Week 3 [Gubbi, Aulakh, Ray, Sarkar, & Chittoor, 2010]

Question 1

What do [Gubbi, Aulakh, Ray, Sarkar, & Chittoor, 2010] state about international acquisition by emerging economies?
[Gubbi, Aulakh, Ray, Sarkar, & Chittoor, 2010]

Answer 1

H1: International acquisition by firms from emerging economies generate positive abnormal returns/value for acquiring firm’s stakeholders

Question 2

How did emerging-economies like India internationalize, (2 waves)?
[Gubbi, Aulakh, Ray, Sarkar, & Chittoor, 2010]

Answer 2

1. First wave: from developing region to other developing regions
2. Second wave (in post-liberalization era): need to ‘acquire strategic assets and to learn’ in addition to exploiting their stock of FSA.

Question 3

Which data was used for the [Gubbi, Aulakh, Ray, Sarkar, & Chittoor, 2010] paper?
[Gubbi, Aulakh, Ray, Sarkar, & Chittoor, 2010]

Answer 3

Data on 425 acquisitions of Indian companies in the 2000-2007 period.

Question 4

What are [Gubbi, Aulakh, Ray, Sarkar, & Chittoor, 2010] results on international acquisitions (4)?
[Gubbi, Aulakh, Ray, Sarkar, & Chittoor, 2010]

Answer 4

“International acquisitions:

1. facilitate internationalization of (in)tangible FSAs
2. allow MNEs to overcome time constraint for developing FSAs
3. address difficulty in trading these FSAs in market
4. provide a strategic lever for EM-MNE’s”

Question 5

According to [Gubbi, Aulakh, Ray, Sarkar, & Chittoor, 2010], will target firms in more advanced economies generate greater value?
[Gubbi, Aulakh, Ray, Sarkar, & Chittoor, 2010]

Answer 5

Yes, H2: Those acquisitions that involve target firms in more advanced economies will generate greater abnormal returns/values

• Level of ‘economic development’ is positively correlated with the quality of resources available in different economies
• companies in advance economies are likely to present a richer reservoir of learning from emerging-economy firms, which can then be internalized and applied in different product-market contexts

Question 6

How do [Gubbi, Aulakh, Ray, Sarkar, & Chittoor, 2010] describe ‘more advanced economies’?
[Gubbi, Aulakh, Ray, Sarkar, & Chittoor, 2010]

Answer 6

Characterized by higher-quality complementary resources and developed institutional environment