شروع کار، شرکت کنندگان و تاثیرات رقابت تصدی  Start-ups, incumbents, and the effects of takeover competition

1. Introduction Especially in times of technological advancement (e.g., the rise of the Internet), a multitude of start-up companies are founded and enter the market every year (e.g., amounting to $48 billion in venture capital investments in 2014; National Venture Capital Association, 2015). Previous research has shown that in times of such technological discontinuities entire industries may collectively fail to adequately adapt resulting in “collective inertia” (e.g., Abrahamson & Fombrun, 1994). Collective inertia is a potential result of different behavioral patterns in the face of discontinuous business models changes initiated by a new entrant. Surviving in competitive markets forces established companies to evaluate strategies to fight off companies entering their market (Homburg, Fürst, Ehrmann, & Scheinker, 2013). To protect or recapture its market share, an incumbent’s natural reaction is to take over an entrant as particularly successful players are bound to incumbent inertia (Chandy & Tellis, 2000). Since the 1990s, there has been substantial merger and acquisition (M&A) activity despite up- and downturns in the economic cycle. In the U.S. alone, for example, in 2013, there were nearly 10,000 M&As, with a total value of over $950 billion (FactSet Research, 2014). In addition to M&As between large established firms, acquisitions of Internet start-ups have also involved tremendous sums. Facebook’s $1 billion deal to take over Instagram and Yahoo’s $1.1 billion investment in Tumblr shows that firms are willing to pay extremely high prices for start-ups that are losing money and which face a high uncertainty with respect to their future revenues and profits. In the existing literature, the dynamics of competition in corporate takeovers have received special attention. Despite the existing literature on M&As involving competing bidders (Betton, Eckbo, & Thorburn, 2008; Boone & Mulherin, 2007), alternative takeover strategies (e.g. Berkovitch & Khanna, 1991; Boone & Mulherin, 2009; Giammarino & Heinkel, 1986), and the outcomes of competitive bids (e.g. Aktas, de Bodt, & Roll, 2010; Giliberto & Varaiya, 1989), little is known about why and how negotiation dynamics influence takeover outcomes, particularly because merger negotiations always carry the risk that multiple incumbents enter an auction process for the target company (Aktas et al., 2010; Betton et al., 2008; Eckbo, 2009). Thus, it is unclear what effects “overshadowing” auctions’ behavioral and market dynamics have on the evaluation of the target company, the competitive situation, the actual bidding behavior, and, ultimately, on the target company’s price.