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The influence of market and product knowledge resource embeddedness on the international mergers of advertising agencies: The case-study approach

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  • Huang, Tai-Yuan
  • Hu, Jer-San
  • Chen, Kuo-Chia
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    Abstract

    The acquisition of Taiwanese advertising companies by large multinational advertising syndicates stands out as unique compared to those in other industries. The strategic thinking involved in such acquisitions is worth a deep analysis. This study focuses on the merger of two Taiwanese and Japanese advertising agencies from the network embeddedness point of view. Using the case-study method, this paper probes into the motivations and strategy evolutions of the said mergers. The following findings were made: "product knowledge" and "market knowledge" are important resources on which advertisers and advertising agencies share mutual dependency in a given market. As products are marketed and experience growth, advertising agents and advertisers enter into a long-term cooperation relationship and resource embeddedness. When advertising agencies follow their advertisers into a foreign market, and thus also leading to bundled investments, the globalization strategies of the former become a consequence. Advertisers' need to understand the local competitive resources (i.e. market knowledge) leads to symmetrical resource complementarities with their advertising agencies in the multinational market. In the course of a merger dictated by common market knowledge needs, advertising agencies, enjoying an upper hand in resources, often have a greater dominance in the merger and acquisition process.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Business Review.

    Volume (Year): 17 (2008)
    Issue (Month): 5 (October)
    Pages: 587-599

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    Handle: RePEc:eee:iburev:v:17:y:2008:i:5:p:587-599

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    Keywords: Business network International merger Market/product knowledge Multinational company Resource embeddedness;

    References

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    1. Sharma, D. Deo & Blomstermo, Anders, 2003. "The internationalization process of Born Globals: a network view," International Business Review, Elsevier, vol. 12(6), pages 739-753, December.
    2. Yeniyurt, Sengun & Tamer Cavusgil, S. & Hult, G. Tomas M., 2005. "A global market advantage framework: the role of global market knowledge competencies," International Business Review, Elsevier, vol. 14(1), pages 1-19, February.
    3. Nachum, L. & Rolle, J. D., 1999. "Home country and firm-specific ownership advantages: A study of US, UK and French advertising agencies," International Business Review, Elsevier, vol. 8(5-6), pages 633-660, October.
    4. Harris, Judy & Taylor, Kimberly A., 2003. "The Case for Greater Agency Involvement in Strategic Partnerships," Journal of Advertising Research, Cambridge University Press, vol. 43(04), pages 346-352, December.
    5. Arnold K Weinstein, 1977. "Foreign Investments by Service Firms: The Case of Multinational Advertising Agencies," Journal of International Business Studies, Palgrave Macmillan, vol. 8(1), pages 83-91, March.
    6. Charles Dhanaraj & Marjorie A Lyles & H Kevin Steensma & Laszlo Tihanyi, 2004. "Managing tacit and explicit knowledge transfer in IJVs: the role of relational embeddedness and the impact on performance," Journal of International Business Studies, Palgrave Macmillan, vol. 35(5), pages 428-442, September.
    7. Nicolaj J. Foss & Volker Mahnke, 2003. "Knowledge Management What Can Organizational Economics Contribute?," DRUID Working Papers 03-02, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    8. Eriksson, Kent & Chetty, Sylvie, 2003. "The effect of experience and absorptive capacity on foreign market knowledge," International Business Review, Elsevier, vol. 12(6), pages 673-695, December.
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    Cited by:
    1. Ellis, Paul D., 2010. "International trade intermediaries and the transfer of marketing knowledge in transition economies," International Business Review, Elsevier, vol. 19(1), pages 16-33, February.
    2. Hong, Jacky Fok Loi & Snell, Robin Stanley & Easterby-Smith, Mark, 2009. "Knowledge flow and boundary crossing at the periphery of a MNC," International Business Review, Elsevier, vol. 18(6), pages 539-554, December.

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