socioemotional wealth. However, family firms are more likely to undertake unrelated acquisitions, when the environment is uncertain but the target operates in a similar and more developed institutional context where prospective financial gains are more predictable. Overall, building on a sample of 1014 international acquisitions, our study offers important contributions to the literature on family firms and acquisitions.

Suggested Citation

  • Michele Pinelli & Francesco Chirico & Alfredo De Massis & Alessandro Zattoni, 2024. "Acquisition Relatedness in Family Firms: Do the Environment and the Institutional Context Matter?," Journal of Management Studies, Wiley Blackwell, vol. 61(4), pages 1562-1589, June.
  • Handle: RePEc:bla:jomstd:v:61:y:2024:i:4:p:1562-1589
    DOI: 10.1111/joms.12932
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/joms.12932
    Download Restriction: no

    File URL: https://libkey.io/10.1111/joms.12932?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Witold J. Henisz & Sinziana Dorobantu & Lite J. Nartey, 2014. "Spinning gold: The financial returns to stakeholder engagement," Strategic Management Journal, Wiley Blackwell, vol. 35(12), pages 1727-1748, December.
    2. Noni Symeonidou & Dawn R. DeTienne & Francesco Chirico, 2022. "The persistence of family firms: How does performance threshold affect family firm exit?," Small Business Economics, Springer, vol. 59(2), pages 477-489, August.
    3. Caprio, Lorenzo & Croci, Ettore & Del Giudice, Alfonso, 2011. "Ownership structure, family control, and acquisition decisions," Journal of Corporate Finance, Elsevier, vol. 17(5), pages 1636-1657.
    4. Richard A. Bettis, 1981. "Performance differences in related and unrelated diversified firms," Strategic Management Journal, Wiley Blackwell, vol. 2(4), pages 379-393, October.
    5. Richard A. Bettis & Michael A. Hitt, 1995. "The new competitive landscape," Strategic Management Journal, Wiley Blackwell, vol. 16(S1), pages 7-19.
    6. David L. Deephouse & Peter Jaskiewicz, 2013. "Do Family Firms Have Better Reputations Than Non-Family Firms? An Integration of Socioemotional Wealth and Social Identity Theories," Journal of Management Studies, Wiley Blackwell, vol. 50(3), pages 337-360, May.
    7. Steven W. Bradley & Dean A. Shepherd & Johan Wiklund, 2011. "The Importance of Slack for New Organizations Facing ‘Tough’ Environments," Journal of Management Studies, Wiley Blackwell, vol. 48, pages 1071-1097, July.
    8. Roberto A. Weber & Colin F. Camerer, 2003. "Cultural Conflict and Merger Failure: An Experimental Approach," Management Science, INFORMS, vol. 49(4), pages 400-415, April.
    9. Thomas L Brewer, 1993. "Government Policies, Market Imperfections, and Foreign Direct Investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 24(1), pages 101-120, March.
    10. Lihua Wang & Edward J. Zajac, 2007. "Alliance or acquisition? a dyadic perspective on interfirm resource combinations," Strategic Management Journal, Wiley Blackwell, vol. 28(13), pages 1291-1317, December.
    11. Xavier Castañer & Maria Goranova & Niels Hermes & Nikolaos Kavadis & Alessandro Zattoni, 2022. "Ownership and corporate governance across institutional contexts," Post-Print hal-04694670, HAL.
    12. Debellis, Francesco & Rondi, Emanuela & Plakoyiannaki, Emmanuella & De Massis, Alfredo, 2021. "Riding the waves of family firm internationalization: A systematic literature review, integrative framework, and research agenda," Journal of World Business, Elsevier, vol. 56(1).
    13. A. J. J. (Ron) Maas & P. P. M. A. R. (Pursey) Heugens & Taco H. Reus, 2019. "Viceroys or Emperors? An Institution‐Based Perspective on Merger and Acquisition Prevalence and Shareholder Value," Journal of Management Studies, Wiley Blackwell, vol. 56(1), pages 234-269, January.
    14. Daniel Kahneman & Amos Tversky, 2013. "Prospect Theory: An Analysis of Decision Under Risk," World Scientific Book Chapters, in: Leonard C MacLean & William T Ziemba (ed.), HANDBOOK OF THE FUNDAMENTALS OF FINANCIAL DECISION MAKING Part I, chapter 6, pages 99-127, World Scientific Publishing Co. Pte. Ltd..
    15. Gautam Ahuja & Riitta Katila, 2001. "Technological acquisitions and the innovation performance of acquiring firms: a longitudinal study," Strategic Management Journal, Wiley Blackwell, vol. 22(3), pages 197-220, March.
    16. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-488, June.
    17. Ji‐Yub (Jay) Kim & Sydney Finkelstein, 2009. "The effects of strategic and market complementarity on acquisition performance: evidence from the U.S. commercial banking industry, 1989–2001," Strategic Management Journal, Wiley Blackwell, vol. 30(6), pages 617-646, June.
    18. Roy L. Simerly & Mingfang Li, 2000. "Environmental dynamism, capital structure and performance: a theoretical integration and an empirical test," Strategic Management Journal, Wiley Blackwell, vol. 21(1), pages 31-49, January.
    19. Jean-Luc Arregle & Francesco Chirico & Liena Kano & Sumit K. Kundu & Antonio Majocchi & William S. Schulze, 2021. "Family firm internationalization: Past research and an agenda for the future," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(6), pages 1159-1198, August.
    20. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    21. Justin J. P. Jansen & Frans A. J. Van Den Bosch & Henk W. Volberda, 2006. "Exploratory Innovation, Exploitative Innovation, and Performance: Effects of Organizational Antecedents and Environmental Moderators," Management Science, INFORMS, vol. 52(11), pages 1661-1674, November.
    22. Chrisman, James J. & Chua, Jess H. & Litz, Reginald, 2003. "A unified systems perspective of family firm performance: an extension and integration," Journal of Business Venturing, Elsevier, vol. 18(4), pages 467-472, July.
    23. Hussinger, Katrin & Issah, Abdul-Basit, 2019. "Firm acquisitions by family firms: A mixed gamble approach," ZEW Discussion Papers 19-044, ZEW - Leibniz Centre for European Economic Research.
    24. A Delios & W J Henisz, 2003. "Policy uncertainty and the sequence of entry by Japanese firms, 1980–1998," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(3), pages 227-241, May.
    25. Sandro Castaldo & Katia Premazzi & Fabrizio Zerbini, 2010. "The Meaning(s) of Trust. A Content Analysis on the Diverse Conceptualizations of Trust in Scholarly Research on Business Relationships," Journal of Business Ethics, Springer, vol. 96(4), pages 657-668, November.
    26. repec:bla:jfinan:v:59:y:2004:i:2:p:479-506 is not listed on IDEAS
    27. Mattias Nordqvist & Karl Wennberg & Massimo Bau’ & Karin Hellerstedt, 2013. "An entrepreneurial process perspective on succession in family firms," Small Business Economics, Springer, vol. 40(4), pages 1087-1122, May.
    28. Duchin, Ran & Schmidt, Breno, 2013. "Riding the merger wave: Uncertainty, reduced monitoring, and bad acquisitions," Journal of Financial Economics, Elsevier, vol. 107(1), pages 69-88.
    29. Jiyoung Kimjeon & Per Davidsson, 2022. "External Enablers of Entrepreneurship: A Review and Agenda for Accumulation of Strategically Actionable Knowledge," Entrepreneurship Theory and Practice, , vol. 46(3), pages 643-687, May.
    30. J. Robert Baum & Stefan Wally, 2003. "Strategic decision speed and firm performance," Strategic Management Journal, Wiley Blackwell, vol. 24(11), pages 1107-1129, November.
    31. David R. King & Olimpia Meglio & Luis Gomez‐Mejia & Florian Bauer & Alfredo De Massis, 2022. "Family Business Restructuring: A Review and Research Agenda," Journal of Management Studies, Wiley Blackwell, vol. 59(1), pages 197-235, January.
    32. Steven Globerman & Daniel Shapiro, 2003. "Governance infrastructure and US foreign direct investment," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 34(1), pages 19-39, January.
    33. Jose Manuel Campa & Simi Kedia, 2002. "Explaining the Diversification Discount," Journal of Finance, American Finance Association, vol. 57(4), pages 1731-1762, August.
    34. Jean‐Paul Roy, 2012. "IJV Partner Trustworthy Behaviour: The Role of Host Country Governance and Partner Selection Criteria," Journal of Management Studies, Wiley Blackwell, vol. 49(2), pages 332-355, March.
    35. Bauer, Florian & Schriber, Svante & Degischer, Daniel & King, David R., 2018. "Contextualizing speed and cross-border acquisition performance: Labor market flexibility and efficiency effects," Journal of World Business, Elsevier, vol. 53(2), pages 290-301.
    36. Jean‐Luc Arregle & Michael A. Hitt & David G. Sirmon & Philippe Very, 2007. "The Development of Organizational Social Capital: Attributes of Family Firms," Journal of Management Studies, Wiley Blackwell, vol. 44(1), pages 73-95, January.
    37. Brian L. Connelly & Robert E. Hoskisson & Laszlo Tihanyi & S. Trevis Certo, 2010. "Ownership as a Form of Corporate Governance," Journal of Management Studies, Wiley Blackwell, vol. 47(8), pages 1561-1589, December.
    38. repec:bla:jomstd:v:47:y:2010:i:s2:p:1561-1589 is not listed on IDEAS
    39. Davide Ravasi & Alessandro Zattoni, 2006. "Exploring the Political Side of Board Involvement in Strategy: A Study of Mixed‐Ownership Institutions," Journal of Management Studies, Wiley Blackwell, vol. 43(8), pages 1671-1702, December.
    40. Weston, J Fred & Mansinghka, Surendra K, 1971. "Tests of the Efficiency Performance of Conglomerate Firms," Journal of Finance, American Finance Association, vol. 26(4), pages 919-936, September.
    41. Johannes Luger & Sebastian Raisch & Markus Schimmer, 2018. "Dynamic Balancing of Exploration and Exploitation: The Contingent Benefits of Ambidexterity," Organization Science, INFORMS, vol. 29(3), pages 449-470, June.
    42. Choi, Jongmoo Jay & Lee, Sang Mook & Shoham, Amir, 2016. "The effects of institutional distance on FDI inflow: General environmental institutions (GEI) versus minority investor protection institutions (MIP)," International Business Review, Elsevier, vol. 25(1), pages 114-123.
    43. Pascual Berrone & Patricio Duran & Luis Gómez-Mejía & Pursey P M A R Heugens & Tatiana Kostova & Marc Essen, 2022. "Impact of informal institutions on the prevalence, strategy, and performance of family firms: A meta-analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(6), pages 1153-1177, August.
    44. Thomas M. Zellweger & Franz W. Kellermanns & James J. Chrisman & Jess H. Chua, 2012. "Family Control and Family Firm Valuation by Family CEOs: The Importance of Intentions for Transgenerational Control," Organization Science, INFORMS, vol. 23(3), pages 851-868, June.
    45. Jean-Luc Arregle & Francesco Chirico & Liena Kano & Sumit K. Kundu & Antonio Majocchi & William S. Schulze, 2021. "Correction to: Family firm internationalization: Past research and an agenda for the future," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(6), pages 1199-1199, August.
    46. Klaus E Meyer, 2001. "Institutions, Transaction Costs, and Entry Mode Choice in Eastern Europe," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(2), pages 357-367, June.
    47. Luis R Gómez-Mejia & Leslie E Palich, 1997. "Cultural Diversity and the Performance of Multinational Firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 28(2), pages 309-335, June.
    48. Jean-Luc Arrègle & Michael Hitt & David Sirmon & Philippe Véry, 2007. "The Development of Organizational Social Capital : Attributes of Family Firms," Post-Print hal-02312687, HAL.
    49. Schierstedt, Bennet & Henn, Marisa & Lutz, Eva, 2020. "Diversified acquisitions in family firms: Restricted vs. extended family priorities," Journal of Family Business Strategy, Elsevier, vol. 11(2).
    50. Miller, Danny & Le Breton-Miller, Isabelle & Lester, Richard H. & Cannella Jr., Albert A., 2007. "Are family firms really superior performers?," Journal of Corporate Finance, Elsevier, vol. 13(5), pages 829-858, December.
    51. John R. Graham & Michael L. Lemmon & Jack G. Wolf, 2002. "Does Corporate Diversification Destroy Value?," Journal of Finance, American Finance Association, vol. 57(2), pages 695-720, April.
    52. Stéphane J. G. Girod & Richard Whittington, 2017. "Reconfiguration, restructuring and firm performance: Dynamic capabilities and environmental dynamism," Strategic Management Journal, Wiley Blackwell, vol. 38(5), pages 1121-1133, May.
    53. Robert A. Burgelman, 1983. "Corporate Entrepreneurship and Strategic Management: Insights from a Process Study," Management Science, INFORMS, vol. 29(12), pages 1349-1364, December.
    54. Choelsoon Park, 2002. "The Effects of Prior Performance on the Choice Between Related and Unrelated Acquisitions: Implications for the Performance Consequences of Diversification Strategy," Journal of Management Studies, Wiley Blackwell, vol. 39(7), pages 1003-1019, November.
    55. Yadong Luo, 2007. "Are joint venture partners more opportunistic in a more volatile environment?," Strategic Management Journal, Wiley Blackwell, vol. 28(1), pages 39-60, January.
    56. Krishna Palepu, 1985. "Diversification strategy, profit performance and the entropy measure," Strategic Management Journal, Wiley Blackwell, vol. 6(3), pages 239-255, July.
    57. Sayan Chatterjee & Michael Lubatkin, 1990. "Corporate mergers, stockholder diversification, and changes in systematic risk," Strategic Management Journal, Wiley Blackwell, vol. 11(4), pages 255-268, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Fuad, Mohammad & Thakur, Vinod & Pattnaik, Chinmay & Jain, Rajesh, 2024. "Family firms and the mixed gamble perspective in cross-border acquisitions: A study of Indian firms," International Business Review, Elsevier, vol. 33(1).
    2. Calabrò, Andrea & Requejo, Ignacio & Reyes-Reina, Fernando & Sanchez-Bueno, Maria J. & Suárez-González, Isabel, 2024. "Nearby or faraway? Determinants of target selection in family firm acquisitions," International Business Review, Elsevier, vol. 33(4).
    3. Alexandra Bertschi-Michel & Philipp Sieger & Thomas Wittig & Andreas Hack, 2023. "Sacrifice, Protect, and Hope for the Best: Family Ownership, Turnaround Moves, and Crisis Survival," Entrepreneurship Theory and Practice, , vol. 47(4), pages 1132-1168, July.
    4. Pan, Xin & Chen, Xuanjin & Wang, Hao, 2024. "Beyond economic considerations: The role of socioemotional wealth in family firm foreign exit decisions," International Business Review, Elsevier, vol. 33(4).
    5. Andrea Calabrò & James J. Chrisman & Liena Kano, 2022. "Family-owned multinational enterprises in the post-pandemic global economy," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(5), pages 920-935, July.
    6. Martin Tao-Schuchardt & Frederik J. Riar & Nadine Kammerlander, 2023. "Family Firm Value in the Acquisition Context: A Signaling Theory Perspective," Entrepreneurship Theory and Practice, , vol. 47(4), pages 1200-1232, July.
    7. González, Carlos & González-Galindo, Ana, 2022. "The institutional context as a source of heterogeneity in family firm internationalization strategies: A comparison between U.S. and emerging market family firms," International Business Review, Elsevier, vol. 31(4).
    8. Choi, Young Rok & Zahra, Shaker A. & Yoshikawa, Toru & Han, Bong H., 2015. "Family ownership and R&D investment: The role of growth opportunities and business group membership," Journal of Business Research, Elsevier, vol. 68(5), pages 1053-1061.
    9. Ralf Meinhardt & Sebastian Junge & Martin Weiss, 2018. "The organizational environment with its measures, antecedents, and consequences: a review and research agenda," Management Review Quarterly, Springer, vol. 68(2), pages 195-235, April.
    10. Katrin Hussinger & Abdul-Basit Issah, 2019. "Firm Acquisitions by Family Firms: a Mixed Gamble Approach," DEM Discussion Paper Series 19-16, Department of Economics at the University of Luxembourg.
    11. Criaco, Giuseppe & van Oosterhout, J. (Hans) & Nordqvist, Mattias, 2021. "Is blood always thicker than water? Family firm parents, kinship ties, and the survival of spawns," Journal of Business Venturing, Elsevier, vol. 36(6).
    12. Jean–Luc Arregle & Lucia Naldi & Mattias Nordqvist & Michael A. Hitt, 2012. "Internationalization of Family–Controlled Firms: A Study of the Effects of External Involvement in Governance," Entrepreneurship Theory and Practice, , vol. 36(6), pages 1115-1143, November.
    13. Wu, Sihong & Chirico, Francesco & Fan, Di & Ding, Jiayan & Su, Yiyi, 2024. "Foreign market exit in family firms: Do historical military and cultural frictions matter?," Journal of World Business, Elsevier, vol. 59(1).
    14. Francesco Chirico & Giuseppe Criaco & Massimo Baù & Lucia Naldi & Luis R. Gomez-Mejia & Josip Kotlar, 2020. "To patent or not to patent: That is the question. Intellectual property protection in family firms," Entrepreneurship Theory and Practice, , vol. 44(2), pages 339-367, March.
    15. Nguyen, Pascal & Rahman, Nahid & Zhao, Ruoyun, 2013. "Ownership structure and divestiture decisions: Evidence from Australian firms," International Review of Financial Analysis, Elsevier, vol. 30(C), pages 170-181.
    16. Schierstedt, Bennet & Henn, Marisa & Lutz, Eva, 2020. "Diversified acquisitions in family firms: Restricted vs. extended family priorities," Journal of Family Business Strategy, Elsevier, vol. 11(2).
    17. Fourné, Sebastian P.L. & Zschoche, Miriam & Schwens, Christian & Kotha, Reddi, 2023. "Multinational family firms’ internationalization depth and breadth following the global financial crisis," Journal of World Business, Elsevier, vol. 58(3).
    18. Chirico, Francesco & Duane Ireland, R. & Pittino, Daniel & Sanchez-Famoso, Valeriano, 2022. "Radical innovation in (multi)family owned firms," Journal of Business Venturing, Elsevier, vol. 37(3).
    19. Francesco Debellis & Mariateresa Torchia & Fabio Quarato & Andrea Calabrò, 2023. "Board openness and family firm internationalization: a social capital perspective," Small Business Economics, Springer, vol. 60(4), pages 1431-1448, April.
    20. Francesco Debellis & Emanuela Rondi & Peter J. Buckley & Alfredo Massis, 2024. "Family firms and the governance of global value chains," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 55(8), pages 962-975, October.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jomstd:v:61:y:2024:i:4:p:1562-1589. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0022-2380 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.