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

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

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. [Copyright 2008 Elsevier]

Huang, T., Hu, J., & Chen, K. (2008, October). The influence of market and product knowledge resource embeddedness on the international mergers of advertising agencies: The case-study approach. International Business Review, 17(5), 587-599. Retrieved October 17, 2008, doi:10.1016/j.ibusrev.2008.07.004