Gammelgaard, Jens (Department of International Economics and Management, Copenhagen Business School)
Abstract
Is the present investment behaviour of firms acquiring other firms abroad an outcome of an
historic tradition and the time period in which the take-over started? As Barney (1986a) points
out is the strategies of the firm and abilities to fulfil those strategies the result of a historic
developing, beginning with the foundation of the firm and the unique personalities of its
founder(s), and the specific circumstances of its subsequent growth. Therefore, some path
dependencies are predictable, where firms continuously follow a specific track in their foreign
direct investment behaviour. Organisational investment routines occur and alternative entry
modes are not reconsidered (Nelson & Winter, 1982; Duhaime & Schwenk, 1985), especially
if the first foreign acquisition turns out to be successful, this investment mode evolves to be
the dominant logic in the firm’s internationalisation process (Prahalad & Bettis, 1986; Côte,
Langley & Pasquero, 1999). However, one aspect is acquisitions versus other entry modes,
another is the underlying strategies and motives behind the investment mode. The purpose of
this paper is to illustrate time and path dependent acquisition motives in the case of Danish
industrial firms acquiring foreign firms in the period 1888 to 1993. To give one introductory
example, Rentokil, an English subsidiary to Sophus Berendsen acquired more than 100
foreign firms in an attempt to reach a 20% annual increase in turnover. This firm started its
international commitment through acquisitions in a period where the growth of the firm was
the dominating strategy, and subsequently Rentokil stayed within this track. Other firms are
able to break this time-related path dependency and follow the prevailing motive of the next
time period. Therefore, another assumption discussed is that different acquisition motives link
up to different time periods. To give an example, international acquisitions at the beginning of
the 20 th century were often an outcome of an attempt to avoid tariffs. Today many firms
follow a competence-oriented strategy.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by Copenhagen Business School, Department of International Economics and Management in its series Working Papers with number
3-2001.
Length: 31 pages Date of creation: 10 Jun 2001 Date of revision: Handle: RePEc:hhb:cbsint:2001-003
Contact details of provider: Postal: Department of International Economics and Management, Copenhagen Business School, Howitzvej 60, DK-2000 Frederiksberg, Denmark Phone: +45 3815 2515 Fax: +45 3815 2500 Web page: http://www.cbs.dk/departments/int/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Lars Nondal).
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: