This study examines the impact of an acquisition announcement on the market reaction to an acquirer's alliance partner. From a transaction cost perspective, we argue that the market valuation of an alliance partner around an acquisition announcement is negative because the stock market recognizes that an acquisition causes an unanticipated increase in the uncertainty of the acquirer's behavior, thereby decreasing the expected value from the alliance. Additionally, the negative impact of an acquisition announcement depends on the alliance and acquisition characteristics, which determine the degree of the unanticipated increase in the acquirer's behavioral uncertainty. Using an event study of 347 alliances associated with 150 acquisitions of Japanese public non-financial firms, we find that an acquirer's acquisition announcement triggers a negative market valuation of its alliance partner. Moreover, past alliance experience reduces the negative impact of an acquisition announcement, while non-horizontal alliance type and acquisition deal value enhance the negative impact.

Social fragmentation caused by widening differences among constituents has recently become a highly relevant issue to our modern society. Theoretical models of social fragmentation using the adaptive network framework have been proposed and studied in earlier literature, which are known to either converge to a homogeneous, well-connected network or fragment into many disconnected subnetworks with distinct states. Here we introduced the diversities of behavioral attributes among social constituents and studied their effects on social network evolution. We investigated, using a networked agent-based simulation model, how the resulting network states and topologies would be affected when individual constituents’ cultural tolerance, cultural state change rate, and edge weight change rate were systematically diversified. The results showed that the diversity of cultural tolerance had the most direct effect to keep the cultural diversity within the society high and simultaneously reduce the average shortest path length of the social network, which was not previously reported in the earlier literature. Diversities of other behavioral attributes also had effects on final states of the social network, with some nonlinear interactions. Our results suggest that having a broad distribution of cultural tolerance levels within society can help promote the coexistence of cultural diversity and structural connectivity.

Copyright © 2017 Strategic Management Society Research Summary: In this study, we adopt a socioemotional wealth perspective to examine the influence of family ownership on foreign direct investment. When establishing foreign subsidiaries, firms with greater degrees of family ownership are more likely to engage in greenfield investment and full equity ownership in order to maintain family owners’ socioemotional wealth. Additionally, these relationships are more pronounced in countries with higher levels of corruption. In corrupt countries, greater control over foreign subsidiaries is necessary to restrict their corrupt behaviors, which can seriously damage the firm’s socioemotional wealth and destroy the reputation of the family owners. By using a dataset of foreign market entries by Japanese listed firms in the electronic machinery industry, we find general support for our hypotheses. Managerial Summary: We find evidence that Japanese listed electronic machinery manufacturers with larger family ownership are more likely to choose greenfield investment and full ownership when entering foreign countries. This result suggests that family owners prefer to maintain strong control on local subsidiaries, possibly for preserving their socioemotional wealth. Additionally, this tendency of family firms’ regarding the choice of greenfield investment is stronger when they enter countries with higher levels of corruption. Managers and investors of family firms might need to pay attention to family owners’ entry mode choices, which could be incentivized excessively for the preservation of socioemotional wealth, possibly at the expense of economic wealth.

We discuss why corporate misconduct is increasing in Japan through a lenses of comparative corporate governance. We find that managerial ownership under stakeholder logic decreases whereas foreign ownership under shareholder logic increases corporate misconduct. Although stock options bring in strong shareholder logic, it has different effects on above mentioned relationships.

Research summary: We use a sample of Singapore firms to replicate Barkema and Vermeulen's (1998) study of international expansion through start-ups or acquisitions by Dutch firms. We discover that the authors misinterpreted the regression coefficients for hypothesis testing and only two of their four hypotheses were actually tested. For these two hypotheses, one is not supported in either their study or ours, while the other is supported in their study but not ours. For the remaining two hypotheses we find support for one of them, which is concerned with the curvilinear effect of product diversity on the mode of expansion. In sum, the original study claims that all four hypotheses are supported, whereas only one is supported in the replication. More specifically, the former results, including the effects of the independent and control variables, are largely not generalizable to the latter.
Managerial summary: Barkema and Vermeulen's (1998) study investigates the international expansion by Dutch firms during the period from 1966 to 1994. Their results indicate that whether a firm expands through setting up a greenfield operation or acquiring an existing operation is affected by the diversity of the firm's product lines, the diversity of the countries to which it has expanded, and how far the expansion is related to its existing business. We replicate their study using a sample of Singapore firms for the period from 1980 to 2000. Our results show only an effect of a firm's product diversity on its mode of international expansion. Our study clearly indicates the risk of drawing managerial implications from the results of a single study. More replication studies are needed for establishing a solid theoretical foundation to inform management decisions. Copyright (C) 2016 John Wiley & Sons, Ltd.

To enrich the literature on alliance termination, we recognize that the dynamics of individual alliances are subject to the structural characteristics of the alliance portfolios in which they are embedded. We anchor our study in the context of large industry leaders partnering with multiple small partners, the latter of which can be viewed as competing for access to the formers' resources. We expect that a small partner's relative capability in relation to peer partners within a leader's alliance portfolio is negatively related to the likelihood of alliance termination, since the leader acknowledges that partners with inferior capability do not deserve to be supported. Furthermore, this relationship would be moderated by alliance portfolio size, market overlap with peer partners, and with industry leaders. Using a unique dataset of 145 alliances between leading and small department stores in Japan in the period 1977-93, we found general support for the hypothesized relationships.

This article theorizes the effects of interfirm rivalry on partner selection in horizontal alliance formation from a competitive dynamics perspective. Although horizontal alliances are formed between competing firms, previous studies have paid limited attention to the relationship between interfirm rivalry and partner selection. The article proposes two types of interfirm rivalries in horizontal alliances: inside-alliance rivalry and outside-alliance rivalry. The suggested model predicts that firms select partners that result in lesser inside-alliance rivalry. However, when firms face threatening common rivals, they tend to choose partners that reduce outside-alliance rivalry despite a high inside-alliance rivalry. The diversity of competitive repertoires of common rivals determines the type of interfirm rivalry that firms would consider more important in selecting partners. Additionally, when the level of intensity of outside-alliance rivalry for two firms is equal, they are more likely to form an alliance. This article contributes significantly to the alliance formation and competitive dynamics literature in three ways. First, this study utilizes the competitive dynamics perspective to explain partner selection in horizontal alliances, which is unprecedented. Second, and in continuity to the first contribution, this article clearly distinguishes between the effects of market commonality and resource similarity on partner selection. Finally, in the field of competitive dynamics, this study presents theoretical explanations for inter-firm rivalry related to allied firms.

In this paper, we review previous theoretical and empirical works on family business in the management and finance literatures. We particularly focus on the issue of alignment between ownership and management. We introduce three major theories─agency theory, resource-based theory, and socioemotional wealth theory─ and discuss how each of them accounts for mechanisms of "family ownership" and/or "family management." We also indicate that family management may be more influential than family ownership in the context of the Japanese family business. We finally discuss implications for future studies on family business in Japan.

Although cultural integration, or sharing a common corporate culture, is crucial for the success of mergers, previous studies have been limited to firm-level analyses. From a social network perspective, this study explores how cultural integration emerges from the patterns of social interactions among individuals. Using an agent-based model, we investigate the impact of network structures within and between two merging firms on post-merger cultural integration and organizational dysfunctions-individual turnover, interpersonal conflict and organizational communication ineffectiveness-that arise from insufficient cultural integration. The simulation results demonstrate that the highest level of cultural integration is achieved when social ties are more centralized within each merging firm and the social ties between the merging firms are less concentrated on central individuals. Additionally, the results show that within-firm and between-firm network structures significantly affect individual turnover, interpersonal conflict and organizational communication ineffectiveness, and that these three outcome measurements do not vary in tandem. © 2012 Springer Science+Business Media, LLC.

Adaptive networks are a novel class of dynamical networks whose topologies and states coevolve. Many real-world complex systems can be modeled as adaptive networks, including social networks, transportation networks, neural networks and biological networks. In this paper, we introduce fundamental concepts and unique properties of adaptive networks through a brief, non-comprehensive review of recent literature on mathematical/computational modeling and analysis of such networks. We also report our recent work on several applications of computational adaptive network modeling and analysis to real-world problems, including temporal development of search and rescue operational networks, automated rule discovery from empirical network evolution data, and cultural integration in corporate merger. © 2012 Elsevier Ltd. All rights reserved.

This study investigates the impact of product modularity on product development performance in the context of team processes. Although previous studies have argued that product development performance increases with product modularity, owing to the enhancement of problem solving in product development, few have empirically demonstrated the relationship. In addition, previous studies remain silent regarding the mechanism by which product modularity moderates the effects of team processes on performance during product development. We examine product modularity's direct effects on product development performance and moderating effects on team members' communication and effort. Using survey data of 48 project leaders in a Japanese system integration company, we found that the modularity of an information system enhanced the effectiveness and efficiency of its development. Furthermore, the positive impact of communication within team members was attenuated by product modularity. This study broadens our understanding of product modularity and team processes.

This paper analyzes the effects of a successor's organizational socialization in a relation-ship between CEO succession and strategic change. In former research, the factor whether a new CEO is promoted in a current company or is invited outside of the company has been treated as one of the CEO characteristics, moderating the relationship between CEO succession and strategic change. However, the empirical results are not consistent. The inconsistent results could be derived from an insufficient construct validity of the factor. Drawing on the distinction of an insider or outsider, researchers strive to explain the qualitative difference of the successor's knowledge and values. However, through measuring the factor by a dichotomous variable, the researchers have not fully considered the degree to which a successor absorbs the knowledge and values of a certain company. Considering the former research, organizational socialization, the process by which an individual comes to appreciate the values, abilities, expected behavior, and social knowledge essential for assuming an organizational role and for participating in as an organizational member, could function as a more explanatory construct. To examine its effect, 164 small businesses in Japan, half of which experienced CEO succession in 2000 and the rest did not, are selected as a sample. Empirical results are as follow: First, CEO succession promotes strategic change. Second, the degree of a successor's organizational socialization to the current company negatively influences the relationship. Third, the degree of the successor's organizational socialization to the other companies positively affects the relationship. Finally, the stronger organizational socialization to the other companies compared with that to the current company, the stronger the relationship will be. The dichotomous variable measuring the distinction of an insider or outsider, frequently used in the existing literature, is not statistically significant. The result implies that a successor's organizational socialization could be more explanatory than the distinction of an insider or outsider is.