(1975). The Limits of Organization. Journal of Economic Issues: Vol. 9, No. 3, pp. 543-544.

The Limits of Organization

In this landmark book, Scott Page redefines the way we understand ourselves in relation to one another. The Difference is about how we think in groups--and how our collective wisdom exceeds the sum of its parts. Why can teams of people find better solutions than brilliant individuals working alone? And why are the best group decisions and predictions those that draw upon the very qualities that make each of us unique? The answers lie in diversity--not what we look like outside, but what we look like within, our distinct tools and abilities. The Difference reveals that progress and innovation may depend less on lone thinkers with enormous IQs than on diverse people working together and capitalizing on their individuality. Page shows how groups that display a range of perspectives outperform groups of like-minded experts. Diversity yields superior outcomes, and Page proves it using his own cutting-edge research. Moving beyond the politics that cloud standard debates about diversity, he explains why difference beats out homogeneity, whether you're talking about citizens in a democracy or scientists in the laboratory. He examines practical ways to apply diversity's logic to a host of problems, and along the way offers fascinating and surprising examples, from the redesign of the Chicago "El" to the truth about where we store our ketchup. Page changes the way we understand diversity--how to harness its untapped potential, how to understand and avoid its traps, and how we can leverage our differences for the benefit of all.

Prologue to The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies

Despite the fact that one-third of worldwide mergers involve firms from different countries, the vast majority of the academic literature on mergers studies domestic mergers. What little has been written about cross-border mergers has focused on public firms, usually from the United States. Yet, the vast majority of cross-border mergers involve private firms that are not from the United States. We provide an analysis of a sample of 56,978 cross-border mergers occurring between 1990 and 2007. We first characterize the patterns of who buys whom: Geography matters, with firms being much more likely to purchase firms in nearby countries than in countries far away. Purchasers are usually but not always from developed countries and they tend to purchase firms in countries with lower investor protection and accounting standards. A significant factor in determining acquisition patterns is currency movements; firms tend to purchase firms from countries relative to which the acquirer's currency has appreciated. In addition economy-wide factors reflected in the country's stock market returns lead to acquisitions as well. Both the currency and stock market effect could reflect either misvaluation or wealth explanations. Our evidence is more consistent with the wealth explanation than the misvaluation explanation.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1788267_code357812.pdf?abstractid=1427408

Determinants of Cross-Border Mergers and Acquisitions

Does One Belt One Road initiative promote Chinese overseas direct investment

The vast majority of cross-border mergers involve private firms outside of the United States. We analyze a sample of 56,978 cross-border mergers between 1990 and 2007. We find that geography, the quality of accounting disclosure, and bilateral trade increase the likelihood of mergers between two countries. Valuation appears to play a role in motivating mergers: firms in countries whose stock market has increased in value, whose currency has recently appreciated, and that have a relatively high market-to-book value tend to be purchasers, while firms from weaker-performing economies tend to be targets. THE VOLUME OF CROSS-BORDER acquisitions has been growing worldwide, from 23% of total merger volume in 1998 to 45% in 2007. Conceptually, cross-border mergers occur for the same reasons as domestic ones: two firms will merge when their combination increases value (or utility) from the perception of the acquiring firm’s managers. However, national borders add an extra element to the calculus of domestic mergers because they are associated with an additional set of frictions that can impede or facilitate mergers. For example, cultural or geographic differences can increase the costs of combining two firms. Governance-related differences across countries can motivate a merger if the combined firm has better protection for target-firm shareholders because of higher governance standards in the country of the acquiring firm. Perhaps more importantly, imperfect integration of capital markets across countries can lead to a merger in which a higher-valued acquirer purchases a relatively inexpensive target following changes in exchange rates or stock market valuations in local currency. In this paper, we evaluate the extent to which these international factors influence the decision of firms to merge. Using a sample of 56,978 cross-border mergers occurring between 1990 and 2007, we estimate the factors that affect the likelihood that firms from any pair of countries merge in a particular year.

We find strong evidence that three key dimensions of national culture (trust, hierarchy, and individualism) affect merger volume and synergy gains. The volume of cross-border mergers is lower when countries are more culturally distant. In addition, greater cultural distance in trust and individualism leads to lower combined announcement returns. These findings are robust to year and country-level fixed effects, time-varying country-pair and deal-level variables, as well as instrumental variables for cultural differences based on genetic and somatic differences. The results are the first large-scale evidence that cultural differences have substantial impacts on multiple aspects of cross-border mergers.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1968987_code999292.pdf?abstractid=1545514&mirid=3

Lost in Translation? The Effect of Cultural Values on Mergers Around the World

https://msbfile03.usc.edu/digitalmeasures/kahern/intellcont/Ahern_et_al_JFE_2015-1.pdf

Daniele Daminelli

Papers

Lost in Translation? The Effect of Cultural Values on Mergers Around the World

Lost in translation? the effect of cultural values on mergers around the world