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Structure Emergence in Corporate Mergers Edward Bailey, University of Arizona Optical Sciences Amit Joshi, Anderson Graduate School of Management, University.

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Presentation on theme: "Structure Emergence in Corporate Mergers Edward Bailey, University of Arizona Optical Sciences Amit Joshi, Anderson Graduate School of Management, University."— Presentation transcript:

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 B1 B2 B5 B6 B4 B3 A1 A3 A5 A4 A6 A2 + = Assumptions Same market, slightly different competencies Firm C will be made up of 6 < C < 12 At least one employee at each level Three levels available ATTRIBUTES Performance Internal Connections Level in Hierarchy Specialization Firm CFirm BFirm A

6 The Model Value = a1 * (Performance) + a2 * (Internal Connections) + a3 * (Hierarchy) + a4 * (Specialization) + a5 *( Performance * Specialization) a1 = a2 = a4 = a5 = 0.5a3 = -0.3

7 Results Value per employee a1a2a3a4a5a6b1b2b3b4b5b6 2.181.171.21.471.180.631.841.521.320.650.331 CEOCTO First Levela1b1 PM1PM2PM3 Second Levela4b2a3 SP1SP2 Third Levelb6b4 AB Total Firm Value7.826.65 Value/person1.301.10 C Total Firm Value10.86 Value/person1.55

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


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