Bocconi University. Ph.D. Program in Management. Corporate Strategy. Prof. Maurizio Zollo. Sept. Oct. 2014

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1 Bocconi University Ph.D. Program in Management Corporate Strategy Prof. Maurizio Zollo Sept. Oct The course is meant to be an introduction to some of the leading themes in corporate strategy, with special attention given to the most recent advancements applying evolutionary arguments to the management and learning of complex corporate development processes, such as acquisitions and alliances. The course is structured in three modules of two sessions each. The first one looks at the motives and the performance implication of the decision to diversify, by product as well as geography, and at the choice of diversification mode. The second module focuses on some of the key problems related to the management of acquisition and alliance processes. Finally, we will consider some application of evolutionary thinking to study the problem of organizational learning in these corporate strategy contexts. Pedagogy Participants to this seminars are expected to be able to present the key ideas of each required reading, critique them on theoretical as well as empirical grounds, and offer alternative recommendations with respect to research design, methodology and analysis. The session will follow an interactive seminar format, where participants will offer their own interpretations, critiques and suggestions aiming at mutual enrichment and collective advancement of knowledge. I will stimulate and coordinate the debate, while providing my own perspective and summary conclusions. (*) denotes optional readings for class discussion, they are considered optional additions for more in-depth inquiries into the subject matter.

2 Session 1: The Logic of Diversification Choices 1. why do firms diversify? 2. how does diversification influence firm performance? 3. what factors might influence the diversification-performance link? * Ramanujam V. and Varadarajan P "Research on Corporate Diversification: A Synthesis", Strategic Management Journal", 10: Montgomery, C.A Corporate Diversification, The Journal of Economic Perspectives,: * Chatterjee, S. & Lubatkin, M Extending Modern Portfolio Theory into the domain of corporate diversification: does it apply?, Academy of Management Journal, 37(1): Chang, Sea Jin (1996) An evolutionary perspective on diversification and corporate restructuring: Entry, exit, and economic performance during Strategic Management Journal, 17(8): Lane, Peter J.; Cannella, Albert A. Jr.; Lubatkin, Michael H., Agency problems as antecedents to unrelated mergers and diversification: Amihud and Lev reconsidered. Strategic Management Journal, 19(6): * Amihud and Lev, "Does Corporate Ownership Structure Affect Its Strategy Towards Diversification?", Strategic Management Journal, 20, pp * Campa J.M. and Kedia, S What explains the diversification discount?. Journal of Finance, 57(4). Villalonga, B Diversification premium or discount? Evidence from the Business Information Tracking Series. Journal of Finance, 59 (2). Greve H.R A behavioral theory of firm growth: sequential attention to size and performance goals. Academy of Management Journal 51(3):

3 Session 2: The Choice of Growth/Diversification Modes 1. what might influence the choice between organic and external growth? 2. what might influence the choice between M&A and partnerships as growth tools? 3. how does relatedness matter in diversification strategies? The Choice of Growth Mode Reuer, Jeffrey J. and Mitchell P. Koza, Asymmetric Information and Joint venture Performance: Theory and evidence for Domestic and International Joint Ventures, Strategic Management Journal, 21: (2000). Reuer, Jeffrey J. and Mitchell P. Koza, On Lemons and Indigestibility: Resource assembly through joint ventures, Strategic Management Journal, 21: (2000). Harzing, A.W., Acquisitions versus greenfield investments: International strategy and management of entry modes. Strategic Management Journal. 23(3) * Singh H. and M. Zollo, Globalization through acquisitions and alliances: an evolutionary perspective. In The Alliance on Globalizing by H. Gatignon and J. Kimberly (eds.), Cambridge Univ. Press. Villalonga B. and A. McGahan The choice among acquisitions, alliances and divestitures. Strategic Management Journal Wang, L., & Zajac, E Alliance or acquisition? A dyadic perspective on interfirm resource combinations. Strategic Management Journal, 28(13): Session 3. Acquisition performance and Pre-acquisition Factors 1. What is the performance of M&As? 2. What factors might influence M&A performance? 3. What is the role of the pre-acquisition phase? Acquisition performance Zollo, M., and D. Meier. What is M&A performance?. Academy of Management Perspectives, august 2008.

4 Zollo M., G. Valentini and D. Meier: What explains M&A Performance?. CROMA Working Paper Pre-acquisition factors * Chatterjee, S Types of synergy and economic value: The impact of acquisitions on merging and rival firms. Strategic Management Journal, 7: Seth A, "Value Creation in Acquisitions: A Re-examination of Performance Issues", Strategic Management Journal, 11, pp * Chatterjee, S., Sources of value in takeovers: Synergy or restructuring Implications for target and bidder firms. Strategic management journal, 13(4), pp Kim J-Y, Finkelstein S The effects of strategic and market complementarity on acquisition performance: evidence from the U.S. commercial banking industry, Strategic Management Journal 30(6): Haleblian, J., Devers, C. E., McNamara, G., Carpenter, M. a., & Davison, R. B Taking Stock of What We Know About Mergers and Acquisitions: A Review and Research Agenda. Journal of Management, 35(3): Session 4. Acquisitions, Process and performance Managing the post-acquisition phase 1. What factors might influence post-acquisition decisions? 2. What decisions are taken during post-acquisition integration? 3. What mechanisms are used to implement these decisions? Integration decisions * Jemison, D.B. & Sitkin, S.B Corporate acquisitions: a process perspective. Academy of Management Review, 11: * Datta, D.K. & Grant, J.H., Relationships between type of acquisition, the autonomy given to the acquired firm, and acquisition success: An empirical analysis. Journal of Management, 16(1), pp Capron, L The long-term performance of horizontal acquisitions. Strategic Management Journal, 20(11); * Puranam P., H. Singh and M. Zollo, Organizing for innovation: managing the coordination-autonomy dilemma in technology acquisitions. Academy of Management Journal.

5 * Cording, M., Christmann, P. & King, D.R., Reducing causal ambiguity in acquisition integration: Intermediate goals as mediators of integration decisions and acquisition performance. The Academy of Management Journal, 51(4), pp Puranam, P., Singh, H., & Chaudhuri, S Integrating Acquired Capabilities: When Structural Integration Is (Un)necessary. Organization Science, 20(2): Bauer, F. & Matzler, K., Antecedents of M&A success: The role of strategic complementarity, cultural fit, and degree and speed of integration. Strategic Management Journal, 291(April 2013), pp Implementation mechanisms * Schweiger, D.M. & Denisi, A.S., Communication With Employees Following a Merger: a Longitudinal Field Experiment. Academy of Management Journal, 34(1), pp Ellis, K.M., Reus, T. & Lamont, B., The effects of procedural and informational justice in the integration of related acquisitions. Strategic Management Journal, 161(November 2008), pp Stahl, G.K. & Larsson, R., Trust dynamics in acquisitions: A case survey. Human Resource Management, 50(5), pp Monin, P. et al., Giving Sense to and Making Sense of Justice in Postmerger Integration. Academy of Management Journal, 56(1), pp *Marks, M. & Mirvis, P., A framework for the human resources role in managing culture in mergers and acquisitions. Human Resource Management, 50(6), pp Session 5: Managing Cooperative Growth 1. What is the performance of a partnership agreement? 2. What factors might influence the performance of a partnership agreement? 3. What factors might influence some of the key post-formation decisions? Evolutionary Perspectives Doz, Y The Evolution of Cooperation in Strategic Alliances: Initial Conditions or Learning Process. Strategic Management Journal, Summer Special Issue: * Rao, A. & Schmidt, S., A behavioral perspective on negotiating international alliances. Journal of International Business Studies, 29(4), pp Dyer, J. H., & Singh, H The relational view: Cooperative strategy and sources of interorganizational competitive advantage. Academy of Management Review, 23:

6 Kale P. and M. Zollo Understanding partnering processes and outcomes: the contribution of evolutionary theory. In Handbook of Strategic Alliances by O. Shenkar and J. Reuer (eds.), SAGE. * Doz Y & Hamel G Alliance Advantage. Harvard Business School Press Alliances as competition and cooperation mechanisms * Anand, B. & Khanna, T., Do firms learn to create value? The case of alliances. Strategic management journal, 21(3), pp Silverman, B. S., & Baum, J Alliance-based competitive dynamics. Academy of Management Journal, 45: Kale P. and H. Singh Managing strategic alliances: what do we know now and where do we go from here?. Academy of Management Perspectives. August 1; vol. 23 no * Khanna, T., Gulati, R., & Nohria, N The dynamics of learning alliances: Competition, cooperation, and relative scope. Strategic Management Journal, 19: Session 6: Learning to Grow 1. How do firms learn to manage strategic processes? 2. How does experience accumulation influence learning in corporate strategy initiatives? 3. What factors might influence (positively and negatively) the effectiveness of learning processes? Learning to Partner Simonin, B. L The importance of collaborative know-how: An empirical test of the learning organization. Academy of Management Journal, 40: * Barkema, H. G., Shenkar, O., Vermeulen, F., & Bell, J. H. J Working abroad, working with others: How firms learn to operate international joint ventures. Academy of Management Journal, 40: Zollo M., J. Reuer and H. Singh, 2003 Inter-organizational routines and the performance of strategic alliances. Organization Science * Reuer J., K. Park and M. Zollo, Experiential learning in international joint ventures: the role of venture novelty and experience heterogeneity. In Cooperative Strategies and Alliances by F. Contractor and P. Lorange (eds.), Elsevier Science. Zollo M. and J. Reuer Experience spillovers across corporate development activities Organizazion Science, Nov.-Dec.

7 Learning to Acquire: Experience Effects * Haleblian, J. & Finkelstein, S The influence of organization acquisition experience on acquisition performance: a behavioral learning theory perspective. Administrative Science Quarterly. Hayward M When do firms learn from their acquisition experience? Evidence from Strategic Management Journal. 23(1) Barkema, H.G. & Schijven, M., How do firms learn to make acquisitions? A review of past research and an agenda for the future. Journal of Management, 34(3), pp Zollo M., 2009 Superstitious learning in strategic events: theory and evidence from corporate acquisitions, Organization Science, Sept-Oct Castellaneta F. & M. Zollo, 2014 The dimensions of experiential learning in the management of activity load, forthcoming on Organization Science. Learning to Acquire: Deliberate Learning Effects Zollo M. and H. Singh, Deliberate learning in corporate acquisitions: post-acquisition strategies and integration capability in US bank mergers. Strategic Management Journal 25 (12). Heimeriks, K.H., Schijven, M. & Gates, S., Manifestations of Higher-Order Routines: The Underlying Mechanisms of Deliberate Learning in the Context of Postacquisition Integration. Academy of Management Journal, 55(3), pp Zollo, M., Valentini, G. and Castellaneta, F. (Working paper) Learning or Inertia? The impact of experiential and deliberate learning on post-acquisition integration.