The influence of market and product knowledge resource embeddedness on the international mergers of advertising agencies: The case-study approach

Tai-Yuan Huang, Jer-San Hu and Kuo-Chia Chen

International Business Review, 2008, vol. 17, issue 5, 587-599

Abstract: The acquisition of Taiwanese advertising companies by large multinational advertising syndicates stands out as unique compared to those in other industries. The strategic thinking involved in such acquisitions is worth a deep analysis. This study focuses on the merger of two Taiwanese and Japanese advertising agencies from the network embeddedness point of view. Using the case-study method, this paper probes into the motivations and strategy evolutions of the said mergers. The following findings were made: "product knowledge" and "market knowledge" are important resources on which advertisers and advertising agencies share mutual dependency in a given market. As products are marketed and experience growth, advertising agents and advertisers enter into a long-term cooperation relationship and resource embeddedness. When advertising agencies follow their advertisers into a foreign market, and thus also leading to bundled investments, the globalization strategies of the former become a consequence. Advertisers' need to understand the local competitive resources (i.e. market knowledge) leads to symmetrical resource complementarities with their advertising agencies in the multinational market. In the course of a merger dictated by common market knowledge needs, advertising agencies, enjoying an upper hand in resources, often have a greater dominance in the merger and acquisition process.

Keywords: Business; network; International; merger; Market/product; knowledge; Multinational; company; Resource; embeddedness (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (7)

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