Preservation and Dissolution of the Target Firm's Embedded Ties in Acquisitions

54 Pages Posted: 8 May 2007

See all articles by S. Spedale

S. Spedale

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM); Erasmus Research Institute of Management (ERIM); Nottingham University Business School

Frans A. J. Van Den Bosch

Erasmus University Rotterdam (EUR) - Department of Strategic Management and Entrepreneurship; Erasmus Research Institute of Management (ERIM)

H. W. Volberda

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM); Erasmus Research Institute of Management (ERIM)

Date Written: December 11, 2006

Abstract

Our study builds on extant theory on embeddness to concentrate on the process of preservation and dissolution of the target firm’s embedded ties in acquisitions. We identify four critical areas - communication, idiosyncratic investments, inter-personal relations and, personnel turnover – where managerial decisions taken during the acquisition process affect the components of the target firm’s embedded ties – trust, joint problem-solving and exchange of fine-grained information. The preservation or dissolution of an embedded tie depends ultimately on two specific tie-contingencies, the balance of power between the target firm and the embedded relation and interpretive processes at the inter-face between the two. Our findings have implications for the study of the dissolution of market ties as they point to different roles played by social and institutional forces, power asymmetries and competition in the dynamics of embedded ones. Finally, we encourage theory development in acquisition studies by positing the importance of interpretive processes and, more broadly, relational elements that span the boundaries of the parent-target dyad.

Keywords: Acquisitions, Embedded tie dynamics, Embedded ties

Suggested Citation

Spedale, Simona and Van Den Bosch, Frans A. J. and Volberda, Henk W., Preservation and Dissolution of the Target Firm's Embedded Ties in Acquisitions (December 11, 2006). ERIM Report Series Reference No. ERS-2006-077-STR. Available at SSRN: https://ssrn.com/abstract=981291

Simona Spedale (Contact Author)

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands
+31 10 408 1941 (Phone)
+31 10 408 9013 (Fax)

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

Frans A. J. Van Den Bosch

Erasmus University Rotterdam (EUR) - Department of Strategic Management and Entrepreneurship ( email )

RSM Erasmus University
Rotterdam, 3000 DR
Netherlands
+31 10 408 1955/2005 (Phone)
+31 10 453 0137 (Fax)

HOME PAGE: http://www.rsm.nl/fvandenbosch

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Henk W. Volberda

Erasmus University Rotterdam (EUR) - Rotterdam School of Management (RSM) ( email )

P.O. Box 1738
Room T08-21
3000 DR Rotterdam, 3000 DR
Netherlands
+31 10 408 2761 (Phone)
+31 10 408 9013 (Fax)

HOME PAGE: http://www.eur.nl/fbk/dep/dep4/faculty_members/Henk_Volberda

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

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