Open AccessReconfiguring Dependencies Through Acquisitions: A Resource Dependency Perspective
Author(s) -
Rama Krishna Reddy,
Sung Jin Park
Publication year - 1970
Publication title -
journal of business strategies
Language(s) - English
Resource type - Journals
eISSN - 2162-6901
pISSN - 0887-2058
DOI - 10.54155/jbs.36.2.62-74
Subject(s) - dependency (uml) , perspective (graphical) , business , resource dependence theory , empirical research , revenue , industrial organization , resource (disambiguation) , order (exchange) , test (biology) , resource based view , marketing , microeconomics , economics , competitive advantage , computer science , accounting , computer network , philosophy , software engineering , epistemology , finance , artificial intelligence , biology , paleontology
Organizations are embedded within ecosystems and develop varying degreesof dependence based on the actors within their environment. In this study, weinvestigate the effects dependency has on firms that rely heavily on a few majorcustomers for their revenue streams. We posit that an increase in dependence on asmall number of consumers will have an adverse effect on firm performance (ROA).Furthermore, we assert that firms acquiring other firms in order to counteract thesenegative repercussions actually demonstrate an improvement in their performance.To test this hypothesis, we conducted an empirical analysis using 12,038 firm-yearobservations and our empirical results lend support to our predictions.