Lobby Resources and Economics of Scope: an Analysis on M&as
Ben Barber (IE University)
Marco Giarratana (IE University)
Juan Santalo (IE University)

Abstract : This paper investigates the conditions under which political capabilities can provide a source of competitive advantage for diversified firms. We argue and find that political capabilities attached to one business unit are more likely to provide a competitive advantage to another business unit within the same firm when both business units do not share any other strategic resource. Empirically, we alleviate endogeneity concerns by employing a matching strategy that compares sales growth of targets in successful acquisition versus growth rates of targets in unsuccessful acquisitions. We find empirical evidence consistent with our hypotheses. Political capabilities of the acquirer firm seem to help the sales growth of the target especially for unrelated acquisitions. Our results seem to be driven by the fact that political capabilities of the acquirer improve access to public procurement contracts for targets.

The Evolution of Productive Organizations
Francisco Brahm (London Business School)
Joaquin Poblete (Pontifical Catholic University of Chile)

Abstract : We develop a cultural evolution model that illuminates the evolution of productive organizations, such as partnerships, guilds and modern corporations. The basic insight provided by the model is that productive organizations evolved because they favored the difficult-to-propel process of cumulative culture by virtue of being exclusive and facilitating social learning. Productive organizations make social learning and culture useful to society, playing a fundamental role in the adaptive success of the human species. The model also illuminates issues regarding adaptation and rigidity, the locus of innovation, secrecy and the origins of specialization. We test the model using a sample of pre-modern societies drawn from the Ethnographic Atlas. The empirical analysis provides supporting evidence for our predictions.

The Dark Side of Relatedness: Resource Characteristics, Hierarchical Failure, and Organizational Form
Nicolai J. Foss (Bocconi University)
Peter G. Klein (Baylor University)
Ram Mudambi (Temple University)
Samuele Murtinu (Groningen University)

Abstract : Theory suggests that corporate diversification can create value by exploiting economies of scope or creating efficient internal capital markets. Because resources can normally be shared over a limited set of activities, and because internal capital markets suffer from information and incentive problems, most researcher argue that closely related diversification should outperform unrelated or conglomerate diversification. However, the empirical evidence is mixed. We argue that the same factors giving rise to scope economies—in particular, the ability to deploy resources across multiple products or activities—lead to divisional rent-seeking under conditions of asymmetric information. In other words, there is a “dark side of relatedness.” We provide an integrated, comparative-institutional explanation for diversification based on resource characteristics and transaction costs, showing how resource flexibility and information costs drive the benefits and costs of alternative organizational forms.