Skip to main content
SpringerLink
Log in

The Foresight of Explicit and Valuation of Tacit Synergies in International Alliance by Real Options

  • Conference paper
  • First Online:
Advances in Empirical Economic Research (ICOAE 2022)

Part of the book series: Springer Proceedings in Business and Economics ((SPBE))

Included in the following conference series:

  • 298 Accesses

Abstract

One of the most important questions in business partners’ collaboration is whether their strategies create a collaborative synergy and, thus, add market value. This chapter aims to develop a conceptual framework useful for scholars and practitioners to the foresight of explicit synergies and value a tacit synergy in strategic collaborative ventures. This chapter is novel theoretical and empirical contributions to foresight an explicit competence-based synergy in international alliance from the resources-based view employing the ARCTIC framework and values a tacit competence-based synergy using compound real option applications. This is the main theoretical contribution of this chapter. Moreover, this chapter makes several theoretical and empirical contributions to strategic management, international business, and corporate finance disciplines. In the end, this chapter discusses research limitations and future work.

Synergy … is incorrectly valued, inadequately planned for and much more difficult to create in practice than it is to compute on paper (Damodaran, 2005, p. 2)

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 189.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 249.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

References

  • Adner, R., & Levinthal, D. A. (2004). What is not a real option: Considering boundaries to application of real options to business strategy. Academy of Management Review, 29(1), 74–84.

    Google Scholar 

  • Ansoff, I. H. (1965). Corporate strategy. McGraw-Hill.

    Google Scholar 

  • Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99–120.

    Google Scholar 

  • Barney, J. B., & Hesterly, W. S. (2015). Strategic management and competitive advantage: Concepts and cases, Global Edition (p. 385). Pearson Education Limited.

    Google Scholar 

  • Bauer, F., & Matzler, K. (2014). Antecedents on M&A success: The role of strategic complementary, cultural fit, and degree and speed on integration. Strategic Management Journal, 35, 269–291.

    Google Scholar 

  • Baum, J., Cowan, R., & Jonard, N. (2010). Network independent partner selection and the evolution of innovation networks. Management Science, 56(11), 2094–2110.

    Google Scholar 

  • Black, F., & Sholes, M. (1973). The pricing of options and corporate liabilities reprint from the. Journal of Political Economy, 81(3), 637–654.

    Google Scholar 

  • Board Report Ahold. (2015). Received 21 Jan 2020, from https://www.aholddelhaize.com/media/2156/board_report_ahold.pdf

  • Borison, A. (2005). Real options analysis: Where are the Emperor’s clothes? Journal of Applied Corporate Finance, 17(2), 17–31.

    Google Scholar 

  • Bower, J. L. (2001). Not all M&As are alike – And that matters. Harvard Business Review, 79, 92–101.

    Google Scholar 

  • Butcher, B., & Schraer, R. (2018). Brexit: How has immigration changed since the referendum? Retrieved 5 Jan 2022, from: https://www.bbc.com/news/uk-46618532

  • Chen, R. R., & He, W. (2015). The valuation of compound options: A correction and an extension. Journal of Derivatives, 22(4), 92–104.

    Google Scholar 

  • Childs, P. D., Ott, S. H., & Triantis, A. J. (1998). Capital budgeting for interrelated projects: A real options approach. Journal of Financial and Quantitative Analysis, 33(3), 305–333.

    Google Scholar 

  • Čirjevskis, A. (2020). Do synergies pop up magically in digital transformation-based retail M&A? Valuing synergies with real options application. Journal of Open Innovation: Technology, Market, and Complexity, 6(1), 18.

    Google Scholar 

  • Čirjevskis, A. (2021a). Exploring micro-foundations of collaborative synergy in global strategic alliance with the real options approach. Academy of Accounting and Financial Studies, 5(3S), 1–9.

    Google Scholar 

  • Čirjevskis, A. (2021b). Exploring the link of real options theory with dynamic capabilities framework in open innovation-type merger and acquisition deals. Journal of Risk and Financial Management, 14(168), 1–16.

    Google Scholar 

  • Čirjevskis, A. (2021c). Exploring critical success factors of competence-based synergy in strategic alliances: The Renault–Nissan–Mitsubishi Strategic Alliance. Journal of Risk and Financial Management, 14(8), 385, 1–22.

    Google Scholar 

  • Copeland, T. H., & Keenan, P. T. (1998). How much is flexibility worth. McKinsey Quarterly, 2, 38–49.

    Google Scholar 

  • Damodaran, A. (2005). The value of synergy (p. 47). New York University-Stern School of Business. Retrieved 5 Jan 2022, from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=841486

  • Deloitte. (2019). Strategic alliances. An essential weapon in the growth arsenal. Retrieved 21 May 2022, from https://www2.deloitte.com/content/dam/Deloitte/us/Documents/mergers-acqisitions/us-strategic-alliance.pdf

  • Dunis, C., & Klein, T. (2005). Analyzing mergers and acquisitions in European financial services: An application of real options. European Journal of Finance, 11, 339–355.

    Google Scholar 

  • Eremina, Y., Lace, N., & Bistrova, J. (2019). Digital maturity and corporate performance: The case of the Baltic States. Journal of Open Innovation: Technology, Market, and Complexity, 5, 54.

    Google Scholar 

  • Floridi, C. (2018). Carrefour and Google: A match made in heaven? Retrieved 21 May 2022, from https://www.datalab-crm.de/carrefour-google-a-match-made-in-heaven/?lang=en

  • Folta, T. B., & Miller, K. D. (2002). Real options in equity partnerships. Strategic Management Journal, 23(1), 77–88.

    Google Scholar 

  • Gauthier, B. (2020). The Autorité issues a new decision concerning purchasing offices and makes the commitments made by Carrefour and Tesco binding, 2020. Retrieved 5 Jan 2022, from https://www.autoritedelaconcurrence.fr/en/print/pdf/node/7504

  • Geske, R. (1979). Valuation of compound options. Journal of Financial Economics, 7, 63–81.

    Google Scholar 

  • Ghemawat, P. (2007). Managing differences: The central challenge of global strategy. Harvard Business Review, 85, 58–68.

    Google Scholar 

  • Haleblian, J., Kim, J.-Y., & Rajagopalan, N. (2006). The influence of acquisition experience and performance on acquisition behavior: Evidence from the U.S. The commercial banking industry. Australasian Marketing Journal, 49, 357–370.

    Google Scholar 

  • Hao, B., Jiangfeng, Y., Yanan, F., & Ziming, C. (2020). Explicit and tacit synergies between alliance firms and radical innovation: The moderating roles of interfirm technological diversity and environmental technological dynamism. R&D Management, 50, 432–446.

    Google Scholar 

  • Hitt, M. A., King, D., Krishnan, H., Makri, M., Schijven, M., Shimizu, K., & Zhu, H. (2009). Merger and acquisition: Overcoming pitfalls, building synergy, and creating value. Business Horizon, 52, 523–529.

    Google Scholar 

  • Hofstede, G. J., & Minkov, M. (2010). Cultures and organizations: Software of the mind. McGraw-Hill.

    Google Scholar 

  • Hull, J. (2022). Options, futures, and other derivatives (11th ed., p. 841). Pearson Education Limited.

    Google Scholar 

  • Jacquemod, J. (2020). Leader-member exchange and organizational trust as context-related micro-foundations of organizational innovativeness. Ph.D. thesis, RISEBA University, Riga, Latvia.

    Google Scholar 

  • King, D. R., Dalton, D. R., Daily, C. M., & Covin, J. G. (2004). Meta-analyses of post-acquisition performance: Indications of unidentified moderators. Strategic Management Journal, 25, 187–200.

    Google Scholar 

  • Kogut, B. (1985). Designing global strategies: Comparative and competitive value-added chains. Sloan Management Review, 26, 15–28.

    Google Scholar 

  • Kogut, B. (1991). Joint ventures and the option to expand and acquire. Management Science, 37(1), 19–33.

    Google Scholar 

  • Lasker, R. D., Weiss, E. S., & Miller, R. (2001). Partnership synergy: A practical framework for studying and strengthening the collaborative advantage. The Milbank Quarterly, 79(2), 179–205.

    Google Scholar 

  • Li, Y., James, B. E., Madhavan, R., & Mahoney, J. T. (2007). Real options theory. Advances in Strategic Management, 24, 31–66.

    Google Scholar 

  • Lin, Y., & Wu, L.-Y. (2014). Exploring the role of dynamic capabilities in firm performance under the resource-based view framework. Journal of Business Research, 67, 407–413.

    Google Scholar 

  • Luehrman, T. A. (1998, July-August). Investment opportunities as real options: Getting started on the numbers. Harvard Business Review. Retrieved 21 May 2022, from http://pages.stern.nyu.edu/~adamodar/pdfiles/articles/InvestmentsasOptions.pdf

  • Magee, T. (2017). How Walmart will use the blockchain system to improve the traceability of food supply. Retrieved 29 Apr 2019, from: https://www.computerworlduk.com/iot/walmart-picks-ibmbring-traceability-food-with-blockchain-3654841/

  • Mun, J. (2002). Real options analysis, tools and techniques for valuing strategic investments and decisions. John Wiley and Sons.

    Google Scholar 

  • Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147–175.

    Google Scholar 

  • Netz, J., Svensson, M., & Brundin, E. (2019). Business disruptions and affective reactions: A strategy-as-practice perspective. Long Range Planning. Retrieved 28 Apr 2022, from https://doi.org/10.1016/j.lrp.2019.101910

  • Nielsen, L. T. (1992). Understanding N (d1) and N(d2): Risk-adjusted probabilities in the Black-Scholes model. INSEAD. Retrieved 21 May 2022, from https://studylib.net/doc/18052986/understanding-n-d1%2D%2Dand-n-d2-

  • Oliver, M. A. (2016). Consumer neoteny: An evolutionary perspective on childlike behavior in consumer society. Evolutionary Psychology, July-September, 1–11.

    Google Scholar 

  • Oliver, C., & Holzinger, I. (2008). The effectiveness of strategic political management: A dynamic capabilities framework. Academy of Management Review, 33(2), 496–520.

    Google Scholar 

  • Rabier, M. R. (2017). Acquisition motives and the distribution of acquisition performance. Strategic Management Journal, 38, 2666–2681.

    Google Scholar 

  • Ragozzino, R., Reuer, J., & Trigeorgis, L. (2016). Real options in strategy and finance: Current gaps and future linkages. Academy of Management Perspectives, 30(4), 428–440.

    Google Scholar 

  • Schweizer, L., Wang, L., Koscher, E., & Bjorn, M. (2022). Experiential learning, M&A performance, and post-acquisition integration strategy: A meta-analysis. Long Range Planning, 55(6), 102212.

    Google Scholar 

  • Spanner, G. E., Nuño, J. P., & Chandra, C. (1993). Time-based strategies—Theory and practice. Long Range Planning, 26, 90–101.

    Google Scholar 

  • Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18, 509–533.

    Google Scholar 

  • Tong, T. W., & Reuer, J. J. (2007). Real options in strategic management. Advances in Strategic Management, 24, 3–24.

    Google Scholar 

  • Vergos, K. (2003). Real options and the pricing of shares. Ph.D. dissertation, University of Wales, Bangor, UK.

    Google Scholar 

  • Wang, X., He, J., & Li, S. (2014). Compound option pricing under fuzzy environment. Journal of Applied Mathematics, Article ID 875319, 9 pages.

    Google Scholar 

  • Yeo, K. T., & Qiu, F. (2003). The value of management flexibility--a real options approach to investment evaluation. International Journal of Project Management, 21(4), 243–250.

    Google Scholar 

  • Zaheer, A., Castañer, X., & Souder, D. (2013). Synergy sources, target autonomy, and integration in acquisitions. Journal of Management, 39(3), 604–632.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. RISEBA University of Applied Sciences in Business, Arts and Technology, Business Department, Riga, Latvia

    Andrejs Čirjevskis

Authors
  1. Andrejs Čirjevskis
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Andrejs Čirjevskis .

Editor information

Editors and Affiliations

  1. Department of Economics, University of Western Macedonia, Kastoria, Greece

    Nicholas Tsounis

  2. Department of Economics, University of Western Macedonia, Kastoria, Greece

    Aspasia Vlachvei

Rights and permissions

Reprints and permissions

Copyright information

© 2023 The Author(s), under exclusive license to Springer Nature Switzerland AG

About this paper

Check for updates. Verify currency and authenticity via CrossMark

Cite this paper

Čirjevskis, A. (2023). The Foresight of Explicit and Valuation of Tacit Synergies in International Alliance by Real Options. In: Tsounis, N., Vlachvei, A. (eds) Advances in Empirical Economic Research. ICOAE 2022. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-031-22749-3_48

Download citation

Publish with us

Policies and ethics

Search

Navigation