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Why free markets die: An evolutionary perspective

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  • Eduardo Viegas
  • Stuart P. Cockburn
  • Henrik Jeldtoft Jensen
  • Geoffrey B. West
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    Abstract

    Company mergers and acquisitions are often perceived to act as catalysts for corporate growth in free markets systems: it is conventional wisdom that those activities lead to better and more efficient markets. However, the broad adoption of this perception into corporate strategy is prone to result in a less diverse and more unstable environment, dominated by either very large or very small niche entities. We show here that ancestry, i.e. the cumulative history of mergers, is the key characteristic that encapsulates the diverse range of drivers behind mergers and acquisitions, across a range of industries and geographies. A long-term growth analysis reveals that entities which have been party to fewer mergers tend to grow faster than more highly acquisitive businesses.

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    File URL: http://arxiv.org/pdf/1401.5314
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    Bibliographic Info

    Paper provided by arXiv.org in its series Papers with number 1401.5314.

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    Date of creation: Jan 2014
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    Handle: RePEc:arx:papers:1401.5314

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    Web page: http://arxiv.org/

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