Diversity management and postmergers and acquisitions performance

PurposeThe purpose of this paper is to examine the role of diversity management on postmergers and acquisitions (M&A) performance. Building on prior literature, it investigates whether a firm ability to harmonize people with different backgrounds and to deal with uncertainty and dynamics in the diverse work environment will affect post-M&A performance either directly or through its interactions with acquirer-target characteristics.Design/methodology/approachThis paper used panel regression analysis on a sample of 218 M&As conducted by listed large US firms across industries.FindingsResults show that the diversity management of an acquiring firm positively influences post-M&A performance. This paper also finds support for diversity management having a more significant moderating role where merged firms have a bigger size difference and higher industry relatedness.Originality/valueThe primary contribution of this study is in testing and finding evidence to support the claim that diversity management is a useful factor in predicting post-M&A performance. The success of post-M&A integration should be considered alongside the extent of firm capabilities to manage internal diversity.

Competency-Industry Relatedness (C-IR) Framework for Sustained Business Growth in Startups during and beyond Pandemic: Myths and Lessons from Publicly Funded Innovative Startups

Context: The coronavirus disease 2019 (COVID-19) pandemic led to a turbulent business environment, resulting in market uncertainties, frustrations, and rumors. Wrongly held beliefs—or myths—can hinder startups from turning new market opportunities into their favor (for example, by failing at diversification decisions) or undertaking wrong business decisions, e.g., diversifying in industries that have products of no real market value). Objectives: The objective of the paper is to identify the beliefs that drive the business decisions of startups in a pandemic and to isolate those beliefs that are merely myths. Further, this paper proposes strategic guidelines in the form of a framework to help startups make sound decisions that can lead to market success. Method: The two-step research method involved multiple case studies with five startups based in India, France, Italy, and Switzerland, to identify perceptual beliefs that drove strategic business decisions, followed by a case study of 36 COVID-19-solution focused startups, funded by the European Union (EU). The findings were validated through a survey that involved 102 entrepreneurs. The comparative analysis of two multiple case studies helped identify beliefs that were merely “myths”; myths that drove irrational strategic decisions, resulting in business failures. Results: The results indicate that startups make decisions in pandemic situations that are driven by seven myths, pertaining to human, intellectual, and financial resources. The decision on whether to diversify or continue in the same business operation can be divided into four strategic options of the Competency-Industry Relatedness (C-IR) framework: ignore, delay, phase-in, and diversify. Diversification in the same (or different industry) is less risky for startups if they have the skills, as needed, to diversify in related industries. Diversification in related industries helps startups leverage their experiences and learning curves (those associated with existing product lines) to adapt their existing products in new markets, or utilize their technologies to solve new problems via new products. The desired outcome for these startups should be sustainable business growth—to meet sustainability goals by contributing to the society and the economy. Conclusion: The C-IR framework is a strategic guide for startups to make business decisions based on internal factors, rather than myths. Accurately assessing skill diversity and the nature of new industries (or markets) will help startups leverage their existing resources optimally, without the need for (pricey) external funding. This will foster sustained business growth resulting in a nation economic development. Knowledge transfer from the Innovation ecosystem will further strengthen the C-IR framework effectiveness.

Unraveling the Network of the Extractive Industries

This paper analyzes extractive industries in Colombia and their connections to other economic activities in the country. We use detailed social security data on all formal employees to create an industry-relatedness measure using labor flows between industries. Drawing on the vast network analysis literature, we exploit centrality measures to reveal the importance of the extractive sector among Colombian industries. Our results show that extractive industries are well connected within the Colombian industrial network, and that they are central overall and within their clusters. We also find that extractive industries have stronger linkages with manufacturing and agriculture than with other sectors. Finally, a higher relatedness to extractive activities is correlated with lower levels of employment, specially of female workers.

Managing mergers in a difficult era: Stock market and accounting evidence from Greece

The study examines the impact of mergers on stock market and performance of companies which were involved at mergers in Greece. Thus, the study, by using a sample of twenty-three listed companies which executed at least one merger (as acquirers) during the period of economic crisis, analyses nine stock market measures and ratios using simultaneously accounting measures extracted from corresponding financial statements. More specifically, we test a company’s performance by comparing a two-year span period before and after of all the merger events that took place within the period 2011-2015 (with data analysis from 2009 to 2017). The results of the study indicated that there is no statistically significant improvement or worsening for none of the examined variables in the post-merger period. In addition, we examined further merger characteristics, such as the method of payment and industry relatedness (qualitative variables). We observed statistically significant changes of a variable, in relation with the payment method, and in particular improvement of a variable when the exchange of shares is used as a payment method of a merger, instead of cash exchange.