Exploring firm characteristics that differentiate leaders from followers in industry merger waves: a competitive dynamics perspective

Abstract

Abstract Research in strategic management has shown that the timing of firm participation in a merger wave matters, as early movers have been shown to outperform later ones. However, while the consequences of the timing of action within a merger wave have been assessed, the causes that drive these timing effects remain unknown. We draw on the competitive dynamics perspective to investigate firm‐level factors that influence the large‐scale strategic behavior of leading or following within industry merger waves. We develop hypotheses based on the competitive dynamics argument that the awareness‐motivation‐capability of firms will influence the timing of competitive action. Consistent with this perspective, we show that a firm's strategic orientation, its structure, and its resource base influence the timing of firm entry in merger waves. Copyright © 2012 John Wiley & Sons, Ltd.