Network Positions and the Probability of Being Acquired: An Empirical Analysis in the Biopharmaceutical Industry

18 Pages Posted: 22 Jul 2016

See all articles by Erica Mazzola

Erica Mazzola

University of Palermo - Department of Economics, Business and Statistics

Giovanni Perrone

University of Palermo - Economics, Business and Finance

Dzidziso Samuel Kamuriwo

City University London

Date Written: July 2016

Abstract

This paper examines the relationship between the firm's direct ties, its inter‐firm network prominence and its likelihood of being acquired. The authors argue that firm's direct ties and prominence enhance the firm's visibility and signal its quality – and thus foster the firm's likelihood of being acquired. However, higher levels of direct ties and prominence, by providing access to resources and the firm's status, respectively, increase the firm's ability to remain independent and thus reduce its likelihood of being acquired. Thus, the authors posit the overall relation as an inverted U‐shaped. Furthermore, they show that, for firms that undergo an initial public offering, the aforementioned relation becomes much weaker. The hypotheses are empirically tested in the biopharmaceutical industry and important theoretical and managerial implications are discussed.

Suggested Citation

Mazzola, Erica and Perrone, Giovanni and Kamuriwo, Dzidziso Samuel, Network Positions and the Probability of Being Acquired: An Empirical Analysis in the Biopharmaceutical Industry (July 2016). British Journal of Management, Vol. 27, Issue 3, pp. 516-533, 2016. Available at SSRN: https://ssrn.com/abstract=2812948 or http://dx.doi.org/10.1111/1467-8551.12174

Erica Mazzola (Contact Author)

University of Palermo - Department of Economics, Business and Statistics

Viale delle Scienze
Palermo, 90100
Italy

Giovanni Perrone

University of Palermo - Economics, Business and Finance ( email )

viale delle scienze, ed 13
Palermo, 90128
Italy

Dzidziso Samuel Kamuriwo

City University London ( email )

Northampton Square
London, EC1V OHB
United Kingdom

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