The document summarizes a research paper that examines how exploratory learning and network embeddedness drive firms' acquisitions of their alliance partners. It hypothesizes that exploration alliances which involve open learning are more likely to lead to acquisitions than exploitative alliances. Additionally, a high degree of joint brokerage positions and relative centrality between alliance firms strengthens the relationship between exploration and subsequent acquisitions. The document outlines the paper's methods, findings, and contributions in integrating behavioral and network perspectives on acquisitions.

1. BEHIND
ACQUISITIONS OF
ALLIANCE PARTNERS:
EXPLORATORY
LEARNING AND
NETWORK Paper Review by Akshay S. Bhat, XLRI
EMBEDDEDNESS
Academy of Management Journal
2011, Vol. 54, No. 5, 1069–1080.
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2. Abstract
• Acquisition Literature dominated by
economistic and atomistic assumptions
• This study extends acquisition research by
integrating behavioral learning and social
network perspectives to examine acquisitions
of alliance partners
• At dyadic level, how learning's from one
acquisition can drive subsequent acquisitions
• US industry empirical support to theory
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3. Learning • Exploration v Exploitation
• Joint brokerage positions
Networks and relative uncertainity
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4. Alliances and Networks
 important for
external resources
(Wang & Zajac, 2007)
Albeit literature
treats them as
parallel, firms often
ACQUIRE alliance
partners
What drives
acquisitions of
alliance partners?
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5. Prior
Research
Paid less
attention
on
Financial Transaction Agency Real
Economic Explanations Costs Behavior
conflicts Options
al and
Network
Drivers
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6. This paper
bridges these
two theories
(Motivation)
Firms embedded
in network
relationships
Behavioral
Decisions
Important in AQD
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7. Critical but
Alliance Link the
unexplored
attributes and segmented Synthesis type
drivers for
networks will literature of research
acquisitions to
be considered together
be explored
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8. Research Question
acquisitions of
alliance
drive their partners?
subsequent
and
embeddedness
How do firms’ in their alliance
learning in networks
alliances
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9. • Firms rely on part
experience
• Prior studies focused on
direct experience
• Role of firms from alliance
networks
• Role of learning was
explored by the authors
• Exploration v exploitation
alliance
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10. • Opportunity seeking
vehicles
• Experiment with new
knowledge
• Access Partners tacit
knowledge
• Evaluate intrinsic sources
• Build new competancies
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11. Schumpeterian
Rents is the
focus
Focus is not to
discover new
knowledge but
refine existing
one
Authors argue :
exploration
better
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12. Authors argue..
• Firms are not atomistic players (disparate
elements)
• Firms rather are relational entities
• Subject to opportunities and constraints
• Exploratory learning thrives in an open
network
• Although previous work talks a bit about
network embeddness it has focused on
imitation mechanisms
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13. ALLIANCE LEARNING, NETWORK
EMBEDDEDNESS, AND ACQUISITIONS
• Alliances and Networks  external resources
• Alliance  Partial Control
• Acquisition  Full Control (Complete
ownership)
• Alliance involves piecemeal decision making
• Acquisition  Sunk cost/irreversible
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14. • Both to access external resources
• Common motivations (Synergy)
• One may inform the other
• Both developed independently
• No cross fertilization between the two
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15. Authors argue…
• Firms are adaptively “learning”
• March (1991) provided a ex-exp framework to
deal with alliance heterogeneity
• Both exploratory and exploitation lead to
evaluation of the partners tacit knowledge
however exploratory has an advantage
• In addition to learning, acquisitions do not
take place in vacuum
• They are embedded in a broad social context
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16. Authors propose.. (with help from
other scholars)
• Important to integrate the behavioral learning perspective
and social network perspective
• Learning thru awareness increases partners value, such
learning takes place in network embeddness
• Actual awareness contingent upon a firms motivation and
capability
• Two constructs for network embeddedness
– Joint Brokerage Positions
– Relative Centrality
• Acquisitions don’t take place in vacuum but wrt
embeddedness in a social and economic context
• But important to integrate behavioral context
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17. Constructs
• Joint Brokerage refers to the collective
network openness enjoyed by two firms in an
alliance
• Relative centrality refers to the asymmetry in
network positions between two alliance
partner firms
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18. Effects of Alliance Learning
Firm risk taking
Understand partners resources
Increases understanding of true
value
Knowledge search and creation
Close interaction and shared value
creation
More dynamic
Understanding partners is more
important
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19. Effects of Alliance Learning
• Maximize value of
existing resources
• No interactive
• More focus on
Exploitation status quo
• Easy for managers
to describe roles
and relationships
• Less ambiguity
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20. Therefore
Hypothesis 1. Compared with
exploitation alliances, exploration
alliances are more likely
to result in acquisitions of
alliance partners.
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21. Moderating Roles of Network
Embeddedness
• McFadyen and Cannella : Resources in
Exploration may turn into liabilities in
Exploitation if tasks at hand do not match with
its network structure
• How partners leverage their network
embeddedness is important as scope is not
only for network embeddedness but also
induce potential power conflicts
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22. Two important Dimensions of Network
Embeddedness
Joint
Network Relative
Brokerage
Embeddedness Centrality
positions
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23. Joint Brokerage Positions
•First, the increased value of exploration
alliances can alleviate firms’ qualms about the
true value of partner firms and increase their
confidence and motivation regarding
internalizing the alliance activities through
acquisition (Baum & Ingram, 2003).
•Second, interpartner conflicts may provide
more incentives to initiate acquisition of
partner firms, which can resolve these
conflicts and also yield more benefits through
internalization and hierarchical control
(Dussauge et al., 2000).
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24. And therefore they hypothesize
Hypothesis 2. A high
degree of joint brokerage
occupied by alliance
firms strengthens the
positive relationship
between exploration
alliances and subsequent
acquisitions of alliance
partners.
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25. Relative Centrality
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26. And therefore they hypothesize
Hypothesis 3. A high level
of relative centrality
between alliance firms
strengthens the positive
relationship between
exploration alliances and
subsequent acquisitions
of alliance partners.
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27. Methods
• Sample
– US Computer Industry
– SW/Hardware
– Industry alliance network using two decision rules
• Types of relationship between alliances et al.
• Attributes of those actors
– (at least one alliance)
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28. Dependent Variables
• Acquisition of Alliance partners
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29. Independent Variables
• Exploration Alliance Index
• Joint Brokerage Positions
• Relative Centrality
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30. Control Variables
• Equity Alliance Index
• Strategic Interdependence
• Asymmetry in firm size
• Combined Financial Resources
• Competitor Alliance Index
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31. Analysis
• Dependent variable is dichotomous
• Logistic Regression Analysis was run
• Multiple observations for a dyaid of several
years
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32. Contributions (1)
New way of looking at
Finding that
acquisition research by Findings that firms are
learning, behaviour and
looking at behavioral interlinked, embedded
acquisition are
and rational in networks
interlinked
perspectives
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33. Contributions (2)
Bridges two Learning Extends prior
separate affects social network
acquisitions literature
streams
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34. Limitations + Future Research
• Only one industry studied for the sake of
simplicity and accuracy
• Aspiring scholars can extend and generalize
based on their findings
• Isolated researches on acquisitions, alliances
and learning
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35. My Critique
• Tautological
• They have shown behavior and learning
impacts but how exactly has not been covered
in detail, but I appreciate that they have
acknowledged it
• How learning happens (Dominant v Servile)
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