Structure Emergence in Corporate Mergers

1
Structure Emergence in Corporate Mergers

• Edward Bailey, University of Arizona Optical
  Sciences
• Amit Joshi, Anderson Graduate School of
  Management, University of California Los Angeles
• Ong Kiankok, La Trobe University, Australia
• Suhan Ree, Kongju National University
• Luis Armando Lujan Salazar, Monterrey Tech,
  Mexico
• Ricardo Valerdi, Center for Software Engineering,
  University of Southern California

2
Outline

• Problem Statement
• Literature Review
• Approach
• The Model
• Results
• Attribute Comparison
• Conclusions

3
Problem Statement

• The merging of two firms generates social
  complexities
• How do individual factors affect?
• New firm topology
• Position in the new firm
• Value of the new firm

4
Literature Review

• Previous studies of merger affect on
• competitive relations/anti-trust
• Market power congestions
• Social forces that determine who stays
• Formal education
• Previous leadership experience
• Perceived threat to management
• Other human emotions

5
Approach
Firm C
Firm B
Firm A
?

• Assumptions
• Same market, slightly different competencies
• Firm C will be made up of 6 lt C lt 12
• At least one employee at each level
• Three levels available

6
The Model
Value a1 (Performance) a2 (Internal
Connections) a3 (Hierarchy) a4
(Specialization) a5 ( Performance
Specialization) a1 a2 a4 a5 0.5 a3
-0.3
7
Results

• Value per employee

8
Attribute Comparison
9
Conclusions

• Little work done on resulting social structures
  of firms after mergers
• Interdependencies determine the level of
  efficiency in a new system
• Internal connections add value to the firm
• Lesson Maximize your connections