This thesis provides an additional perspective of the Merger Paradox, namely that mergers and acquisitions (M&A) continue to be transacted when historically their results seem to be disappointing overall. The thesis shows that when a theoretically sound basis (related to the Resource Based View and expressed as twelve design principles) is used to design a performance measurement framework, then there is no association between a firm's post-acquisition performance and the scale of a firm's previous acquisitions; the thesis then shows, by contrast, that there is a positive association between firms with an above-average level of past acquisitions (by value) and higher financial performance. This divergence provides both a motive and an ability to continue to undertake M&A, despite a lack of association of acquisitions with longer-term operational performance and very strong evidence of diseconomy of scale in the most crucial business process, for the case examined, which is the research and development (R&D) process in the research-based pharmaceutical sector. Additionally, the thesis examines the relative merits of Return on Sales and Return on Assets as financial metrics of performance, and establishes statistically significant differences in the measurement of performance by these two metrics. The thesis also establishes a contrast between the findings at the level of the firm and at the level of the sector, namely acquisitions considered in aggregate are associated with gains at the sector level, even though this association was not observed when acquisition was considered at the level of the acquiring firm. The thesis provides a new application of Data Envelopment Analysis and establishes a scale efficiency relationship for the pharmaceutical R&D process. A further empirical contribution is the examination of the statistical distribution of acquisitions in the pharmaceutical sector and confirmation of the consistency of that distribution with a power-law.
| Identifer | oai:union.ndltd.org:bl.uk/oai:ethos.bl.uk:582180 |
| Date | January 2011 |
| Creators | Booth, Rupert J. |
| Publisher | University of Warwick |
| Source Sets | Ethos UK |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Source | http://wrap.warwick.ac.uk/55431/ |
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