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International Acquisitions and Emerging Market Firms' Performance - A Structural Contingency Perspective

Lookup NU author(s): Dr Saurabh BhattacharyaORCiD

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Abstract

Entry modes have impact on firms' performance in international markets. Using an organizational structural contingency perspective, we assert that firms with mechanistic structure can enhance their performance in international markets if they choose acquisitions as an entry mode. Mechanistic structure limits organizations' learning capability, which can be managed through acquisitions but not through other entry modes such as joint ventures. For managing limitations associated with the poor knowledge absorption capability of mechanistically structured organizations, firms should not follow the standard integration procedures associated with acquisitions aiming to achieve economies of scale or scope. Rather, they should provide corporate parenting advantage to the newly acquired unit by (a) granting complete autonomy and (b) contributing required resources for future growth, thus treating the acquired business as a strategic business unit. Since mechanistic structures are more common in emerging markets, we explain our perspective using illustrative caselets from these markets.

Publication metadata

Author(s): Agnihotri A, Bhattacharya S

Publication type: Article

Publication status: Published

Journal: Thunderbird International Business Review

Year: 2018

Volume: 60

Issue: 4

Pages: 691-698

Print publication date: 01/07/2018

Online publication date: 17/09/2017

Acceptance date: 17/08/2017

Date deposited: 21/08/2018

ISSN (print): 1096-4762

ISSN (electronic): 1520-6874

Publisher: John Wiley & Sons, Inc

URL: https://doi.org/10.1002/tie.21946

DOI: 10.1002/tie.21946

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