Why Companies Do Not Pursue Attractive Mergers and Acquisitions
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Why Companies Do Not Pursue Attractive Mergers and Acquisitions ...

Chapter 1:  Introduction
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  • For example, conflicting interests and goals across organisational units can result in political and other behaviours that have a dysfunctional impact on decision-making (leading to failure in the case of acquisitions); it is possible that some of these can be identified and managed to improve decision outcomes. For example, Cyert and March (1963), find that one subject’s bias towards a course of action tends to be offset by another’s bias against it. This discounting, however, applies in frequently made decisions and was not tested with strategic decisions.
  • Strategic decision-making: SDM is an eclectic field drawing from a range of disciplines covering diverse subjects (Papadakis & Barwise, 1998) and which overlaps with the behavioural and organisational decision-making streams described previously. In 1965, Ansoff distinguished between two major perspectives on decision-making. The first, based on decision theory, takes alternatives and consequences as givens and examines the kinds of mental processes, interactions, and rules that are used to select a preferred alternative. The second focuses on understanding the nature and structure of decisions. It seeks to improve decision-making by providing insights into their antecedents and consequences (Ansoff, 1965). One large and recent stream of SDM research does both by seeking to establish linkages between four main categories of variables: the type or content of a decision, the context in which it is made, the process or mode used to make it, and its outcomes. Strategic or value-creating acquisitions fall within the scope of SDM based on a generally agreed set of criteria for distinguishing these decisions from more operational ones. They are, for example, important in terms of the actions taken, resources committed, and precedents set (Eisenhardt & Zbaracki, 1992; Mintzberg et al., 1976). Acquisition scholars have drawn from SDM to frame much of their research. Hitt and Tyler, for example, sought to reconcile the rational normative, strategic choice, and external control models of decision-making (1991); Pablo et al. (1996) sought to ground acquisition decision-making models more firmly in behavioural decision theory, from which much SDM draws, by suggesting the addition of a variable representing risk propensity in process models that deal with all phases of the M&A process including candidate selection and postacquisition integration decision.
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