This Article Free Full Text (Free PDF) Free References Alert me when this article is cited Alert me if a correction is posted Citation Map Services Email this article to a friend Similar articles in this journal Similar articles in Web of Science Alert me to new issues of the journal Add to Saved Citations Download to citation manager Request Permissions Request Reprints Add to My Marked Citations Citing Articles Citing Articles via HighWire Citing Articles via Web of Science (9) Citing Articles via Google Scholar Citing Articles via Scopus Google Scholar Articles by Shimizu, K. Articles by Hitt, M. A. Search for Related Content Social Bookmarking                         What's this?

What Constrains or Facilitates Divestitures of Formerly Acquired Firms? The Effects of Organizational Inertia

Department of Management, University of Texas at San Antonio, 6900 North Loop 1604 West, San Antonio, TX 78249-0634, kshimizu{at}utsa.edu

Michael A. Hitt

Department of Management, Texas A&M University, College Station, TX 77843-4221

This study examined behavioral explanations for the divestitures of formerly acquired units, particularly organizational inertia. It was argued that characteristics of parent firms and divested units reduce the likelihood of divesting a poorly performing unit. Conversely, it was also argued that change of key personnel and effective governance mechanisms increase the likelihood of such divestitures. Importantly, the results show that with age and size combined, appointment of new outside directors and divestiture experience (among other variables) moderated the effects on the likelihood of firms divesting units they had previously acquired. Implications for future theory development and management practice are also discussed.

Key Words: mergers and acquisitions • divestiture • organizational inertia • case control design

Journal of Management, Vol. 31, No. 1, 50-72 (2005)
DOI: 10.1177/0149206304271381


CiteULike    Complore    Connotea    Del.icio.us    Digg    Reddit    Technorati    Twitter    What's this?

This article has been cited by other articles:

				J. O'Brien and T. Folta Sunk costs, uncertainty and market exit: A real options perspective Ind. Corp. Change, October 1, 2009; 18(5): 807 - 833. [Abstract] [Full Text] [PDF]

				H. G. Barkema and M. Schijven How Do Firms Learn to Make Acquisitions? A Review of Past Research and an Agenda for the Future Journal of Management, June 1, 2008; 34(3): 594 - 634. [Abstract] [PDF]

				M. Brauer What Have We Acquired and What Should We Acquire in Divestiture Research? A Review and Research Agenda Journal of Management, December 1, 2006; 32(6): 751 - 785. [Abstract] [PDF]