International Strategy and
Organization
Part II:
International Licensing, Joint Ventures,
Consortia, Franchising, Mergers & Acquisitions,
Clusters and Counter Trade
Josef Windsperger
Professor of Organization and Management
Content
3 Management of Networks of the MNC
3.1 Theoretical Foundation of Networks of the MNC
3.2 International Licensing
3.3 International Strategic Alliances, Joint Ventures and
Consortia
3.4 Internationalization through Franchising
3.5 Internationalization through M&As
3.6 Internationalization through Clusters
3.7 Internationalization through Counter Trade
3.8 Organization Design of the MNC of the Future
3.1 Theoretical Foundations of Networks
Hierarchy
Stable
Network
Internal
Network
One Firm
Dynamic
Network
Several Firms
Networks of the MNC
Joint
Venture
High
Consortium
Countertrad
e
Interaction Level
Franchising
Cluster
CrossLicensing
Licensing
Cooperation
low
Competition
Cooperation
Cooperation Propensity
Theories of Networks
Transaction Cost Theory
Property Rights-Theory
Resource-based Theory
Relational View
3.1.1 Transaction Cost Theory O. E.
Williamson (1975)
Atmosphere
Bounded Rationality
Uncertainty/Complexity
‚Transaction Costs‘
Opportunism
Transaction Specifity
Quasi-Rents, Specific Investments and
Hold-up
g BA
A
B
g AB
D
g AC
g BD
C
B‘s profit with A: gBA
A‘s profit with B: gAB
A‘s quasi-rent: QRAB = (gAB – gAC)
B‘s quasi-rent: QRBA = (gBA – gBD)
Quasi-rent of A (QRBA) =
HOLD-UP Potential of B (HB)
Transaction Costs and Networks
TC
Market Network
S1
S2
Hierarchy
S3
Specifity,
Uncertainty
Complexity
of Know How
3.1.2 Property Rights-Theory
a. the right to use the good
b. the right to change the good
c. the right to capture the profit or to bear the loss
d. the right to sell the good and to receive the liquidation
value
a + b = decision rights
c + d = ownership rights
Contractability (due to intangibility) of assets
determines the structure of residual rights
Example: Franchising-Network
Intangible assets of the franchisor:
Brand name assets, system-specific know-how
Intangible assets of the franchisee:
Outlet-specific knowledge
ao and a1 are contactible – market coordination
ao and a1 are noncontractible – network coordination
3.1.3 Resource-based Theory
Strategic Rents (SR) = Competitive Advantage
(Schumpeterian and Ricaridian Rents)
Organizational Capabilities
Resources
Resource Characteristics
Intangible, tangible resources and
organizational capabilities
Heterogenity
Imitability
Substitutability
Firm specifity
3.1.4 Relational View: Networks and Trust
g BA
A
B
g AB
D
g AC
g BD
C
B‘s Reputation capital: RB
A‘s Reputation capital: RA
A‘s Quasi-Rents: QRAB = (gAB – gAC)
B‘s Quasi-Rents: QRBA = (gBA – gBD)
Quasi-Rents of A (QRAB) +
reputation capital of A (RA)
A> H cooperative behavior
A< H opportunistic behavior
3.2 International Licensing
Licensing agreement
A company (licencee) is allowed to use the licensor‘s trademark,
patent, manufacturing process or some other value creating activity
of the licensor.
Objectives
(a) In-licencing: Access to complementary assets
(b) Out-licensing: Risk reduction, deterrence of potential competitors,
standard creation
Cross Licensing
Agreement on the exchange of rights for the entire portfolio of technology for
a certain time period.
Licensee pays fixed fees and/or royalties (percentage of sales)
Conditions for Licensing
 Complementary
and contractible resources
Resources
• easy to replicate (contractible)
• property rights are well defined
TC and Licensing
TC
Hierarchy:
FDI
Licensing
S1
S2
S3
Specific
Investment
Know-how
Complexity
Uncertainty
Property Rights-Explanation
Contractible Know-how
Contractible
Know-how
Market Contract
A
Non-contractible Know-how
B to A:
Licensing
B
Noncontractible
Know-how
A to B:
Licensing
Network
Austrian company A wants to enter the market in Ukraine. The
Company B in Chernivtsi has intangible knowledge at the consumer
and labour market. On the other hand, the know-how of A is contractible.
Licensing as a Strategy for
Technological Innovations
Country Culture and Licensing
 Does
the national culture influence the choice
between licensing and foreign direct investments?
“The national differences in levels of trust impact the
choice of foreign market entry mode” (Shane, 1994)
 Results
- High Trust Countries → Licensing
- Low Trust Countries → Foreign Direct Investment
“Resorting to hierarchies is less common where
trust among people is greater.” (Shane, 1994)
3.3 International Joint Ventures, Strategic Alliances
and Consortia as stable Networks
Joint Venture
A
B
b
a
JV
Strategic alliance
a, b
A
B
3.3.1 Joint Ventures – Strategic Alliances
Strategic Alliance:
Agreement to gain competitive advantage through access to partner’s
resources, including markets, technologies, capital and human resources.
Joint Venture
a.Scale JV:
Firms enter together into a stage of production, distribution or a new market
(for example: JV that produce components for
automobile producers). Objective: Economies of Scale
b.Link JV:
Firms combine resources and capabilities from different stages of the value
chain. Objective: Synergies in R&D, production, distribution,
marketing.
JV and Strategic Alliances as Stable
Networks
Characteristics:
– High specific investments, high uncertainty
and/or
– Complementary firm-specific resources and
organizational capabilities
– Joint Ventures: Allocation of decision and
ownership rights
– Strategic alliances: Allocation of decision rights,
no ownership rights
– Weak Ties:
Trust instead of formal coordination mechanisms
Conditions for JV and SA
Hennart 1988:
„When knowledge is tacit, it cannot be effectively transferred in
codified form; its exchange must rely on intimate human contact“ (366)
- High TC:
Markets for intermediate inputs are subject to high
transaction costs due to high specific investments and high
uncertainty, leading to a transfer of decision and ownership
rights.
- Firm-specific resources:
The inputs are difficult to imitate by one of the parties.
TC, Licensing and Joint Venture
TC
Licensing
S1
S2
Internal
Hierarchy
JV
S3
Specifity,
Know-how
Complexity,
Uncertainty
Determinants of Decision and Ownership
Rights in JV
Hennart 1988:
„When knowledge is tacit, it cannot be effectively transferred in
codified form; its exchange must rely on intimate human contact“ (366)
- According to the PR-theory, the contractibility of assets
determines the governance structure.
- Noncontractible assets require the transfer of decision and
ownership rights.
- Intangible assets refer to organizational, marketing,
country-specific and technological know how.
Property Rights-Explanation
Contractible Know-how
Contractible
Know-how
Market Contract
A
Non-contractible Know-how
B to A:
Licensing
B
Noncontractible
Know-how
A to B:
Licensing
Joint Venture
Joint Venture: Choice of Entry Mode
- Licensing
- Joint venture
- Wholly-owned subsidiary
Market Entry and Control
 Licensing:
low control
 Joint Ventures: shared control
 Subsidiary (WOS): Decision and ownership
rights have the foreign headquarter
Market Entry and Resource Commitments
Licensing: Low
Joint Venture: Medium
Wholly-owned Subsidiary: High
Market Entry and Diffusion Risk
Licensing: High
Joint Venture: Medium
Wholly-owned Subsidiary: Low
Eclectic Theory: Hill et al. 1990
Strategic Variables
Environmental
Variables
1. Scale Economies
1. Country Risks
2. Global Concentration
2. Cultural Distances
3. Market Potential
3. Demand Uncertainty
4. Competitive
Dynamics
Form of Market
Entry
Resource Variables
1. Value of the Firm-specific Knowhow
2. Tacit Knowledge of the Partner
3. International Experience
3.3.2 Consortia
Latin „consortium“: association, society
= a temporary collaboration to perform a certain task or to
provide a specific service or product more efficiently
= association of two or more individuals, companies,
universities, or governments (or any combination)
Separate legal status
 Control over each participant is generally limited to
activities refering to the joint project
Consortium: NewPC-Consortium in Taiwan
Consortia versus Internalization
Firms have to decide how much of the R&D they should
be internally procured
- not possible to procure all R&D from outside
- in-house R&D is necessary for implementation
This decision depends on a number of factors:
- transaction and disincentive costs
- technological and organizational capabilities
Transaction Cost Explanation

Organization has to balance transaction costs with
incentives
– Firm is more likely to integrate R&D activities (inhouse) where transaction costs are high
– Firm is more likely to procure R&D from external
partners where incentives can be enhanced with market
competition
Organizational Capability Theory (1)
Schumpeter (1912, 1942) and Penrose (1959)
(resource based view)
capabilities of the firm result in competitive
advantages
capabilities have to be enhanced through
innovation and learning
Organizational Capability Theory (2)

R&D transactions: companies acquire scientific
knowledge from outside and form alliances with other
firms with different capabilities.
Organizational Capability theory
- lack of knowledge and sufficient capabilities of the firms
- advantage of utilizing the new capabilities of external
partners can exceed the coordinaton cost disadvantages.
Sakakibara‘s Model
Motives for Consortia
Economic View  Cost-sharing Motives
–
–
symmetrical firms in terms of capabilities or knowledge
same industry & outcome
Organizational View  Skill-Sharing Motives
–
–
–
heterogeneous capabilities
direct competitors in the product market
knowledge base
 tacit knowledge
 difficult to transmit
 complementary knowledge
Sakakibara‘s Model
Summary
Motives
Cost-sharing
Skill-sharing
competition in R&D
consortia
firm capabilities in
R&D consortia
role of R&D
consortia
private R&D
spending
constraints firms
face
single-industry
competition
homogeneous,
substitutable
divide tasks
can decrease
wide industry
participation
heterogeneous,
complementary
create/transfer
knowledge
can increase
financial resources
research capabilities
3.4 Internationalization through FranchisingNetworks
Royalties
to
t
Franchisor: System-specific Know-how
Franchisee: Initial Fee
Specific Investments
Characteristics:
-Franchisees and franchisor are entrepreneurs.
- Intangible Assets:
Franchisor‘s brand name, system-specific know how
Franchisee‘s local market know how
-Incentive system:
Royalties and intial fees
Transaction Cost Theory
TC
Licensing
Company-owned
Franchising subsidiaríes
‚Hostage Model‘
S1
S2
S3
Specifity,
Uncertainty
A Property Rights View
Intangible assets
System-specific und local market knowledge
H1
How is the knowledge distrubuted
Between the franchisor and the
franchisee?
Residual decision rights
H2
Who is the residual decision maker
(whose decisions influences
the residual income)?
Ownership rights
(Residual income rights)
Proportion of
company-owned
Outlets (PCO)
H3
Royalties/
Initial Fees
How are the ownership
rights allocated?
Entry Forms
Determinants of the Market Entry Choice:
Environmental and Organisational Factors
- Geographic distance
-
Cultural distance
Country risk
Political risk
Market volume and growth
- Resources of the partner
- Brand name assets
- International experience
- Financial situation of the franchisor
Efficiency Comparison
Subsidiary (WOS)
1. High resource commitments
2. Central control
3. Protection of the system-specific know how
Appropriate:
–
–
–
–
–
High cultural and geographic distance
Strong brand name
Important system-specific know how
High market potential and growth
International experience
Area Development Agreement
1. Lower resource commitment
2. Relatively strong central control
3. Fast market entry
Appropriate:
–
–
–
–
–
High geographic and cultural distances
Uncertain market development
Instable legal environment
Local market knowledge is very important
No international experience
Direct Franchising
High control and agency costs
Appropriate:
– Low geographic and cultural differences
– Strong local market know how of the franchisees
– Relatively small market potential and growth
Joint Venture
1. Shared control
2. Know-how diffusion risk
3. Lower risk
Appropriate:
– Franchisor has not enough local market knowledge
– Uncertain market development
– High legal and political uncertainty
– Relatively high cultural differences
– Legal barriers
Master Franchising
Lower central control
Appropriate:
–
–
–
–
–
–
High geografic and cultural differences
No international experience
High political risk
Strong market growth
High market uncertainty
Local market know-how is very important.
3.5 Mergers & Acquisitions
Merger Waves
11000
10000
9000
2000:
10.952
# of cases
With US-firm
involvements
(5) Globalization,
Single European Market,
Shareholder Value
Internet
8000
7000
1999:
9.218
93-??
6000
5000
4000
3000
2000
(1)
„Industrial
Revolution"
leads to
monopolies
97-04
(3) “Conglomerate era"
due to diversification theory
(2)
New Anti-trust laws leads to
vertical integrations
65-69
(4)
“Merger mania",
liberalization
and deregulation
2001:
9.614
2002:
8.423
30.09.2003:
5.444
84-89
16-29
1000
0
1895 00 05 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 00 05
Source: 1895-1920: Nelson (1959); 1921-1939: Thorp/Crowder (1941), 1940-1962: FTC (1971, 1972), 1963-99: MergerStat Review, 2000-03: Thomson Financial, FH Zwickau
Mergers and Diversification Strategies (1)

Unrelated M&A: Conglomerate Mergers
– NPV(A+B) = NPV(A) + NPV(B)
– P = NPV(A+B) – NPV(A)
– Only generates normal economic profit

Related M&A: Vertical and Horizontal Integration
NPV(A+B) > NPV(A) + NPV(B)
M&A generate strategic rents
NPV = Synergies – Premium (preacquisition value – paid
price)
Mergers and Diversification Strategies (2)
NVP(A) = 15000; NVP(B) = 10000
 Unrelated M&A: Conglomerate Mergers

– NPV(A+B) = NPV(A) + NPV(B) = 25000
– P = NPV(A+B) – NPV(A) = 10000
– Only generates normal economic profit

Related M&A: Vertical and Horizontal Integration
– NPV(A+B) = 30000 > NPV(A) + NPV(B)
– P = NPV(A+B) – NPV(A) = 15000
M&A generate strategic rents
Lubatkin (1983)
Technical economies (functional and management synergies)
marketing, production, organization, scheduling,
and compensation
Pecuniary economies
dictate prices by exerting market power
Diversification economies (financial synergies)
portfolio management and risk reduction
Jensen & Ruback 1983 (1)
The reduction of production/distribution/coordination
costs:
1. Through economies of scale
2. Through the adoption of more efficient production or
organizational technology
3. Through the increased utilization of the bidder’s
management team
4. Through a reduction of agency costs
Jensen & Ruback 1983 (2)
Financial Motivations:
1. To avoid bankruptcy costs
1. To increase leverage opportunities
1. To gain tax advantages
To gain power in product markets
To eliminate inefficient target management
Target Firm’s Responses against the
Bidding Firm

Greenmail: target firm purchases any of its stock owned
by a bidding firm for a price which is greater than the
current market price.

Poison Pills: any action of a target firm that makes the
acquisition very costly, e.g. issue rights for the current
stockholders for a special cash dividend in the case of a
unfriendly take-over.

Crown jewel sale: target sells parts of the company, which
are most profitable for the bidding firm.
Postmerger Integration Model
Combination
potential
+
Synergy
realization
+
-
+
Organizational
integration
+
+
Employees‘
resistance
Combination Potential
Economies
of scale – similar
operations
Operational synergies
Administration synergies
Managerial synergies
Financial synergies
Employee Resistance
 M&As
affect career plans
 M&As create appearance of psychological
problems such as:
– “We versus they” antagonism
– Distrust, Tension and Hostility
 Cultural
problems
Factors influencing integration

Management style similarity
– Attenuates employee resistance
– Cushions the degree of change and enhances organizational
integration

Cross-border Combination
– Impede the interaction and coordination because of country
differences
– Culture clashes promoting employee resistance

Relative Size
– Insufficient managerial attention to smaller targets
– Positively associated with organizational integration
Hypotheses
•
The higher the combination potential, the larger the synergy
realisation.
• The stronger the organizational integration, the larger the synergy
realisation.
• The higher the employee resistance, the lower the synergy realisation.
• The higher the combination potential, the greater the organizational
integration.
• The higher the combination potential, the larger the employee
resistance.
• The greater the organizational integration, the larger the employee
resistance.
Networks and M&As
a. Alliances versus M&A






Alliances allow simultaneous and fast entering into
multiple countries
Both achieve complementary capabilities and/or
economies of scale effects
Alliances have a lower degree of organizational
integration than acquisitions
In alliances all decisions must be made by consensus
among the partner firms
Alliances are more flexible to adjust to environmental
changes
Alliances result in higher knowledge spill-over risks
b.Acquisitions versus Greenfield
Investments
Advantages of greenfield investments:
- Know-how advantage of the MNC
(ownership-specific advantages)
- High market potential
- Long-term market growth
- Few competitiors
- Stable legal and political institutional factors
c. Greenfield/Brownfield
Investment/Acquisition
Mode Choice
Preference for external expansion Preference for internal expansion
(greenfield)
(acquisition)
The acquired foreign firm
has sufficient
resources?
no
yes
A
B
Critical resources are
freely available at the foreign market.
yes
G
no
B
Impact of International Strategy on the Market Entry
Mode (1)
Global and multidomestic strategies are associated with different
types of firm-specific advantages (FSAs):
1.location-bound FSAs
2.Nonlocation bound FSAs
Global companies: exploitation of nonlocation-bound home
based firm-specific advantages
Multidomestic companies: exploitation of location-bound
FSAs using host country specific advantages
International Strategy: Impact on
M&A and Network Form (2)
 Hypotheses:
- Companies following Global Strategy
 higher proportion of Greenfield Investments
- Companies following Multidomestic Strategy
 higher proportion of Acquisitions and Alliances
3.6 Internationalization through Clusters
Porter‘s Diamond Model
Firm Strategy,
Structure and
Rivalry
Demand
Conditions
Factor Conditions
Related and
Supporting
Industries
Government
Competitive Advantage through Clusters
„Clusters are geographic concentrations of interconnected companies
and institutions in a particular field.“ (Michael E.Porter)



They include an array of linked industries and other
entities important to competition.
Many clusters include governmental and other institutions
that provide specialized training, education, information,
research and technical support.
Clusters can be extended downstream, horizontally and
laterally.
Organisation Design of Clusters




Characteristics:
– Stable network based on the core competencies of
partner firms
– Location-bound
– Institutional support
Configuration:
– Less formal coordination
- Exclusive brand name at the market
- Stable pool of cooperation partners
Soft Integration Factors:
– Trust as coordination mechanism
IT-supported network relations
Evolution of Clusters
Birth
Evolution
Decline
historical circumstances; unusual local demand;
existence of supplier industry and related
industries; a couple of innovative companies
stimulate others.
influence of government and other institutions
expands; new entrepreneurs are attracted;
suppliers emerge; information accumulates;
infrastructure is improved.
technological discontinuities; a shift in buyer‘s
needs
Advantages of Clusters (1)
(A) Access to employees and suppliers

Can recruit from a pool of specialized and experienced
employees
 lowers search and transactions costs

Offer a specialized supplier network
 minimizes the need for inventory
 eliminates delays
 lowers the opportunism risk and coordination costs
Advantages of Clusters (2)
(B) Preferred access to specialized information
 Extensive market, technical and competitive
information accumulates within a cluster
(C) Access to institutions and public goods
 Investments by government or other public
institutions and universities can enhance a
company’s productivity
Advantages of Clusters (3)
(D) Higher motivation and easier performance
measurement
 Local rivalry is highly motivating
 Peer pressure leads to competitive pressure
 Easier to compare and measure performances
because of local competition
Regional Objective:
Creation of Location-specific Competitive
Advantage
Innovation und KnowHow-Upgrading
Strong
local
competition
Suppliers
with high
capabilities
Sophisticated
demand
Specific
resources
3. 7 Internationalization through
Countertrade
- Explanation:
Market failure at the international product and financial
markets
Advantages for the MNC:
Realization of a higher market potential
-Informal coordination mechanisms
(reputation capital, trust) instead of formal coordination
mechanisms
Forms of Counter Trade
Classical barter
- Clearing arrangement
- Switch Trading
 Buy-Back
 Counterpurchase
 Offset

Use of Counter Trade
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Barter
Offset
Buyback
Counterpurchase
Switches
Barter
Clearing arrangement:
- purchase equal value of goods and services
Switch-trading:
- goods that are useless to the trading country
can be sold or transferred to a third country
Advantages of Barter
 To
open new markets
 To avoid protectionist barriers
 To stimulate trade
 To trade with the Second World
Advantages of Offsets
 Secure
competitive advantage
 Increase local employment
 Create alternative sources of financing
 Transfer technology
 Avoid taxes and tariffs
Counter Purchase



Two hard currency contracts
Goods are taken back by the seller
These goods are not those produced with
the equipment sold. They are from a list
which is set up by the importer.
Buy-Back
 Transfer
of technology, plant, equipment and
technical assistance
 Purchase of a certain percentage of the output
 Long-term orientation
Buy-back-contract
Example
A producer of luxery products from France (F) sells a machine to a
company in Ukraine in order to produce and sell these products in Ukraine.
The Ukraine producer (U) cannot use these production technology for other
products.
Questions:
a) Market contract between F and Ukraine
b) Vertical integration
c) Buy-back: The F-producer concludes a contract to buy a certain amount of
product from the Ukraine producer.
F
U
Market Contract:
What is the problem?
Buy-back:
‚double hostage effect‘
Hostage Model of Countertrade
(Williamson 1983; Hennart 1988)
TC
Licensing Countertrade Hierarchy: DI
‚Hostage-effect‘
S1
S2
S3
Specifity,
Uncertainty
3.8 Organization Design of the ‘MNC of
the Future’
Theses (based on expert interviews)
I.
Evolution of ‘virtual countries’
II.
Evolution of networks
„Shifting Networks“
„Virtual Countries“
Processes
External
Internal
Employment
Ad hoc projects with
independent partners
Employees
Marketing
Partner-specific branding
Umbrella branding
Organization
Self-organizing teams and Hierarchy with
networks
decentralized structures
Cases for Discussion
Case Study: Joint Venture
 The car producer ADOK uses the input goods A and B for the production of OMEGA.
The following resources are given:
 ADOK has firm-specific production know how in producing A but has now experience
in producing B.
 MAX has firm-specific advantages in developing and producing B. MAX has built up
his ownership-specific advantages through high R&D-investments in the last decades.
His capabilities are difficult to imitate by potential competitors.
 In addition, the market environment is very uncertain; especially the technological
uncertainty is very high because new competitors frequently enter the industry.
A) Which organizational form should be used to produce B?
(Market contract, joint venture between MAX and ADOK or internal production)
B) Now we assume that MAX has no firm-specific advantages in B; in addition the market
uncertainty is relatively low. Which organizational decision should be made by ADOK
in this situation?
C) Assume that ADOK is in Germany and MAX in Bulgaria? Does this influence the
organization decision for ADOK and why?
Case: Joint Venture, Acquisition and Greenfield Investment
ALPHA want to enter the following markets:
Market A:
Characteristics:
High market uncertainty, high market potential and growth, unstable political and legal
institutional structure, high cultural differences. In addition, the competitors in the host
country have high local market advantages (knowledge of the product and labour
market).
(1) ALPHA’S Market entry decision:
Joint venture/acquisition/greenfield investment?
Market B:
Characteristics:
Many competitors, no market entry barriers, high market potential and growth,
longterm international experience. In addition, ALPHA has high competitive
advantages in production and R&D. In addition, ALPHA’s organizational culture
enables empowerment and decentralized decision making.
(2) Which market entry strategy is efficient in this market?
(3) Under which condition would you choose brownfield investment?

Case: Discussion of Hypotheses – Market Entry in China: JV vs.
Licensing

H1: European companies (EC) which consider China as a high risk
country are less likely to enter china through JV.
H2: The larger the cultural distance between EC firms’ home countries
and China, the more likely they are to employ JV.
H3: The larger the political and economic distance between EC firms’
home countries and China, the less likely these firms are to employ JV.
H4: The greater the international experience of EC firms in China, the
more they will employ JV.
H5: The larger the firm size, the more likely that firms will employ JV.
H6: When know how is of a tacit nature, it is more likely to be
transferred through JV.
H7: The greater the transaction complexity and uncertainty, the greater
the likelihood that firms will use JV.
H8: Firms employing a marketing mix strategy with standardized
elements are more likely to use licensing.








Case: Market Entry of Japanese Firms in US – Acquisitions vs.
Greenfield Investments

Discuss:
H1: The greater the J-investor’s research and development intensity,
the higher the probability of greenfield investments.
H2: The greater the J-investor’s experience in U.S. market, the higher
the probability of acquisitions.
H3: The higher the rate of growth of demand in target market, the
higher the incentive to enter through acquisitions.
H4:The lower the J-investor’s endowment in human resources, the
higher the likelihood of acquisitions.
H5: The larger the size of subsidiary relative to that of the investor, the
higher the probability of an acquisition.
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