Dominant coalitions directing acquisitions: Different decision makers, different decisions

• Main Authors: ZHANG, Cyndi Man, GREVE, Henrich R.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2019
• Subjects: Organizational Behavior and Theory; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/6207; https://ink.library.smu.edu.sg/context/lkcsb_research/article/7206/viewcontent/dominantcoalitions.pdf
• Institution: Singapore Management University

Coalitions are important in organizational decision making, but the question of how coalitions arebuilt and make decisions in response to firm performance is still not sufficiently explored. In thisstudy, we develop and test theory on how potential coalitions are built through shared experience andrecruitment of allies. When organizations respond to performance relative to aspiration levels, eitheras problemistic search following low performance or opportunity exploration following highperformance, members form coalitions to influence decisions. We develop theory of coalitionformation that builds on upper echelons theory and the theory of dominant coalitions to predict howpast experience of decision makers leads to preferred actions by each member and subsequentcoalition formation. We use this theory to make new measures of potential coalitions and apply it toacquisitions made by firms in China. We find evidence that the experience of members of the keydecision making group—the board of directors—affects the potential coalition building, and hencethe type of acquisition target, as predicted.