Acquisitions, disclosed goals and firm characteristics: A
content analysis of family and nonfamily firms
Maija Worek
Alfredo DeMassis
Mike Wright
Viktoria Veider
ABSTRACT
Despite the considerable body of research on acquisitions and
their goals, we lack insights on how family firms differ from
nonfamily firms in their acquisition goals, particularly in view of
the distinctive characteristics that distinguish family businesses.
Thus, to enhance current understanding, we examine firms’ disclosed
goals in their deal announcements and find that firm ownership type
is an important determinant of acquisition goals. Drawing on the
content analysis of 558 deals from 393 firms, we identify seven
goal categories. Our findings contextualize several differences in
the goals of family and nonfamily firms, contributing to the family
firm and acquisition literatures, offering implications for
practice and potential avenues for future research.
Keywords: Acquisitions, Goals, Content analysis, Family firm,
Family business, M&A
1. Introduction
Evidence suggests that at least half and possibly as much as 80
or 90 per cent of all acquisitions fail (Angwin, 2007; Christensen
et al., 2011). Failure of acquisitions by family firms raise major
challenges regarding potential wealth and control dilution risks
(Basu, Dimitrova, & Paeglis, 2009; Gómez-Mejía, Patel, &
Zellweger, 2015). However, despite recent attention to acquisitions
in family businesses (Bjursell, 2011; Defrancq, Huyghebaert, &
Luypaert, 2016; Requejo, Reyes-Reina, Sanchez-Bueno, &
Suárez-González, 2018; Wang, Song, & Liu, 2016), much remains
unknown about them (Astrachan, 2010). Prior studies suggest that
firms with different ownership structures might have different
preferences for engaging in acquisitions (Angwin, 2007; Haleblian,
Devers, McNamara, Carpenter, & Davison, 2009). As family firms’
decisions are often driven by particular risk preferences
(Gómez-Mejía, Haynes, Núñez-Nickel, Jacobson, & Moyano-Fuentes,
2007), social priorities, family-related noneconomic utilities
(Kotlar & De Massis, 2013; Miller, Le Breton‐Miller, &
Lester, 2010; Gómez-Mejía et al., 2015), and specific
characteristics (Duran, Kammerlander, Van Essen, & Zellweger,
2015), the goals of family firms when conducting acquisitions need
to be further understood. Ignoring the family firm context may lead
to serious problems in acquisitions (Gisser & Gonzalez, 1993).
This is an important issue since lack of clarity as to the goal of
the acquisition is attributed as a major contributory factor in
failure (Christensen et al., 2011).
General research on acquisition goals has tended to assume that
the goals of widely held firms may not be directly applicable to
family firms (Angwin, 2007; Haleblian et al., 2009). In this
research stream that mainly focuses on large public corporations
with diffused ownership, decision-makers are deemed rational agents
who mostly base their acquisition activities on economic analyses
(Jemison & Sitkin, 1986), ignoring the impact of noneconomic
utilities on decision-making (Gómez-Mejía et al., 2015). Further,
most research on acquisition goals relates to only managers,
neglecting the goals of other influential parties, such as owners,
in shaping acquisition activities (Fiss & Zajac, 2004; Kang
& Sorensen, 1999; Miller et al., 2010). Owners in these cases
are assumed to be profit maximizers, and managers may or may not
act in the shareholders’ best interests in conducting
acquisitions.
Building on Duran et al. (2015), we argue that the specific
characteristics that distinguish family firms from nonfamily firms,
namely, high level of control, wealth concentration, and importance
of noneconomic utilities, influence their goals in strategic
decisions, such as acquisitions. High family control over the
family firm implies distinct structures, influencing authority and
processes, and monitoring managers (Carney, 2005; Gedjalovic &
Carney, 2010). High control is imposed by the concentration of
wealth, which in turn makes family firms more sensitive to
uncertain investments and strategic decisions compared to nonfamily
firms (La Porta, López De Silanes, & Shleifer, 1999). Finally,
noneconomic utilities relate to characteristics such as
prioritizing the continuity of the family influence and maintaining
long-term relationships with both internal and external
stakeholders, which all influence the family firm’s strategic
preferences (Duran et al., 2015). We argue that these distinctive
characteristics of family firms may lead to different acquisition
goals compared to nonfamily firms, since the family’s priorities
will not only shape the number and type of acquisitions (Miller et
al., 2010), but also the goals that drive them. As Angwin (2007)
and Haleblian et al. (2009) suggest, acquisition goals are expected
to differ among firms with different ownership structures, yet this
is largely ignored in acquisition literature. Hence, we address the
following research questions:
RQ1. Which goals do family firms disclose in their acquisition
deal announcements?
RQ2. Do family firms’ disclosed goals in such contexts differ
from those of nonfamily firms?
To address these questions, we draw on a content analysis using
an inductive approach to examine the acquisition deal announcements
reported in the press releases of 393 firms comprising 558
acquisitions from manufacturing and nonmanufacturing industries in
22 European countries over the period 2000-2013. This novel dataset
enables examining how family and nonfamily firms communicate their
disclosed goals, defined as the desired economic or noneconomic
rationale of acquisition activities as communicated to stakeholders
via organizational announcements (McKenny, Short, Zachary, &
Payne, 2011). We identify seven goal categories: finance,
innovation, stakeholders, resources, market competitiveness,
strategy, and expansion. Our content analysis informs and
contextualizes several differences in the majority of goals that
family and nonfamily firms disclose.
We offer a number of important contributions to both theory and
practice. First, we enrich the literature by showing that the
specific characteristics of family firms compared to non-family
firms determine their goals with respect to acquisitions. In so
doing, our rich qualitative data enable us to extend prior work on
the distinctiveness of family firm goals compared to their
nonfamily counterparts by providing a fine-grained view of their
goals when engaging in acquisition activities. Second, we extend
the literature and the main theories on acquisition goals by
showing that such goals differ between family and nonfamily firms,
especially in relation to noneconomic goals, such as stakeholder
goals, a perspective largely neglected in previous literature. Our
findings further highlight the importance of distinguishing
different types of synergies and the newness of markets and/or
products when examining acquisition goals instead of treating them
as identical and having the same value (e.g., Berkovich &
Narayanan, 1993; Seth, Song, & Pettit, 2000, 2002), implying
differences among firms with different ownership types that may
influence acquisition outcomes. We also enrich the acquisition
literature with our methodological setting. Cartwright,
Teerikangas, Rouzies, and Wilson-Evered (2012) call for more
methodological pluralism in acquisition literature, especially
using an inductive approach to develop rather than describe theory.
Third, to the best of our knowledge, this is the first study that
examines the goals and intentions of family firm acquisitions, thus
extending prior literature exploring the likelihood of family
businesses engaging in the acquisition process and related
performance (Worek, 2017).
2. Theoretical background
Acquisitions are an important means of corporate development
(Cartwright & Schoenberg, 2006), allowing firms to adapt to
technological changes or acquire resources that are not available
internally (Capron, 1999; Swaminathan, Murshed, & Hulland,
2008). Academic research on acquisitions remains fragmented, and
current knowledge on acquisition goals is particularly limited
(Haleblian et al., 2009). Studies often examine mergers and
acquisitions (M&A) jointly, but for family businesses, these
may have quite different consequences in terms of control
dilution[footnoteRef:2]. For this reason, it is reasonable to
expect that acquisitions are more common than mergers when the
acquirer is a family firm, and hence our focus on acquisitions in
this study. [2: We thank an anonymous reviewer for this
suggestion.]
2.1. Acquisition goals
Most researchers agree that acquisitions are motivated by
complex and multiple objectives (Arnold & Parker, 2009;
Hodgkinson & Partington, 2008; Nguyen, Yung, & Sun, 2012;
Walter & Barney, 1990). Still, acquisition literature pays only
modest attention to the goals of firms when making acquisitions,
and three major perspectives are used to explain acquisition goals:
1) efficiency theory, 2) market power, and 3) agency and hubris
theories.
Efficiency theory claims that acquisitions occur due to synergy
goals (Trautwein, 1990), whereby firms engage in acquisitions to
achieve such synergies (Porter, 1985, Seth et al., 2000; Trautwein,
1990), and value creation depends on the strategic and operational
fit of the acquisition counterparties, with a greater combined
value than that of the individual firms (King, Dalton, Daily &
Covin, 2004, Singh & Montgomery, 1987). Second, according to
the market power perspective, acquisition goals are motivated by
external rewards, such as improving the market position or entry
into a new market (Geiger & Schiereck, 2014; Ghosh, 2004;
Levinson, 1970). Third, agency and hubris theories assume that
goals derive either from managers’ opportunistic behaviors, such as
wealth transfers between the shareholders, or managerial hubris
(Marks & Mirvis, 2010; Nguyen et al., 2012). Managers may not
put their own money into play, which may act as an incentive to
take greater risks in acquisitions (Mueller, 1989). Such goals
result in overpaying for target firms due to excessively optimistic
synergy estimations, ultimately leading to negative shareholder
value (Hodgkinson & Partington, 2008). This theory sees
managers as agents seeking opportunistic possibilities where
potential conflicts arise at the owner-manager level. Prior studies
mostly examine acquisition goals using quantitative methods,
seeking indirect explanations from market reactions (Berkovitch
& Narayanan, 1993; Seth et al. 2000; 2002), despite that the
market is found to be sensitive to information on deal
announcements (Cicon, Clarke, Ferris, & Jayaraman, 2014; Henry,
2008). However, the assumptions of one-sided goals have been
criticized, suggesting that a broader set of goals is needed to
reflect the variety and influence of external dynamics,
organizational strategies, and managerial objectives in
acquisitions (Angwin, 2007; Walter & Barney, 1990), thus
calling for alternative methods (Haleblian et al., 2009),
especially using an inductive approach (Cartwright et al.,
2012).
In addition, previous acquisition goal perspectives assume
rational managerial behavior based on improving firm financial and
economic performance (Angwin, 2007). Acquisition research generally
treats decision-makers as agents who base their acquisition
activities on deliberate analyses (Jemison & Sitkin, 1986),
neglecting the cognitive and behavioral characteristics (Haleblian
et al., 2009). However, acquisition activities are oftentimes
driven by noneconomic utilities that run against the pure rational
assumptions of efficiency and market power.
Different ownership structures may not only alter acquisition
behavior (Haleblian et al., 2009), but entail other reasons for
engaging in acquisitions than increasing shareholder value (Angwin,
2007), hence the importance of considering the motivations of
owners. More precisely, specific ownership structures have relevant
consequences for strategic decision-making and action, as different
owner constituencies influence acquisition behavior, with
distinctive goals directly related to firm owners (Miller et al.,
2010). Governance and ownership influence how managers develop
internal routines (Lazonick & O'Sullivan, 2002), how firms
contract with external entities (Williamson, 1985), and how they
ultimately create value (Carney, 2005). Most importantly, different
ownership structures may also indicate differing interests
(Haleblian et al., 2009), and thus different acquisition goals. It
is therefore perplexing that acquisition research does not
explicitly take into account the role of different ownership types
in acquisition goals.
2.2. Family firm acquisition goals
The nature of goals pursued, the ownership structure, and the
resources available generate differences in behaviors and outcomes
between family and nonfamily firms (Chrisman, Sharma, Steier, &
Chua, 2013). While little is known about family firms’ acquisition
activities (Astrachan, 2010), prior literature suggests that their
acquisition behavior differs from other ownership archetypes,
whereby the specific ownership constituencies of family firms alter
their strategic orientation, competition strategies (Gudmundson,
Hartman, & Tower, 1999), and financial logic (Gallo, Tàpies,
& Cappuyns, 2004).
Due to these differences, current acquisition theories cannot be
unconditionally applied to family firms. The limited research in
this area shows some differences between family and nonfamily firms
in several areas, including lower acquisition propensity (Bauguess
& Stegemoller, 2008; Miller et al., 2010), and contradictory
evidence of both higher (André, Ben-Amar, & Saadi, 2014;
Craninckx & Huyghebaert, 2015; Feito-Ruiz &
Menéndez-Requejo, 2010) and lower performance (Basu et al., 2009;
Bauguess & Stegemoller, 2008; Shim & Okamuro, 2011)
compared to nonfamily firms. Beyond propensity and performance,
other studies examine the acquisition process (Bjursell, 2011;
Mickelson & Worley, 2003; Steen & Welch, 2006), but not the
acquisition goals, despite that family firms are acknowledged as
having other preferences when engaging in acquisitions (Feito-Ruiz
& Menéndez-Requejo, 2010; Angwin, 2007). Accordingly, the
present study examines the disclosed acquisition goals of family
firms.
The characteristics of family firms generally manifest in three
aspects (Duran et al., 2015): high level of control, wealth
concentration, and the importance of noneconomic utilities. Owning
families typically control the majority of the firm’s voting
rights, which authorizes them to control and monitor their managers
(Carney, 2005; Gedajlovic & Carney, 2010). As a consequence,
one might assume that acquisition goals in family firms are
determined to a greater extent by the desire to keep control within
the family, maintain autonomy and limited accountability. Second,
family wealth is often concentrated in one firm, leading to
longer-term and less flexible investment preferences compared to
other organization forms (Gómez-Mejía et al., 2007; Arregle, Hitt,
Sirmon, & Very, 2007; Palmer & Barber, 2001). Wealth
concentration is also linked to a careful approach towards risks
and uncertainty (Duran et al. 2015), which together with their
financial profile may shape the acquisition intentions (Miller et
al., 2010), and hence the acquisition goals, of family firms.
Finally, high family control over the firm and the intertwined
history of the family and the firm lead to noneconomic endowments
(Chrisman, Chua, De Massis, Frattini, & Wright, 2015), linked
to the tendency of owner-managers to attach high importance to
family-centered noneconomic goals when making decisions (Chrisman,
Chua, Pearson, & Barnett, 2012; Kotlar & De Massis, 2013).
The family’s primary goal to retain business control across
generations (Fiss & Zajac, 2004; Gómez-Mejía et al., 2007;
Kotlar, Signori, De Massis, & Vismara, 2018), and preserve
their internal and external long-term relationships (Cruz,
Gómez-Mejía, & Becerra, 2010; Zellweger, Nason, Nordqvist,
& Brush, 2013), are thus expected to shape acquisition
activities. For example, synergy as a generic acquisition goal
(Hodgkinson & Partington, 2008; Angwin, 2007) is also present
in family firm acquisitions, but they may prefer synergies in
physical resources instead of managerial skills to maintain a high
level of control and protect the noneconomic utilities.
Furthermore, to maintain a high level of control, they may prefer
current rather than new, unknown, and risky technologies and
markets when seeking market power in acquisitions. Finally, agency
and hubris goals may be either mitigated in family firms due to
reduced agency conflicts (Anderson, Mansi, & Reeb, 2003) or the
family may pursue its own, even opportunistic, goals to the
detriment of other shareholders (Morck & Yeung, 2003). In
nonfamily firms, these characteristics are different. Ownership
might be diffuse, as in listed firms, or concentrated, such as in
companies with private equity or venture capital backing. These
firms have outsiders to the firm playing a key monitoring and
control role. Second, their wealth portfolios are typically more
diverse, especially in listed firms either as individuals or as
institutional shareholders. Venture capital or private equity
investors will have a narrower portfolio of investee firms but
contrary to family firms, not just concentrated in one firm.
Regarding noneconomic utilities, listed and private equity or
venture capital owners will focus mainly on shareholder wealth
maximization.
Therefore, there are strong conceptual reasons to expect that
the disclosed goals of family firms will differ from those of
nonfamily firms. Figure 1 presents a graphic overview of our
conjecture that family firm characteristics will in some way affect
family firms’ acquisition goals and, respectively, for nonfamily
firms.
Family firm nature
High level of control
Wealth concentration
Importance of noneconomic utilities
Acquisition goals
Family firm characteristics
Nonfamily firm nature
Nonfamily firm control
Low wealth concentration
Importance of economic utilities
Acquisition goals
Nonfamily firm characteristics
Figure 1. Expected influence of the family and nonfamily nature
of a firm on acquisition goals.
Our qualitative content analysis aims to bridge the gap in
literature by investigating the goals that family firms disclose in
their acquisition deal announcements compared to their nonfamily
counterparts. We thus complement acquisition literature by
highlighting the importance of firm ownership type in acquisition
behavior.
3. Methods
We focus on the firms’ disclosed goals (Crane, 2000; Kotlar, De
Massis, Wright, & Frattini, 2018; McKenny et al., 2011; Roth
& Ricks, 1994), defined as their desired economic and
noneconomic outcomes communicated to stakeholders (Vandenberghe,
2011). According to Trautwein (1990), acquisition goals can be
examined either through direct investigation or indirect inference
from their outcomes. Through a content analysis, we examine the
firms’ deal announcements to identify the goals that companies
disclose, a method that offers a number of potential benefits
(Weber, 1990).
First, content analysis is widely used to highlight strategic
decision-making processes (Short, Payne, Brigham, Lumpkin, &
Broberg, 2009) and identify causal statements by testing the
differences between two groups (Hooghiemstra, 2010), thus,
particularly suited to assessing the goals disclosed in
acquisitions. Second, it is less obtrusive in capturing cognitions
(Phillips, 1994) and tends to avoid recall biases (Barr, Stimpert,
& Huff, 1992), enabling ex post examination of past
organizational announcements (Moss, Payne, & Moore, 2014).
Finally, the use of texts, such as deal announcements, enables
greater reliability and replicability (Finkelstein & Hambrick,
1990).
To select organizational announcements reflecting the disclosed
goals of family firms in the context of acquisitions, we rely on
the deal announcements reported in official press releases
accompanying the acquisition process. Press releases may be
criticized as influence tools, as they are often written by public
relations firms, and companies may use them to impress stakeholders
or whitewash problematic issues (Vandenberghe, 2011; Kimbrough
& Wang, 2014). As they address shareholders, press releases
comprising the statements of high-level managers contain both
assertive and informative elements, and may aim to rhetorically
influence various constituencies (Vandenberghe, 2011). Press
releases convey aspects of an organization’s identity (Albert &
Whetten, 1985) and are targeted at a broad audience outside the
company (McKenny et al., 2011; Vandenberghe, 2011). Nevertheless,
press releases provide a major information channel as a basis for
action by those outside the firm. As a public record against which
the outcome of managerial actions might be judged, they are an
important documentary source for the analysis of acquisition
goals.
3.1. Sampling criteria and context
We employ a novel dataset of international acquisitions
involving European acquirers, examining their ownership structure
and distinguishing between family and nonfamily owners. We obtained
data concerning the deals from Zephyr, an international database on
ownership changes compiled by Bureu van Dijk. We also obtained the
deal announcements reported in official press releases from Zephyr,
which are public announcements by the acquiring company’s CEOs or
other directors. The search led to our original sample comprising
3563 deals. After removing deals with no information on the deal
rationales, we arrived at 558 international deals between the years
2000-2013. We then excluded firms where ownership data was missing
or insufficient. We obtained the ownership data from the Orbis
database, and supplemented and integrated it with information
disclosed in the annual reports, in the investor relations sections
of their websites, and in the financial press releases. Following
prior literature calling for a combination of the involvement
approach and the essence approach to identify family firms
(Chrisman et al., 2012), we define a family firm as such when the
three following conditions are all met. First, family members hold
a substantial portion of equity. Consistent with a number of prior
studies (André et al., 2014; Gómez-Mejía, Makri, & Kintana,
2010; Muñoz-Bullón & Sanchez-Bueno, 2011; Wong, Chang, &
Chen, 2010), we use a 10% family ownership threshold to ensure that
the family holds a substantial proportion of a company’s equity.
When examining family voting shares, we also included the shares of
co-trustees of family trusts directly in family hands (Granata
& Chirico, 2010; King, Dalton, Daily, & Covin, 2004). The
second condition is that two or more members of the family are
actively engaged in the company, holding a position in the top
management team. Consistent with Campopiano and De Massis (2015),
we identified familial relations from their family names. The third
condition is that the firm self-identifies as a family firm.
Self-identification is a proxy for the essence approach to define
family firms, and is used to complement the involvement approach
(Chrisman et al., 2012). We mainly assessed the information on
self-identification as a family firm from the firms’ websites
(Calabrò, Campopiano, Basco, & Pukall, 2017; Campopiano &
De Massis, 2015). Firms that did not fulfil all these three
conditions were considered nonfamily firms. To control the validity
of our categorizations, we randomly contacted selected nonfamily
firms from our sample to check whether they define themselves as
family or nonfamily firms; all confirmed themselves as nonfamily
firms. Our sample meets the following criteria: 1) all deals
completed in the period 2000-2013 for European acquirers, 2)
international, global, and domestic deals, also of serial
acquirers, 3) both acquirers and targets may be public or private,
listed or unlisted companies, and 4) in all deals, at least a 51.5%
stake was acquired. Detailed information of the acquiring companies
is reported in Table 1.
Table 1
Distribution of acquiring firms in the sample by listing, size,
industry, country of origin, and deal type.
Family firms
Non-family firms
Listed
31
133
Family equity <50%
18
Family equity >50%
13
Non-listed
73
156
Family ownership <50%
12
Family ownership >50%
61
Large
70
141
SME
28
122
Manufacturing
75
219
Other than manufacturing
23
67
Acquirer origin
AT
5
9
BE
1
1
BG
0
1
CY
1
1
DE
29
74
DK
3
12
EE
0
1
ES
8
15
FI
4
2
FR
8
11
GB
20
96
GR
1
3
HU
0
1
IE
0
4
IT
18
26
LT
0
1
LU
0
2
LV
1
0
NL
2
4
PL
2
8
RO
0
1
SE
1
16
Deal type
Domestic
60
225
Cross-border *
107
163
* Of which overseas
43
50
(Target country not available)
1
2
Deals total
168
390
Firms total
104
289
The final sample consists of 558 deals from 393 firms, of which
104 are family firms (168 deals) and 289 nonfamily firms (390
deals) according to the criteria reported above. The firms are
categorized according to size – large vs small- and medium-sized
(SME) – applying the definition of the European Commission (2005)
headcount (fewer than 250 employees). For family firms, 31 (30%)
are listed and 73 (70%) are non-listed. The acquiring firms
represent 22 European countries, targeting companies in 49
different countries globally. The majority of the acquiring firms
in our sample (67%) are based in Germany, the UK, and Italy. The
majority of companies (294 firms, 75%) operate in the manufacturing
sector (UK 2007 SIC 10-33). Firms in other industry sectors mainly
operate in telecommunications, installation, wholesale, and
construction. Table 1 also reports the number of domestic,
cross-border, and specifically overseas deals. Overseas deals
include acquisitions where the target company is from another
continent. We also report the number of acquisitions in countries
with high vs. low shareholder legal protection. The legal
environment influences acquisition propensity and performance, as
high shareholder protection mitigates family firms’ lower
acquisition propensity (Feito-Ruiz & Menéndez-Requejo, 2010;
Requejo et al., 2018). Following Requejo et al. (2018), shareholder
protection is considered higher in common law countries and
Scandinavian civil law countries, and lower in German and French
civil law countries. The deals are very evenly distributed between
these two classifications: in family firms, 40% of deals are in a
high and 60% in a low protection environment, whereas 50.5% of
nonfamily firms are in a high and 49.5% in a low protection
environment.
Altogether, in 993 instances, goals were nominated in the
announcements, of which 283 were disclosed in 168 deals of the
acquiring family firms, and 710 goals were disclosed in 390 deals
of the acquiring nonfamily firm. At least one goal is nominated in
each announcement, and on average, the firms nominated 1.7 goals in
family firms and 1.8 in nonfamily firms.
3.2. Data analysis
To analyze the disclosed goals of firm acquisitions, we used the
content analysis approach adapted from Neuendorf’s (2002) seminal
methodology. We delimited our coding at the clause level of
analysis, as companies may discuss more than one goal within a
sentence (McKenny et al., 2011). To identify the goals, the first
and the last authors read through each document clause by clause
and noted each goal identified (Weber, 1990), tracking the total
number of times each goal was referenced in each announcement
(Short et al., 2009). To ensure accurate interpretation, the
preliminary results were examined by another person to assess the
validity of each goal and whether it truly captured the meaning of
the clause in question (Brigham, Lumpkin, Payne, & Zachary,
2014). To assess the degree of inter-rater reliability, we employed
three expert judges who scanned the wordlist and provided feedback
on the validity of the codes. After receiving feedback from the
judges, the wordlists retained those words that were agreed on by
at least two of the three judges (Moss et al., 2014). Since we
followed a multiple coder procedure (Barr et al., 1992), we
assessed reliability through the evaluation of a so-called
inter-rater agreement (Short et al., 2009), which was 89% on
completion of our study, indicating high reliability among the
raters on the goal dimensions (Brigham et al., 2014). In the event
of a disagreement, the authors engaged in a discussion until
agreement was reached (e.g., James, Demaree, & Wolf, 1993).
As regards the creation of codes and categories, we inductively
generated first-order codes from the deal announcements and
compared these against the insights from existing theoretical
perspectives and empirical studies (Campopiano & De Massis,
2015; Tsui‐Auch, 2004), also in relation to acquisition goals
(Angwin, 2007; Bower, 2001; Walter & Barney, 1990). Each clause
was placed into one of the categories. However, any passage where
the coders had doubts was discussed between the authors, until
agreement was reached on the appropriate code. Furthermore, any
construction of codes and categories led to reviewing all other
deal announcements, whereas the final list of codes served as an
organizing device to recode the documentary data (Pratt, Rockmann,
& Kaufmann, 2006). The fine-tuning of codes and categories in
the analysis continued until saturation and iteration between the
data and the theoretical perspectives up to reaching theoretical
saturation (Campopiano & De Massis, 2015; Eisenhardt, 1989);
for example, the code “cultural fit” was moved from the stakeholder
to the strategy category, as in the discussion this was seen more
as a strategic goal than a shareholder issue. Furthermore, the
codes in the category originally called “product/market extension”
(as in Bower, 2001) were divided into two new categories
“innovation” and “expansion” (similar to Angwin, 2007) to enable
distinguishing innovation from generic expansion. The firm’s
ownership status was not known during the coding process.
Additionally, we conducted phone interviews with three family firms
from our sample that were willing to cooperate, all confirming our
interpretation of the goals of these transactions.
We subjected the findings of the content analysis to statistical
inference. To answer the research questions, we used the content
categories as the subject of the statistical analysis. We performed
a proportion z-test (Fuchs, Prandelli, Schreier, & Dahl, 2013)
among the groups of family and nonfamily firms, and also controlled
for industry, size, and listing, to examine whether these variables
affect our findings. This test allowed comparing relative
occurrences of codes between family and nonfamily firms, where the
basic population is binomially distributed (Auer & Rottmann,
2010), and the statistical differences are calculated by comparing
the proportions.
4. Results
Our research questions aimed to understand which goals family
firms disclose in their acquisition deal announcements and whether
they differ from those disclosed by nonfamily firms. A preliminary
within-case analysis helped us consider each deal announcement
separately and document the inherent acquisition goals each firm
communicated. This allowed collecting comprehensive and reliable
information indicating the acquisition goals of each firm, since
most deal announcements from the 393 firms clearly showed what led
them to engage in acquisitions (Campopiano & De Massis, 2015).
Based on this within-case analysis, we conducted a comparative
cross-case analysis to “reach a general explanation” (Campopiano,
De Massis, & Cassia, 2012, p. 400) of the acquisition goals.
The underlying aim was to discover recurrent patterns among firms
that engaged in acquisition initiatives, and specifically focusing
on the differences between family and nonfamily firms.
4.1. Goal categories
The seven distinctive goal categories that emerged from our
analysis are finance, innovation, stakeholders, resources, market
competitiveness, strategy, and expansion, as reported in Table 2.
Family firms disclosed 40 and nonfamily firms 45 different goals
within these categories (illustrative examples are provided in
Table 3 and in the Appendix).
Table 2
Distribution of goals disclosed in acquisition announcements
TOTAL
Family FirmsNonfamily Firms
Goal category
Disclosed goals
Count
% Total
Count
% Total
Count
% Total
FINANCE
Financial resources
11
1.11%
3
1.06%
8
1.13%
Profitability
13
1.31%
4
1.41%
9
1.27%
Cost reduction
13
1.31%
2
0.71%
11
1.55%
Revenue
30
3.02%
3
1.06%
27
3.80%
Short term equity investment
2
0.20%
0
0.00%
2
0.28%
INNOVATION
Technology expertise
69
6.95%
14
4.95%
55
7.75%
Innovation initiatives
13
1.31%
4
1.41%
9
1.27%
R&D
9
0.91%
1
0.35%
8
1.13%
STAKEHOLDERS
Service
26
2.62%
8
2.83%
18
2.54%
Corporate social responsibility
1
0.10%
1
0.35%
0
0.00%
Green and sustainability
3
0.30%
1
0.35%
2
0.28%
Workforce
20
2.01%
15
5.30%
5
0.70%
Long-term relationships
13
1.31%
4
1.41%
9
1.27%
RESOURCES
Manufacturing capability/capacity
30
3.02%
11
3.89%
19
2.68%
Management expertise
23
2.32%
4
1.41%
16
2.25%
Distribution network
8
0.81%
1
0.35%
7
0.99%
Marketing and/or sales network
10
1.01%
1
0.35%
9
1.27%
Critical mass
5
0.50%
0
0.00%
5
0.70%
Raw materials
3
0.30%
1
0.35%
2
0.28%
Economies of scale and scope
9
0.91%
0
0.00%
9
1.27%
Complementary competencies
14
1.41%
6
2.12%
11
1.55%
MARKET COMPETITIVENESS
Exploit synergies
31
3.12%
10
3.53%
21
2.96%
Strengthen core business
32
3.22%
5
1.77%
27
3.80%
Productivity
3
0.30%
1
0.35%
2
0.28%
Product quality
3
0.30%
1
0.35%
2
0.28%
Leadership position
58
5.84%
18
6.36%
40
5.63%
Strengthen country position
46
4.63%
19
6.71%
27
3.80%
Strengthen market position
38
3.83%
13
4.59%
25
3.52%
Customers
33
3.32%
16
5.65%
17
2.39%
Speed
9
0.91%
1
0.35%
8
1.13%
Product pricing
1
0.10%
0
0.00%
1
0.14%
STRATEGY
Restructuring
0
0.00%
0
0.00%
0
0.00%
Cultural fit
5
0.50%
4
1.41%
1
0.14%
Strategic reorganization /repositioning
10
1.01%
2
0.71%
8
1.13%
Local business opportunities
4
0.40%
2
0.71%
2
0.28%
Niche player/specialization
11
1.11%
1
0.35%
10
1.41%
Strategic fit
8
0.81%
1
0.35%
7
0.99%
Simplifying ownership structure
1
0.10%
1
0.35%
0
0.00%
Prevent hostile takeover
1
0.10%
0
0.00%
1
0.14%
Market access
48
4.83%
11
3.89%
37
5.21%
EXPANSION
Growth
78
7.85%
28
9.89%
50
7.04%
Product portfolio expansion
107
10.78%
29
10.25%
78
10.99%
Geographic expansion
85
8.56%
20
7.07%
65
9.15%
Turnkey supplier
11
1.11%
1
0.35%
10
1.41%
Diversification
17
1.71%
9
3.18%
8
1.13%
Brand addition
28
2.82%
6
2.12%
22
3.10%
In the following, we illustrate each goal category that emerged
from our content analysis. We then discuss each in light of the
statistical tests of whether there are significant differences
between family and nonfamily firms, and test contingencies for
differences in size, industry, listing, legal environment, and deal
type (domestic/cross-border/overseas). Drawing on the distinctive
characteristics of family firms, namely, high level of control,
wealth concentration, and noneconomic utilities (Duran et al.,
2015), we propose why acquisition goals across these categories may
differ with regard to nonfamily firms.
Table 3 summarizes, for each goal category, the effect of our
analysis of family versus nonfamily firms, the main theoretical
arguments behind our emerging propositions, the link with
literature, and some illustrative examples from the deal
announcements of family and nonfamily firms. Table 4 provides a
synoptic view of the occurrences of the goal categories and the
results of the statistical tests, enabling a straightforward
comparison between the goal categories of family and nonfamily
firms.
1
Table 3
Evidence of the content analysis, theoretical arguments, and
links with literature.
Goal category
Effect
Confirms/questions prior literature
Family firm statements
Nonfamily firm statements
Finance
Lower in Family firms
Family firm literature:Wealth concentration: sensitivity to
uncertain investments, (Anderson, 2003; La Porta et al., 1999),
through patient capital (Sirmon, Hitt, Ireland, & Gilbert.,
2011), less need to pursue financial goals through acquisitions,
long-term oriented in their financial strategy (Dreux, 1990), which
might contrast with short-term financial goals, financial gains
from patient capital (Sirmon et al., 2011)Noneconomic utilities:
priority for family firms over financial returns (Gómez-Mejía et
al., 2007), especially in risky investments.
Concentration on long-term financial goals: Wealth concentration
implies a long-term orientation in investments (Arregle et al.,
2007; Palmer & Barber, 2001)Noneconomic goals: Prioritizing
long-term survival over short-term gains (Gómez-Mejía et al.,
2007)
Acquisition literature: Points to the importance of examining
the time horizon (long-term vs. short-term) when examining
financial synergies.
Thanks to the takeover, our line of machines for the mining
sector will be supplemented and expanded by machinery needed for
brown coal extraction. [---] The synergy within the Famur Group
will lead to even higher profitability and expansion of our outlets
in the future
(Famur SA)
Capital Partners acquisition of Gekoplast is a short-term equity
investment
(Capital Partners SA)
We are growing at quite a rate and have been looking for
acquisitions that could help increase our turnover. We identified
Cobalt as highly complementary to our own operations
(Harland)
Innovation
Lower in Family firms
Family firm literature:Wealth concentration: less financial
resources to invest in uncertain activities (Anderson et al.,
2003), such as innovation. High level of control and noneconomic
utilities: External resources and expertise connected to innovation
may be perceived as a threat to both (Morck & Yeung, 2003;
Duran et al., 2015; Gómez-Mejía et al., 2007).
Acquisition literature: As in the market competitiveness
category, points to the importance of distinguishing between new
and/or existing markets and products when examining market power
goals.
The acquisition [---] furthers our vision to better serve
patients and health care professionals with innovative products, a
strong clinical research capability and new research into
recombinant therapies. We look forward to combining the strengths
of both companies to improve the quality of the lives of patients
around the world, while positioning the enlarged group for long
term profitable growth (Grifols SA)
We believe this technology to be an interesting and competitive
alternative to other systems available on the market in the growth
sector of protein analytics and molecular diagnostics. [---] Of
particular interest is the fact that both the technology and the
sample preparation chemistry use synergies with Analytik Jena’s bio
solutions business unit
(Analytik Jena)
Stakeholders
Higher in Family Firms
Family firm literature:Wealth concentration: to maintain it,
family firms seek to increase stability and family reputation with
their stakeholders. Noneconomic utilities: Proactive stakeholder
engagement (Cennamo, Berrone, Cruz, & Gómez‐Mejía, 2012),
developing good connections with external and internal stakeholders
(Zellweger et al., 2013).
Concentration especially on workforce goals in their
announcements:Noneconomic utilities: establishing trust among
employees (Miller & Le Breton-Miller, 2005), reducing distress
linked to acquisitions (Nemanich & Keller, 2007; Seo &
Hill, 2005)
Acquisition literature:
Points to the importance of examining stakeholder goals (see
also Angwin, 2007; Haleblian et al., 2009) and distinguish
different types of stakeholders.
[Acquisition] helps us secure a number of jobs in this region
(Morgan Grp Ltd)
This acquisition will see many benefits in efficiency for our
customers
(Zonal Retail Data System)
We also offer a warm welcome to the new team members from Long
Elevator who will be joining KONE through this acquisition
(KONE Corporation)
The whole staff will join Christeyns and help the Group to reach
a consolidated turnover in the Italian market of about 20m
(Christeyns Italia Srl)
Resources
No significant overall differences
Family firm literature:High level of control and noneconomic
utilities: Acquiring external [managerial] expertise may threaten
both (Duran et al., 2015; Gómez-Mejía et al., 2007). Concentration
on physical rather than managerial resources to support stability
and to maintain a high level of control.
Acquisition literature:Types of resources [physical/managerial]
should be distinguished, as this might imply differences in
synergies/efficiencies.
We will use the raw materials from the Strelitsa quarry to
supply the booming Voronezh region. In the next stage,
HeidelbergCement will construct a new, modern cement plant with an
annual capacity of 1.2 million tons in the region
(HeidelbergCement)
By taking over Europe’s leading manufacturer of refrigerant
fittings we have secured a supply to our manufacturing sites
worldwide, and expanded our product portfolio
(Bitzer SE)
Market competitiveness
Higher in family firms
Family firm literature:Concentration of wealth: current business
areas seem less risky (Anderson et al., 2003). Noneconomic goals:
prioritizing long-term profitability, which is increased by market
competitiveness (Ghosh, 2004)
Acquisition literature: Points to the importance of
distinguishing between new and/or existing markets and products
when examining market power goals
The acquisition strengthens Ferroli's position on the Chinese
market, where it has been operating for the past three years
(Ferroli Spa)
The acquisition of Bovill & Boyd provides us with the
strength of having the leading distributor of gaskets, seals and
rubber moldings in Scotland on board
(British Gaskets)
Strategy
No significant overall differences
Family firm literature:Cultural and strategic fit are seen as
important success factors in M&As, particularly for family
firms (Bjursell, 2011; Mickelson & Worley, 2003).
Acquisition literature:[generic goals in this category, no
proposition]
It is also a family-owned company so our business philosophies
and approach fit well together
(Chr. Renz GmbH)
The distinct culture and values will benefit both companies
(L’Oreal)
There is a very good level of strategic fit between the two
companies. Both are successful manufacturers of different but
complementary ruminant product ranges. In addition, Net-Tex is
active in equine and pet markets
(Rumenco)
Expansion
No significant overall differences
Family firm literature:
Family ownership's positive influence on expansion (Zahra,
2003), but both negative (Górriz & Fumás, 2005; Caprio, Croci,
& Del Giudice, 2011; Chirico & Nordqvist, 2010) and
positive (Villalonga & Amit, 2006; Miller, Le Breton‐Miller,
& Scholnick, 2008) evidence for family business growth
exists.
Acquisition literature:[generic goals in this category, no
proposition]
The acquisition is in line with the external growth strategy of
the Perego family
(MPG Manifattura Plastica Srl)
The relocation of production from the USA to Mexico offers us a
great opportunity for growth, and allows us a better alliances with
our North American customers
(Cie Automotive)
Table 4
Synoptic representation of the goals disclosed in acquisition
announcements of family and nonfamily firms, and results of the
statistical comparison of these occurrences
Firm categories
Finance
Innovation
Stakeholders
Resources
Market Competitiveness
Strategy
Expansion
Family
4.24%
6.71%
10.25%
***
8.48%
29.68%
*
7.77%
32.86%
Absolute number
(12)
(19)
(29)
(24)
(84)
(22)
(93)
Listed
2.83%
2.83%
6.36%
***
3.53%
14.13%
1.77%
15.55%
Non-Listed
1.41%
3.89%
3.89%
3.53%
12.72%
*
5.65%
15.55%
Manufacturing
3.53%
5.30%
8.48%
***
7.07%
26.15%
***
5.65%
26.86%
Other Industries
1.41%
2.12%
2.47%
2.12%
7.42%
3.18%
8.83%
Large Firms
3.18%
6.01%
8.13%
***
6.71%
25.09%
***
5.65%
26.15%
***
SMEs
2.08%
0.71%
0.71%
1.77%
4.59%
*
1.41%
6.01%
FF Targets*
0.00%
0.00%
22.22%
11.11%
22.22%
*
0.00%
44.44%
NFF Targets*
6.33%
5.06%
12.66%
*
10.13%
27.85%
8.86%
29.11%
Domestic deals
2.47%
2.12%
1.77%
3.18%
8.48%
3.18%
11.66%
*
Cross-border deals
0.47%
4.59%
7.77%
***
5.65%
19.79%
***
2.47%
20.85%
Overseas deals
1.06%
1.06%
6.36%
***
2.83%
34.41%
1.41%
8.83%
High protection
1.41%
2.47%
6.36%
***
4.59%
14.84%
3.18%
12.72%
Low protection
2.83%
4.24%
3.89%
3.89%
14.84%
**
4.59%
20.14%
Nonfamily
8.03%
**
10.14%
**
4.79%
10.99%
23.94%
9.30%
32.82%
Absolute number
(57)
(72)
(34)
(78)
(170)
(66)
(233)
Listed
6.34%
**
6.34%
**
1.69%
6.76%
*
15.49%
6.62%
***
18.73%
Non-Listed
1.69%
3.80%
*
3.10%
4.08%
8.31%
2.68%
13.80%
***
Manufacturing
6.34%
*
7.89%
3.52%
8.03%
18.31%
6.90%
26.90%
Other Industries
1.69%
2.25%
1.27%
2.82%
5.49%
2.39%
5.63%
Large Firms
3.80%
6.34%
2.11%
5.92%
15.35%
5.35%
16.62%
SMEs
3.94%
***
3.10%
2.11%
4.51%
**
7.61%
3.24%
13.52%
FF Targets*
5.00%
0.00%
20.00%
15.00%
5.00%
0.00%
55.00%
NFF Targets*
13.64%
8.18%
6.36%
11.82%
22.73%
7.27%
30.00%
Domestic deals
5.49%
**
6.34%
***
2.54%
5.77%
*
13.66%
**
6.20%
16.06%
Cross-border deals
2.82%
3.94%
2.25%
5.07%
10.00%
2.82%
16.34%
Overseas deals
0.99%
1.27%
0.42%
1.41%
25.26%
6.32%
5.07%
*
High protection
5.63%
***
4.93%
*
2.54%
7.61%
*
13.38%
6.34%
15.63%
Low protection
2.39%
5.21%
2.25%
3.38%
10.14%
2.96%
17.18%
*p<0.1
** p <.05.
*** p<.01.
Each percentage is calculated as the ratio of the number of
citations of each code and the total number of all codes (absolute
number of citations in brackets). * Only 22% of the targets are
identified as family or nonfamily.
4.2. Acquisition goals of family vs. nonfamily firms
Finance goals relate to financial resources, profitability, cost
reduction, and revenue. Thus, firms disclosing these types of goals
seek to increase their revenue and profitability, or acquire
financial resources through acquisitions, as illustrated in Table
3.
Our results suggest that family firms overall emphasize fewer
financial goals in their deal announcements compared to nonfamily
firms. Due to their wealth concentration, family firms are more
sensitive to uncertain investments (Anderson et al., 2003; Bianco,
Bontempi, Golinelli, & Parigi, 2013; La Porta et al., 1999).
However, by leveraging their patient financial capital (Sirmon et
al., 2011) and their other physical and financial assets (Dyer
& Whetten, 2006), they can depend less on external sources of
financing and short-term financial needs (Dreux, 1990), implying
their lesser need to undertake acquisitions with financial goals.
Moreover, wealth concentration is shown to render family firms more
long-term oriented in their strategy making (Arregle et al., 2007;
Palmer & Barber, 2001). However, building long-term
capabilities and relationships often stands in contrast to
short-term financial gains. Finally, noneconomic goals, such as
willingness to preserve and protect the family legacy (Zellweger,
Kellermanns, Chrisman, & Chua, 2012) and family harmony
(Cennamo et al., 2012; Chrisman, Chua, & Zahra, 2003), are an
important priority in family firms over financial returns
(Gómez-Mejía et al., 2007). Through their social capital, family
firms may have good relationships with local financial institutions
(Sirmon et al., 2011), implying they may not need acquisitions to
pursue their financial goals. Moreover, when examining the
descriptive differences between the individual codes in Table 2, we
can see that when disclosing financial goals, family firms
concentrate more on profitability than revenue and short-term goals
in their announcements. This reflects their long-term strategic
orientation (Arregle et al. 2007; Palmer & Barber, 2001) and
noneconomic goals, which lead family firms to prioritize their
long-term survival (Gómez-Mejía et al., 2007) over short-term
financial goals (Bercovitz & Mitchell, 2007). Drawing on these
arguments, we propose:
P1. Family firms disclose fewer financial goals than nonfamily
firms in their acquisition deal announcements, since (a)
high wealth concentration makes them more risk averse,
implying that they might use other assets instead of acquisitions
to pursue financial goals, (b) a more long-term orientation in
their strategy, which might contrast with short-term financial
goals, and (c) noneconomic goals are an important
priority over financial returns, especially in risky investments
such as acquisitions.
P2. When family firms disclose financial goals in their
acquisition deal announcements, they concentrate more on long-term
profitability than on short-term financial goals, such as cost
reduction and increasing revenue, since
(a) wealth concentration makes them more long-term
oriented in their strategic decisions, such as acquisitions, aiming
at profitability, and (b) the presence of noneconomic
goals leads them to prioritize survival over short-term
financial goals, as long-term profitability is central to business
survival.
In examining the acquisition goals, Proposition 1 points to the
importance of distinguishing between different types of synergies,
such as financial or managerial synergies, as these have different
implications for firms with different ownership types. Thus, future
research should examine different ownership types and thereby
distinguish between types of synergies instead of assuming all
synergies are identical and of the same value, as in prior research
(Arnold & Parker, 2009; Cicon et al., 2014; Berkovitch &
Narayanan, 1993; Hodgkinson & Partington, 2008; Seth et al.,
2000), leading to one-sided interpretations of acquisition goals.
This extends the synergy/efficiency perspective in the acquisition
literature (Mukherjee, Kiymaz, & Baker, 2004; Seth et al.,
2002), suggesting that different types of synergies may explain
acquisition priorities.
In examining financial synergies in acquisition goals,
Proposition 2 points to the importance of distinguishing between
different types of financial preferences. As financial preferences
may vary among firms with different ownership types (Anderson,
Duru, & Reeb, 2012; Gallo et al., 2004), future studies drawing
on samples of firms with different ownership types could examine
the heterogeneity of financial synergies treated as a monolithic
block (e.g., Larsson & Finkelstein, 1999). This proposition
extends the synergy/efficiency perspective (Mukherjee et al., 2004;
Seth et al., 2002), suggesting the need to examine the time horizon
associated with financial synergies, especially long- versus
short-term financial gains. This has been largely neglected in the
literature, despite the different implications for firms with
different ownership structures.
Innovation goals concern the acquisition of technological
expertise, the adoption of innovation initiatives or R&D. We
find that family firms disclose fewer innovation goals in their
deal announcements compared to nonfamily firms.
Seeking new ways of thinking, new products and technologies may
result in increased, but also highly varied performance outcomes
and risk (Wiseman & Bromiley, 1996). Innovation is seen as
critical for growth (Morck & Yeung, 2003), especially through
external acquisition (Kotlar, De Massis, Frattini, Bianchi, &
Fang, 2013). However, for family firms, externally acquiring
innovation might impede high levels of control due to the perceived
uncertainty (Duran et al., 2015). For example, innovation might
imply acquiring external expertise and granting managers
responsible for innovation greater autonomy (Gómez-Mejía et al.,
2007; Morck & Yeung, 2003), which is why family firms may
prefer to retain a high level of control instead of engaging in
innovation acquisitions. Particularly in family firms, full control
over product development may be a question of self-identification
(Donnelley, 1964), strongly associated with the family’s position
in the community (Kotlar & De Massis, 2013). Acquiring such
expertise may be seen as a threat to the family’s noneconomic
utilities (Gómez-Mejía, Campbell, Martin, Hoskisson, Makri &
Sirmon, 2014). As noneconomic utilities lead to efficient internal
processes supporting innovation (Duran et al., 2015), family firms
may choose to develop innovations internally or through tradition
(De Massis, Frattini, Kotlar, Petruzzelli, & Wright, 2016;
Rondi, De Massis & Kotlar, 2018) rather than through
acquisition. Finally, concentration of wealth implies that family
firms invest fewer financial resources in uncertain activities,
such as innovation projects (Duran et al., 2015). Family business
literature further suggests that family firms are less likely to
invest in innovation activities (De Massis, Frattini &
Lichtenthaler, 2013), and are characterized by a lower willingness
to innovate (Chrisman et al., 2015), unless some kind of protection
mechanisms for the innovation, such as patents, are possible
(Kotlar et al., 2013). This further reflects the willingness to
maintain a high level of control. See Table 3 for illustrations of
these arguments and statements associated with this goal category.
Considering the above, we propose:
P3. Family firms disclose fewer innovation goals than nonfamily
firms in their acquisition deal announcements, since innovation is
often linked to the need for external expertise and granting
managers responsible for innovation greater autonomy, thus (a)
family firms may prefer to retain their high level of control
instead of innovating through acquisition, (b) such external
expertise may also be perceived as a threat to noneconomic
utilities, and (c) wealth concentration implies that family firms
overall have fewer financial resources to invest in uncertain
activities, such as innovation.
We return to the implications of Proposition 3 for future
research in the discussion of Proposition 6 below.
Stakeholder goals include the workforce, long-term
relationships, and service, the company’s position and reputation
in the community, and the means of improving and fostering these.
Compared to their nonfamily counterparts, family firms disclose
more stakeholder-related goals in their announcements. This is due
to wealth concentration, which can be preserved more easily in
stable and benevolent communities (see Arregle et al., 2007). As a
result, family firms are deemed to engage in more social behaviors
(Campopiano, De Massis, & Chirico, 2014; Dyer & Whetten,
2006) to increase family reputation with their stakeholders
(Gómez-Mejía et al., 2007). These concerns for reputation are
linked to their willingness to foster dialogue with stakeholders
and provide them benefits (Cennamo et al., 2012; Zellweger et al.,
2013). In addition, proactive stakeholder engagement (Cennamo et
al., 2012), establishing and maintaining good relations with
external (Berrone, Cruz, & Gomez-Mejia, 2012) and internal
(Zellweger et al., 2012) stakeholders, are important for family
firms pursuing noneconomic goals. Indeed, multiple stakeholder
goals are predominant for family firms and their reputation
(Cennamo et al., 2012), which can be interpreted as a means of
building social capital in stakeholder relationships (Sirmon &
Hitt, 2003).
Moreover, the descriptive findings in this category in Table 2
show that family firms disclose more workforce goals than other
stakeholder goals compared to nonfamily firms. This is due to
noneconomic utilities, as family firms seek to build trust-based
relationships with employees (Miller & Le Breton-Miller, 2005),
which is crucial for their reputation (Zellweger et al., 2013).
Noneconomic utilities further involve tacit knowledge (Duran et
al., 2015), which acquiring family firms may want to preserve by
establishing trust with the target firm employees, as there is a
high risk of losing a talented workforce in acquisitions (Seo &
Hill, 2005). Moreover, as employee welfare is a central concern in
acquisitions and important for their success (Nemanich &
Keller, 2007), by addressing employees in the statements, family
firms may seek to reduce the distress linked to acquisitions by
showing support and empathy, which further support noneconomic
utilities. Indeed, employees in family firms are seen as a
“pseudo-family” (König, Kammerlander, & Enders, 2013), as
family firms foster loyalty and employee care in the workplace
(Ward, 1988), and are highly concerned about their workers’
satisfaction (Donckels & Fröhlich, 1991). This is also
reflected in the statements reported in the deal announcements (see
Table 3 and the Appendix). In sum, stakeholder goals are not
identified in previous studies on acquisition goals, despite that
stakeholder influence in such strategic decisions is acknowledged
(Angwin, 2007; Godfrey, 2005). Our evidence thus leads to the
following propositions:
P4. Family firms disclose more stakeholder goals than
nonfamily firms in their acquisition deal announcements, since (a)
they seek to maintain wealth concentration, which is easier in
stable communities, implying that they seek to increase stability
and family reputation with their stakeholders, and (b) proactive
stakeholder engagement is important for preserving the pursuit of
noneconomic goals, and developing good relations with external and
internal stakeholders.
P5. When family firms disclose stakeholder goals in their
acquisition deal announcements, they concentrate more on employees
than other types of stakeholders, since (a) due to noneconomic
utilities, they seek to build trust-based relationships with
employees, as these are crucial for the family firm’s reputation,
and (b) addressing employees can reduce employee distress linked to
acquisitions by showing support and empathy, further supporting
noneconomic utilities.
Proposition 4 raises the point that the importance attached to
stakeholder goals in company acquisitions may vary among firms with
different ownership types. This extends and enriches both the
efficiency and market power perspectives in the acquisition
literature (Mukherjee et al., 2004; Chatterjee, 1991; Kim &
Singal, 1993), suggesting that addressing stakeholders might bring
undetermined benefits in acquisition efficiencies or market power
at later stages through political favors, lowering social pressure
(see Angwin, 2007), and promoting social responsibility (Godfrey,
2005).
Proposition 5 instead raises the point that the importance
attached to stakeholder goals in company acquisitions may vary
depending on the type of stakeholders addressed, such as employees
or long-term partners, which may differ among firms with different
ownership types. This enriches the synergy/efficiency perspective
in the acquisition literature (Mukherjee et al., 2004; Hodgkinson
& Partington, 2008), highlighting that types of stakeholder
goals and their implications should be considered, as these may
influence the realization of synergy/efficiency. For example, in
some countries, such as Germany (Angwin, 2007), that have a high
number of family firms (Stiftung Familienunternehmen, 2016),
employee welfare is an important concern in acquisitions (Nemanich
& Keller, 2007), as employee distress may hinder integration
(Cartwright & Cooper, 1992) and synergy goals.
Resource goals refer to actions aimed at acquiring external
resources, such as technology and management expertise, utilizing
marketing or sales networks and manufacturing capabilities;
overall, we do not find significant differences between family and
nonfamily firms. Examining the distribution of single goals in this
category as presented in Table 2, we find some descriptive
differences. Family firms disclose fewer goals regarding
distribution and marketing/sales network. One reason might be that
they have advantages in managing and organizing their existing
resources, i.e., “resource orchestration” (Sirmon, Hitt, Ireland,
& Gilbert, 2011). This implies that family firms do not
necessarily need to acquire resources through acquisition when they
are able to efficiently deploy internal resources, such as
firm-specific tacit knowledge and their networks (Duran et al.,
2015; Sirmon et al., 2011). Further, as discussed above, acquiring
external managerial expertise may be perceived as a threat to
noneconomic utilities (Duran et al., 2015; Gómez-Mejía et al.,
2007). As shown in Table 2, when family firms disclose resource
goals, they concentrate on physical resources, such as
manufacturing capacities and raw materials, preferring less
variability in their investments (Anderson et al., 2012), which
allows greater stability compared to more uncertain projects, such
as innovation (Miller, Le Breton-Miller, & Lester, 2011), to
maintain a high level of control.
Market competitiveness goals refer to a firm’s competitive
situation in existing markets and geographic areas, and the goals
in this category refer to actions aimed at changing and adapting to
this situation. For example, companies may seek to achieve a
leadership position in a given market, strengthen its market,
country position, or core business through acquisitions.
We find that family firms disclose more goals concerning market
competitiveness than nonfamily firms. Due to their high
concentration of wealth, family firms are more sensitive to
uncertainty (Bianco et al., 2013). Favoring existing markets in
acquisition transactions may be seen as less risky, supporting the
aim to maintain a high level of control and protect the pursuit of
noneconomic utilities in family firms. Focusing on current business
areas may be deemed to lower the risk linked to acquisitions,
especially if the firm lacks the competent human capital needed for
this type of risky investment (Sirmon & Hitt, 2003). Moreover,
noneconomic goals imply that long-term survival of the business is
an important priority for family firms (Gómez-Mejía et al., 2007),
as strengthening their market position contributes to increased
long-term profitability (Ghosh, 2004). Finally, according to Miller
and Le Breton-Miller (2005), the objectives and subsequent actions
of family firms center around long-term continuity strategies that
help build capabilities and loyalty in a defined market. Thus, we
propose:
P6. Family firms disclose more market competitiveness goals
concentrating on current markets, countries, and synergies than
nonfamily firms in their acquisition deal announcements, since (a)
acquisitions in current markets can be seen as less risky
transactions, supporting the aim to maintain a high level of
control and protect the pursuit of noneconomic utilities in family
firms, and (b) noneconomic goals drive family firms to prioritize
the long-term survival of the business, as strengthening their
market position contributes to increased long-term
profitability.
In examining market power goals in acquisitions, Propositions 3
and 6 point to the importance of taking into account the degree of
“newness” of the products and/or markets, since new versus existing
products and/or markets may have different implications in
motivating the acquisition of firms with different ownership
structures. This extends the market power perspective in the
acquisition literature (Chatterjee, 1991), showing that firms with
different ownership types express different priorities regarding
the newness of products and/or markets versus existing ones.
Strategy goals relate to the firm’s strategic actions,
orientation, position, and changes thereof, such as internal
strategic reorganization. Other goals concern the acquisition
partners, such as their strategic and cultural fit, synergies,
market access, niche or specialization, or preventing a hostile
takeover. No significant differences emerged between family and
nonfamily firms, which may be due to the fact that these goals are
universal, and thus important in any acquisition transaction,
regardless of family influence, for instance, goals related to the
fit between deal partners, market access, and restructuring.
Expansion goals refer to generic growth and the
commercialization of new products and services. When firms seek to
expand their product portfolio, gain access to a new geographic
area, or diversify, their goals fall within this category. Our
findings do not indicate significant differences between family and
nonfamily firms with respect to these goals. In prior literature,
no consensus has been reached on whether family firms differ from
their nonfamily counterparts in terms of expansion (e.g., the
contradictory findings of Caprio et al. (2011) and Zahra (2003)).
Achieving and promoting firm growth is one of the main goals of an
acquisition (Bower, 2001; Calipha, Tarba, & Brock, 2010), and
it is thus reasonable to expect that the expansion goals category
applies to all acquisitions and firms, regardless of family
influence. Although no differences emerge between family and
nonfamily firms in this goal category, the specific goals disclosed
in Table 2 show some differences in relation to the diversification
goal. In fact, family firms appear to disclose more diversification
and growth goals. Family firms may use diversified acquisitions as
a means of lowering the investment risk linked to highly
concentrated wealth and to protect noneconomic utilities. When
engaging in acquisitions, family firms are found to diversify more
to spread the risk (Miller et al., 2010), and concentrate on niche
industries where competition is generally less intense (Simon,
2009). An additional reason to diversify more in acquisitions is to
protect the company from a hostile takeover (Patel & King,
2015).
4.3. Contingencies for the influence of listing, size, industry,
legal environment, and deal type on acquisition goals
The results of the z-tests and contingencies are presented in
Table 4. In the finance goal category, the effect of disclosing
more financial goals applies to both listed manufacturing firms and
SMEs, as well as firms in a high shareholder protection
environment, consistent with our findings.
In the innovation goal category, we find that listed and
non-listed nonfamily firms disclose more innovation goals in their
deal announcements than family firms.
In the stakeholder category goals, listed, manufacturing, and
large family firms disclose more of these goals compared to their
nonfamily counterparts. In the case of manufacturing firms, this
may be due to the fact that manufacturing sites may be seen
negatively by the surrounding community, and firms may wish to
communicate the positive effects to the community and strengthen
the firm’s and the family’s positive image (Campopiano & De
Massis, 2015). This effect is also significant for cross-border and
overseas deals. Cross-border acquisitions are deemed beneficial for
the acquirer’s shareholders and lead to synergy gains (Eun,
Kolodny, & Scheraga, 1996), and family firms may wish to
highlight this to stakeholders. This effect also applies for family
firms in environments with high shareholder protection. Family
firms disclose more market competitiveness goals than nonfamily
firms also in most of our subsamples, i.e., non-listed and
manufacturing firms, both large firms and SMEs, cross-border deals,
and acquirers in low-protection environments.
5. Discussion
Our study shows that ownership type is an important determinant
of acquisition goals. Specific family firm characteristics, namely,
high level of control, wealth concentration, and noneconomic
utilities (Duran et al., 2015), distinguish this form of business
organizations from their nonfamily counterparts, and influence the
goals they disclose in deal announcements. Our research questions
asked which goals family firms disclose in their deal announcements
and whether they differ from those of nonfamily firms. Our findings
reveal seven categories of goals disclosed in deal announcements.
Most importantly, we find that family firms disclose more goals
related to stakeholders and market competitiveness than nonfamily
firms, and fewer financial and innovation goals. Family firms want
to protect and maintain control over their firm, and seem to prefer
developing innovation through internal resources and by other means
than acquisition. Due to wealth concentration, they are more
sensitive to uncertain investments (Anderson, et al., 2003; Bianco
et al., 2013), hence not pursuing acquisitions to fulfill, for
example, their financial or innovation goals. Wealth concentration
implies family firms are more long-term oriented in their financial
strategies (De Massis, Audretsch, Uhlaner & Kammerlander, 2018;
Molly et al., 2018), prioritizing long-term survival over
short-term financial gains. Due to their noneconomic utilities,
family firms place less emphasis on financial goals but more on
relationships with stakeholders in their deal announcements. The
primary goal for family firms to expand their business appears to
be based on a strategy of continuity that allows building enduring
relationships, sustaining the business for future generations, and
providing a high level of risk reduction (Miller et al., 2010).
Prior literature characterizes most acquisitions as having
either efficiency, market power, or opportunistic goals (e.g.,
Arnold & Parker, 2009; Berkovitch & Narayanan, 1993;
Garzella & Fiorentino, 2014; Hodgkinson & Partington, 2008;
Seth et al., 2000; Sheen, 2014). Efficiency and market power are
also present in family firms’ disclosed goals, but we find that
family firms concentrate more on profitability than growth, in line
with efficiency theory. Regarding market power, we find that family
firms disclose more market competitiveness goals, such as
strengthening their country and market position, and achieving a
leadership position. Due to the nature of our data, agency and
managerial hubris are not explicitly disclosed in the statements,
as such negative evaluations are rarely made public by the firms
themselves. The literature has examined these issues by measuring
post-acquisition performance, assuming that negative returns are a
result of opportunistic behavior and overpayment. As our study does
not measure performance, triangulation would be needed to examine
opportunistic behavior in acquiring family firms. Some studies
extend these major perspectives by offering additional categories
(Angwin, 2007; Bower, 2001; Walter & Barney, 1990),
highlighting the variety of goals and the need for a broader set of
goals to capture the nature and variety of acquisition goals,
combining managerial intentions, strategic preferences, and
environmental pressures. These studies further point to the need to
examine acquisition goals of firms with different ownership types.
Furthermore, Cartwright et al. (2012) call for more studies
examining acquisitions with qualitative methods, especially using
an inductive approach to enhance theory.
Our study has a number of theoretical and practical
implications. First, we extend family business literature by
showing that the distinctive characteristics of family firms
influence the goals driving their strategic actions, such as
acquisition behavior. Second, we enrich research on family business
goals by specifically examining the goals that family firms
disclose in acquisitions, providing a fine-grained understanding of
what distinguishes these from the acquisitions goals of nonfamily
firms. In so doing, we show that due to wealth concentration, high
level of control, and noneconomic utilities, family firms disclose
more goals regarding stakeholders, long-term continuity, physical
resources, and competitiveness in existing markets, and fewer
short-term financial and innovation goals. Third, our study extends
prior research on family business acquisition activity, which has
looked at the propensity, process, and performance associated with
acquisition, but overlooking the motivations and intentions that
drive family firms when engaging in acquisitions. Fourth, our study
complements the acquisition literature. We show that ownership type
is an important antecedent of acquisition goals and thus
acquisition behavior, stressing the importance of examining the
acquisition goals and their heterogeneity in relation to different
governance archetypes, especially regarding noneconomic goals, an
aspect largely neglected in prior research. Specifically, our study
extends the literature on acquisition goals in a number of ways.
Our findings point to the importance of distinguishing between
different types of synergies, such as financial and managerial
synergies, when examining acquisition goals instead of treating
them as equal (Seth et al., 2000), indicating differences among
firms with different ownership types. Furthermore, our findings
point to the importance of considering the time orientation when
examining financial synergies. Our findings further highlight the
need to examine the newness of markets and/or products when
examining market power goals in acquisitions, showing that this has
very different implications for family and nonfamily firms.
Finally, our finding on nonfinancial goals in acquisitions,
especially stakeholder goals, adds to the literature on general
acquisition goals. Stakeholder goals have not emerged in previous
studies, despite the acknowledged importance of stakeholder
preferences in acquisitions (Angwin, 2007). Finally, we contribute
to the acquisition literature by examining company statements
reported in deal announcements using a qualitative approach
supported with statistical tests. This is rare in acquisition
literature, despite that the content analysis of statements
reported in deal announcements can provide insights not derivable
from numerical data (Davis, Piger, & Sedor, 2012). Such
analysis adds substantial richness to the existing body of evidence
(Cicon et al., 2014; Vandenberghe, 2011). In this regard, our
study’s findings complement the results of quantitative studies
with a more nuanced view of different types of acquisition goals
according to different ownership types.
This study has implications for managers working in family firms
and practitioners aiming to support family firms in acquisition
transactions, as our findings highlight the importance of
recognizing the family firm-specific acquisition goals.
Practitioners are advised to not presume the universal
applicability of acquisition procedures, but to carefully analyze
the influence of the distinctive acquisition goals on the
particular transactions.
Acquisition announcements generally target a broad external
audience, which enables the firm to identify with and relate to a
larger business community (McKenny et al., 2011). However, as
family firms may be viewed with skepticism by professional
investors due to their perceived non-economic goals (Claessens,
Djankov, Fan, & Lang, 2002), our findings suggest that such
negative associations might be circumvented if family firms use
deal announcements aimed at external stakeholders that communicate
their economic goals (Kotlar & De Massis, 2013; Miller, Le
Breton-Miller, & Lester, 2013; McKenny et al., 2011).
5.1. Limitations
As in all studies, we acknowledge some limitations, which also
provide opportunities for future research. First, this study uses
acquisition announcements reported in press releases accompanying
the acquisition process. These deal announcements generally target
a broad external audience and seek to reassure external
stakeholders that strategic decisions are an outcome of economic
rationales. However, these statements may deliberately disguise the
noneconomic utilities of family firms in acquisition
considerations, and this should be taken into account when
interpreting our study’s findings. Furthermore, although prior
studies show that disclosure announcements have information content
(Davis et al., 2012; Kimbrough & Wang, 2014; Kothari, Li, &
Short, 2009; Lopatta, Jaeschke, Tchikov, & Lodhia, 2017), we
recognize that the extent to which the information disclosed is
accurate and whether firms actually implement what they state they
intend to do can vary. Additional studies may be warranted to
explore whether family firms, due to their closely held ownership
structure, have greater leeway in this regard than non-family
firms. However, previous studies applying content analysis to press
releases find that their wording and tone influence market
reactions (Davis et al., 2012; Kimbrough & Wang, 2014) and it
may be the case that the market sees through behavior in press
announcements designed to hide or mislead intentions and punishes
firms accordingly. Future studies could consider additional sources
of information to explore acquisition goals, such as annual
reports, or combining primary and secondary data sources.
A second limitation refers to family firm heterogeneity (Chua,
Chrisman, Steier, & Rau, 2012). In line with literature showing
differences in family firm goals compared to their nonfamily
counterparts (e.g., Chrisman et al., 2012; Williams et al., 2018),
our focus is on goal differences between family and nonfamily
firms. However, some heterogeneity in goals among family firms may
also exist (e.g., De Massis, Kotlar, Mazzola, Minola, &
Sciascia, 2016). Future endeavors could usefully explore potential
drivers of heterogeneity among family firms, such as family and
business size, level of family involvement, presence of a family
CEO, duration of family ownership, and their effect on acquisition
goals. This would imply taking into account key contingent factors
determining the heterogeneity of family firm behaviors (Chua et
al., 2012). For instance, previous studies show that a distinction
has to be made between active and passive family influence (Maury,
2006; Schmid, Achleitner, Ampenberger, & Kaserer; 2014), and
the level and type of this involvement (Matzler, Veider, Hautz,
& Stadler, 2015). Likewise, different levels of family
involvement might shape the extent to which family-related goals
are deliberately omitted in organizational announcements targeting
outside stakeholders (Miller et al., 2013). Family firms may thus
pursue strategic goals with acquisitions that serve family-specific
goals (and not so much business-specific goals. Future empirical
studies may thus examine whether different types and levels of
family involvement shape acquisitions in general, and the
organizational announcements accompanying these activities. Such
research may also involve a broadening out or refocusing of the
unit of analysis on the family and its goals and aspirations
(LeBreton-Miller & Miller, 2018). Overall, we encourage
scholars to take more fully into account the microfoundations of
the family system (De Massis & Foss, 2018) to understand
nuances in the acquisition goals disclosed by different family
firms. Firm size could also be a contingency factor of family firm
heterogeneity. For instance, Patel and King (2015) find that
medium-sized family firms are likely to engage in related
acquisitions instead of diversifying. We distinguish between large
firms and SMEs in our samples, but do not distinguish between
small- and medium-sized firms, which could be the subject of future
research efforts.
A third limitation concerns the ownership structure of target
firms. Due to data limitations, we were only able to control for
differences in goals in 22% of targets. However, we found no
significant differences. We encourage future researchers to include
this dimension in their analyses, as this might also have
implications for goals, and contribute to understanding the
perceived cultural fit, which is found to positively affect
acquisition success (Bauer & Matzler, 2014).
Fourth, addressing whether different acquisition goals impact
post-acquisition success is beyond the scope of this study. As
previous research shows, evidence on family and non-family firms’
acquisition performance is mixed, which may indicate other
preferences altogether regarding acquisitions; it would be
important to address this in future studies, as performance is
shown to relate to goals (Chua, Chrisman, De Massis, & Wang,
2018). For example, future research could investigate whether
particular announcements are linked to post-acquisition success or
failure. Such analyses would be especially useful since, while
general evidence shows that a substantial number of acquisitions
are not financially successful (Cartwright, 2005; Cartwright &
Schoenberg, 2006), they may be deemed successful if judged by
whether they meet other goals. Utilizing the “soft” information
reported in deal announcements regarding acquisition goals would
help extend prior literature on acquisition goals, which has tended
to rely on hard financial data (Berkovitch & Narayanan, 1993;
Seth et al., 2000, 2002).
Finally, our study focuses on acquisitions, which differ from
mergers in terms of implications for dilution of control. Future
studies could focus on mergers, or on both mergers and
acquisitions, thereby shedding light on whether and how the
implicatio