Pierre-Xavier Meschi

Do Firms Forget About Their Past Acquisitions? Evidence From French Acquisitions in the United States (1988–2006)

Empirical studies of the relationship between acquisition experience and acquisition performance have had mixed results. Interestingly, these studies have found that acquisition experience does not necessarily increase acquisition performance. In particular, the extent to which the recency of the acquisition experience affects the performance of the focal acquisition remains equivocal. To investigate this issue, the authors adopt a perspective based on the concept of organizational forgetting. In the context of operations management, organizational forgetting explains the decrease in productivity that firms experience as a result of knowledge depreciation over time and interruptions to production. Cognitive psychology scholars find that the forgetting process follows specific laws. On the organizational level, these laws indicate that the organizational memory may deteriorate over time for three reasons: inefficient encoding, decay, and disuse. In the context of acquisitions, the authors examine how forgetting depreciates acquisition experience and, therefore, increases the likelihood of failure in subsequent acquisitions. They carry out a survival analysis on a population of 731 U.S. firms acquired by French firms between 1988 and 2006. The research shows that acquisition experience that is old or recent has no significant impact on acquisition performance. However, medium-term acquisition experience reduces the likelihood that the focal acquisition will fail. These findings are consistent with the laws on forgetting. This research also provides evidence of the existence of reinforcement mechanisms as well as a paradoxical influence of past alliances with the target.

Too Big to Learn: The Effects of Major Acquisition Failures on Subsequent Acquisition Divestment

We examine whether firms learn from their major acquisition failures. Drawing from a threat-rigidity theoretical framework, we suggest that firms do not learn from their major acquisition failures. Furthermore, we hypothesize that host-country experience reinforces the negative effects of major acquisition failures. Our research hypotheses are tested using an event history analysis of 741 acquisitions undertaken by French listed and non-listed firms in the USA between January 1988 and December 2008. We use failure divestment (divestment resulting from acquisition failure) as a proxy for acquisition performance. Consistent with our theoretical framework, we find that major acquisition failures have a negative impact on future acquisition performance. Furthermore, we find that such negative effects are reinforced by firms’ host-country experience.

European Direct Investment in China and Sino-French Joint Ventures

‘The achievements are great, the problems considerable, but the future is bright’ (Mao Tse Tung, in Han Suyin, 1975: 229). With the advantage of forty years’ hindsight, serious doubts can be expressed as to the reality of this bright future promised to China. The in-depth reforms undertaken by Deng Xiaoping (with the ‘open door’ policy applied since 1978), then by Jiang Zemin, may have taken China off the straight and narrow path of Maoist orthodoxy to put it on the difficult road of the ‘double system’ (a political system based on communist structures, with an economic system of the free market type), but there still remain many uncertainties regarding the country. Is the experimentation with the ‘one country, two systems’ policy in the process of embodying the slogan ‘a brighter future’, so dear to the hearts of communist leaders? In fact, nothing could be less certain. For the Western economic world’s traditional wariness with regard to China is more than ever prevalent. In the West, and particularly Europe, there has always been a deeply rooted tradition of scepticism regarding the vitality and the future of the Chinese economy. Thus, it was said in the French press in the 1930s that ‘if all the world’s rich nations were to work together to take China out of its mess, they would not succeed’ (in Guillain, 1965: 47). Every time China meets a major difficulty, someone is always ready to announce an imminent economic catastrophe. Very recently, to find proof of the theory of the ‘great leap backward’, one just had to read certain articles expressing the concern that, in the best case scenario, it was possible that the Yuan would be devalued: ‘By not devaluing its currency, the Yuan, China had created an image of a strong country when all its Asian neighbours were slumping. But now, everything is in danger of collapse. The pressures on the Yuan are building up continually’ (Rodier, in Figaro Economie, 28 July 1999: 29); and, in the worst case scenario, there would be economic crisis: ‘Today, the question is one of ascertaining whether China, which sailed through the Asian economic crisis with the composure of a large ocean liner, is the Queen Elizabeth or the Titanic’ (Yukon, in

Alliance Network Position, Embeddedness and Effects on the Carbon Performance of Firms in Emerging Economies

This article explores the effect of network structure on the carbon performance of firms in emerging economies at an ego network level. Building on the theoretical framework of social networks, we posit that an ego firm’s network position, structural embeddedness, and structural constraint affect carbon performance. We examine the research hypotheses using a panel data set made up of 44 Indian firms that entered into alliances under the Clean Development Mechanism over the 2005-2009 period. Our main results show that the central position of the focal firm in the network and its degree of network embeddedness exert a positive effect on its carbon performance. This article contributes to the literature on climate strategy by exploring the influence of the structural characteristics of the firm’s ego network in the carbon market on its environmental performance.

Competence Building, Corporate Renewal and Value Creation – A Case Study

Which courses of action and levers are used by companies in the quest for renewal? Do renewal initiatives create value for the company? Can successful renewal initiatives provide models for managers committed to change, enabling them to identify certain levers that can be exploited in their own drives for renewal? This paper aims at providing answers to these questions by describing different aspects (implementation and corporate value creation perspectives) of the renewal experience conducted in 1993 by a large French electrical engineering company, Spie-Trindel. In this company, a competence building process was identified and analyzed as a driving force behind renewal. Thanks to an analysis of different performance measures (return on investment, return on equity and stock market prices) of Spie-Trindel, the competence building process was studied as a transformational leverage and its impact on the resulting value creation of the company was put into light. Moreover, this paper provides a concrete and detailed description of a specific competence building process which led the company to both alter the hierarchy of competences (see “reordering mechanisms”) and institutionalize new competences (see “institutionalization and routinization mechanisms”) within its core competence portfolio.

Competence Building and Corporate Renewal

In 1996, the French business publication “Capital” carried an analysis of what it called “the resurrection of the dinosaurs”: the revival of corporations that had been viewed as moribund. Examples abound in every industrialised country: Chrysler, IBM or General Electric in the United States and Usinor-Sacilor, Siemens or Fiat in Europe. What strategies are behind these cases of revival? This article describes how, starting in 1993, a French company sought to renew itself by implementing one particular strategy which has been widely discussed among managers and academics alike: competence building. It then discusses the general lessons which can be drawn from the case. In particular, the article aims to reveal empirically the relationship between competence building and the corporate renewal process and then to use the case history to help develop the theory of competence-based competition between firms.

Performance of European Joint Ventures in Latin America, Asia and Eastern Europe

This article is literature study of promotional impact on Pepsi. Pepsi use CSR as a tool to gain emotional empathy and bring about a positive response towards their product. All in all Pepsi are masters in promoting and capturing the publics heart. The company tries to deliver emotional experiences such as happiness, hope and optimism. This article is basically a review study. The literature for the study is obtained through certain reliable research repositories. The literature survey revealed astounding facts as how to position brand in a typical market like India. The study reveals that strategic marketing along with social media presence could impact positioning of the foreign brands.

Assessing the Environment

The assessment of the environment’s value is one of the most classic missions for a consulting firm. Assessing the value of the company’s environment may be the main reason for initiating a consulting mission, but today this is more often the first step in a broader mission whose objective is to help the company CEO and top managers to formalise, validate and make a strategic growth decision. Building on a specific environment assessment methodology, this chapter aims, firstly, to help CEOs and top managers clarify the boundaries and challenges of their company’s current or future environment. The environment assessment methodology also allows identification and evaluation of the key players of an environment, monitoring of the behaviour and strategy of these key players, and can suggest strategic responses and scenarios. Finally, this chapter proposes tools to detect new markets and client segments, and facilitate the emergence of new competitive spaces.

COMPETENCE-BASED MANAGEMENT AND STRATEGIC FLEXIBILITY: THE CASE OF AIR LIQUIDE

During the 1990s, new theories emerged in the field of strategy. In particular, the resource-based and competence-based views of the firm developed in reaction to Porter and the entire current derived from the industrial economy. However, these approaches have their own limitations: they are difficult to put into practice and are partially similar to the industrial approach. This article has two aims: (a) to make a clearer distinction between the classical approach on the one hand, and the resource- and competence-based approach on the other hand; and (b) to overcome the opposition between these two models in order to grasp their complementarities. First of all, a critical analysis of the literature is presented, in order to understand how these two approaches fit into thinking. This theoretical framework is then illustrated by a case study of Air Liquide, which, in some of its activities, adopted a competence-based strategy and structure. The case study clearly identifies the points of divergence such as the complementarities between the two approaches, thereby showing how one can overcome their oppositions as well as their respective limitations.

Re)Designing the Business Model

Who are my clients? What do they consider valuable? How can we generate revenue by offering what they really want? What is the best profit formula to create value for clients at an appropriate cost for the company? By providing the right answer to these questions, this chapter seeks to help the company implement its strategy effectively by designing the business model that reflects its entrepreneurial, technological, and organisational choices. The process should allow the generation of a differentiated model that will be better than existing alternatives. The competitive advantage will emerge from either delivering more value to a specific clientele, or rethinking the way to create value more effectively by implementing a new set of best practices that put the company ahead of the competition.