Assessing the Effects of the Network of Strategic Alliances on M&A Decisions: An Empirical Analysis in an High-tech Sector

Marco Testoni

Student thesis: Master thesis

Abstract

Most of the literature primarily relied on economic or financial explanations to study M&A decisions of firms, but failed to take into account relational drivers. This study contends that the social context surrounding an organization may significantly influence the opportunity set it perceives for acquisitions. By assuming a dyadic perspective, the thesis focuses on the effects of the network of strategic alliances on subsequent M&A decisions. The empirical analysis considers data from the US semiconductor industry during the period 2003-2007. It finds that the closer two firms are in the network, the higher the probability that they will engage in a merger or acquisition. Consistently with previous researches, it is highlighted that R&D, manufacturing, and technology transfer agreements have the highest potential for transforming a direct alliance in a subsequent acquisition. However, when considering the effect operating through indirect links, all the typologies of alliances become relevant. Furthermore, the results show that the likelihood of an M&A increases if the two firms are centrally located within the network, if they have dissimilar sizes, if they experienced more acquisitions in the past, and if they are competing in close product and geographical markets. Finally, the thesis finds no evidence of a significant relationship between the probability of a merger and the technological proximity of two companies.

EducationsMSc in Management of Innovation and Business Development, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2012
Number of pages86