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Why diverse top managementteams break up in post-acquisition periods
KTH, Skolan för industriell teknik och management (ITM), Industriell ekonomi och organisation (Inst.), Entreprenörskap och Innovation.
KTH, Skolan för industriell teknik och management (ITM), Industriell ekonomi och organisation (Inst.), Entreprenörskap och Innovation.ORCID-id: 0000-0003-0820-2769
Department of Management, Economics and Industrial Engineering, Politecnico di Milano.
(engelsk)Manuskript (preprint) (Annet vitenskapelig)
Abstract [en]

This paper proposes a complementary explanation behind the turnover of target’s top managers in post-acquisition periods. Although human capital and acquisition implementation literature describe managerial retention as desirable, empirical studies have reported significant managerial turnover in acquisition of high-tech and knowledge intensive firms. Borrowing some insights from the team diversity literature, the paper examines the ex-ante diversity among top managers of knowledge-intensive and high-tech firms as an antecedent of their turnover in post-acquisition. We argue that diversity reduces the coordination efficiency necessary to transfer knowledge and facilitate post-acquisition organizational integration, and managers belonging to such teams are more likely to be replaced. Empirical analysis drawing on 2164 top managers in 297 Swedish firms shows that managerial position diversity as a separation, pay disparity and industrial tenure diversity as a variety indeed are associated with managerial exit in three years after the acquisition.

HSV kategori
Identifikatorer
URN: urn:nbn:se:kth:diva-176416OAI: oai:DiVA.org:kth-176416DiVA, id: diva2:866816
Merknad

QS 2015

Tilgjengelig fra: 2015-11-03 Laget: 2015-11-03 Sist oppdatert: 2015-11-12bibliografisk kontrollert
Inngår i avhandling
1. Predicting who stays or leaves after the acquisition:: Target’s top manager turnover
Åpne denne publikasjonen i ny fane eller vindu >>Predicting who stays or leaves after the acquisition:: Target’s top manager turnover
2015 (engelsk)Doktoravhandling, med artikler (Annet vitenskapelig)
Abstract [en]

In acquisition of high-tech and knowledge intensive firms, scholars have paid special attention to top managers’ status after the deal. Literature suggests that these managers in particular CEOs if kept in post-acquisition provide coordination capacity for the acquirer to transfer the knowledge and technology from the target to the acquirer while minimizing the disruptive effect of post-acquisition integration process. In addition, the acquirer benefits from human capital embedded in target’s managerial resources; especially in high-tech and knowledge intensive firms where top managers are founders or patent holders. Although the above mentioned argument have been validated by empirical studies showing that top manager’s turnover reduces the post-acquisition performance for the acquirers, multiple empirical studies have reported abnormal managerial turnover shortly after the acquisition. This thesis made an attempt to explain this puzzling phenomenon by investigating on the determinants of the top manager’s turnover of the target in the post-acquisition period. The study finds that in case of CEOs, acquirers do not rely always on coordinating capacity provided by them in post-acquisition. Indeed, the acquirer’s choice of provision of coordination is beyond the target’s CEO retention. The choice of coordination depends on the existing level of coordination capacities and the acquisition’s motivation. In addition, founder-CEOs are more likely to stay after the acquisition because of their valuable firm-specific human capital for the acquirer. However, this value diminishes by the maturity of the target. In addition, similarity in demographic characteristics of the two CEOs (of the acquirer and target) causes social attraction, collaboration and cooperation which ultimately increases the chance that the target’s CEO retention. Finally, diversity within the target’s top management team (TMT) directly increases their chance of departure after the deal. The diversity engenders social frictions, conflicts and coordination inefficiencies.

sted, utgiver, år, opplag, sider
Stockholm: KTH Royal Institute of Technology, 2015. s. 62
Serie
TRITA-IEO, ISSN 1100-7982 ; 2015:11
Emneord
Acquisition, CEO turnover, TMT turnover, coordination, Founder-CEO, Similarity attraction, Diversity
HSV kategori
Identifikatorer
urn:nbn:se:kth:diva-176417 (URN)978-91-7595-767-8 (ISBN)
Disputas
2015-12-14, Kollegiesalen, Brinellvägen 8, KTH, Stockholm, 10:00 (engelsk)
Opponent
Veileder
Merknad

The Doctoral Degrees issued upon completion of the programme are issued by KTH Royal Institute of Technology, Stockholm, Sweden, Politecnico de Milano, POLIMI, Milan, Italy and Universidad Politécnicade Madrid, UPM, Madrid, Spain respectively.

QC 20151112

Tilgjengelig fra: 2015-11-12 Laget: 2015-11-03 Sist oppdatert: 2015-11-12bibliografisk kontrollert

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