Learning Before Making the Big Leap
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- Elango, B. & Pattnaik, C. Manag Int Rev (2011) 51: 461. doi:10.1007/s11575-011-0085-0
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In the past two decades, emerging market countries have opened their markets, resulting in increasing competition from foreign firms. To cope with the influx of new competition, these firms need to develop skills and competencies on par with their new international rivals. One of the strategies employed by firms in these markets is the use of serial acquisitions to build capabilities and has been referred to as the springboard perspective.
We use a sample of 175 acquisitions made by Indian firms during the period 2000–2006. Findings support the underlying premise of the study that firms acquire targets serially but of increasing value in a sequential manner to learn and build capabilities. By acquiring targets in this manner, these firms seek to minimize risk as well as optimize their ability to learn from the acquisitions.
The results of this study offer broad support for the recently advanced springboard perspective which expands the Uppsala model to include acquisitions. While unconventional, this strategy is a potential option for emerging market firms to acquire competencies to cope with the rapid increase in competitive pressure.