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Takeovers, Joint Ventures and the Acquisition of Resources for Diversification
Author(s) -
Thompson Steve
Publication year - 1999
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/1467-9485.00134
Subject(s) - diversification (marketing strategy) , joint venture , homogeneous , industrial organization , mode (computer interface) , economics , microeconomics , business , marketing , commerce , computer science , physics , thermodynamics , operating system
This paper explores the influence of acquisition costs on the choice between the takeover and joint venture modes of obtaining the resources required for diversifying expansion. It uses the conditions created by privatisation in the UK utility sector as a natural experiment to examine the determinants of mode choice across groups of firms with unusually homogeneous opportunity sets. The empirical design is able to incorporate acquirer, target and geographical market variables as explanatory factors in mode choice. It is shown that the form of diversifying expansion adopted is highly sensitive to the anticipated costs of using the acquisition process.