: This study addresses the following questions: (1) can organizations learn how to manage infrequent and heterogeneous tasks ? (2) If they can, then what are the mechanisms that might explain learning under these circumstances ?, and (3) what are the limitations under which these mechanisms operate ? A model based on explicit knowledge codification and tacit experience accumulation is submitted and tested using data from a sample of 183 acquisitions in the US banking industry. Measures of post-acquisition integration strategies and of preacquisition resource characteristics are included in the model. We find that tacit knowledge accumulation significantly impacts performance when the experiences are highly homogeneous, and that knowledge codification improves acquisition performance in the context of high post-acquisition integration, i.e. when the organizational challenge is particularly complex. Also, the level of integration between the two firms involved in the acquisition positive...

: In a study of post-acquisition management practices in the U.S. commercial banking industry, we examine how firms codify their knowledge from previous acquisition experiences and routinize their post-acquisition decisions. We find that firms with higher levels of knowledge codification tend to integrate their acquired units more and to replace the existing top management team with higher probability. Also, acquirers tend to replicate their integration and resource replacement decisions irrespective of variations in the resource characteristics of their targets, suggesting strong tacit routinization effects. 3 Corporate acquisitions have been phenomena of considerable interest to scholars in strategic management, finance and economics for a long time. Despite the impressive amount of research devoted to the performance consequences of acquisitions, the strategic decisions adopted during the post-acquisition integration phase have received significantly less attention. As Haspeslagh...

Despite much research, debate continues about the impact of risk taking on a firm’s future performance. Unlike prior studies, we propose that risk-return relationships evolve as firms age and learn, particularly in high-velocity settings where accumulated knowledge affects how firms respond to technological change. Discerning this requires three things absent from prior analyses: (1) studying an entire population; (2) modeling evolutionary processes; and (3) using separate models to capture how a firm’s gains and losses (i.e., its strong and weak performances) unfold across time. Using this framework, we found that (a) risk-return relationships generally evolved from positive to negative as firms aged; because (b) firms learned to avoid large losses at younger ages than they learned to sustain large gains; yet (c) the risk taking that followed below-aspiration performance moderated those effects such that major setbacks prompted large future gains and large future losses among older firms and downward spirals among younger ones. 1 Relationships between risk and return are central to our lives. In the hope of emotional or monetary rewards, some people take risks by climbing mountains, changing employers, or switching careers. Some executives take risks in pursuit of better pay and enhanced reputations, and some firms pursue risky strategies in a quest for higher sales and profits.

firms want to organize efficiently and what keeps them from doing so:

Although many theories predict strong effects of organizational position on a variety of outcomes, studies that examine the propensity of firms to collectively change positions on the market are rare. We borrow ideas from theories that examine the precursors of organizational change but find that these predictions are often contradictory. Studies of inertia vs. exploration and of imitation vs. strategic differentiation and resource competition offer conflicting predictions. We reconcile the opposing arguments and develop a theory of collective change in strategic position by integrating ideas from established learning, institutional, ecological, and management theories. The core of our theory blends structural and cognitive processes and posits that the properties of the firms ’ external context interact with managerial perceptions of the resource space in which their firms operate. Interpretations of resource availability, competitive forces and collective identities clash as managers try to interpret their firm’s position through the behavior of their peers, as if reflecting in a looking glass. Empirical analyses of changes in strategic position among U.S. automanufacturers support our theory and lay out a framework for further integration among cognitive and structural perspectives. Most sociological and management theories consider market position a primary

In this chapter, I examine how historical setting influences economic organization by focusing on three interconnected environmental conditions: different regulatory regimes, developments in mass transportation, and the importance of founding period. Prior analysis of state laws and organizations has found laws to have both coercive and normative effects on organizations; however, previous investigators have not established how these effects can change over time and how laws are an important part of organizations ’ founding environments. I analyze the effect of state laws on banking structure for all contiguous US states between the period of 1896 and 1978 using an annual time-series data set. Furthermore, from 1978 to 2001, I examine how contemporary and founding legal environments influenced which of the approximately 25,000 banks that existed during this period were more likely to engage in acquisitions. Consistent with economic research, my findings indicate that having restrictive banking regulations leads to smaller state level banks. However, having the most liberal regulations only has a positive effect on size as transportation infrastructure becomes more advanced, which indicates that regulatory effects on firms and economic structures are historically contingent. A further finding is that the regulatory and technical environments during bank foundings have a larger effect on bank acquisitions than contemporary conditions. This chapter suggests that while laws have important effects on organizations, more attention needs to be paid to how legal environments change over time, and are part of organizations ’ founding conditions.

comments as well as Connie Lun, Grace Chun Yu and Nick Wong for assistance in data

TMT COORDINATION NEEDS AND THE CEO PAY GAP:

Executives confront potentially conflicting pressures—to maximize shareholder wealth in the long term and to appease shareholders in the near term. Because near-term pressures must be addressed to preserve tenure and to realize the potential benefits of long-term strategies, executives are increasingly likely to rely on shareholder mollification initiatives. We develop a behavioral-agency theoretical framework to study how stock repurchase programs are used to help top managers appease shareholders. Analysis of 250 large U.S. firms suggests that stock repurchase programs are variously a function of information asymmetry, risky stock-based incentives, and performance expectations. 1 Top executives must manage multiple contingencies in order to preserve their positions. Some of these contingencies call for potentially contradictory efforts. For instance, the U.S. system of corporate governance presumes that top executives ’ primary responsibility is to maximize shareholder wealth (Jensen & Meckling, 1976; Shleifer & Vishny, 1997), which in turn often requires investment in and commitment to long-term risky projects (Ghemawat, 1988). Strategies to maximize shareholder wealth are also necessarily time-dependent, and benefits may become

the problems and opportunities facing the financial services industry in its search for competitive excellence. The Center's research focuses on the issues related to managing risk at the firm level as well as ways to improve productivity and performance. The Center fosters the development of a community of faculty, visiting scholars and Ph.D. candidates whose research interests complement and support the mission of the Center. The Center works closely with industry executives and practitioners to ensure that its research is informed by the operating realities and competitive demands facing industry participants as they pursue competitive excellence. Copies of the working papers summarized here are available from the Center. If you would like to learn more about the Center or become a member of our research community, please let us know of your interest.