Who is Entrepreneurial? Evidence from Late Bloomer Firms with M&A strategies
51 Pages Posted: 30 Sep 2021 Last revised: 3 Nov 2021
Date Written: October 9, 2020
The literature considers firms seeking finance through an initial public offering (IPO) as entrepreneurial. But are they? We hypothesize that firms in the latter stage of industry life-cycle, or late bloomer firms as less innovative, proactive, and risk-taking, signal entrepreneurial orientation with competitively aggressive M&A strategies. They strategically time an IPO to mitigate adverse selection. Analyzing U.S. data, we find that late bloomer firms are 54% more likely to engage in M&As four years following an IPO and acquire 42% faster following the IPO. This M&A pattern is more pronounced at the time of, and among firms with, capital constraints.
Keywords: Entrepreneurial orientation, Entrepreneurial posturing, Sustainable Competitive Advantage, Competitive aggressiveness, IPO, Mergers and Acquisitions, Industry Lifecycle, Resource Advantage.
JEL Classification: L10, L250, G34, G32
Suggested Citation: Suggested Citation