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Global Capitalism Meets National Spirit

Global Capitalism Meets National Spirit. By: Kent Copeland Eric Hamilton Chase Luft Adam Stone. Part 1: Article Focus. Article Focus. Corporate managers use of discursive resources Focused now on discursive strategies of actors involved in mergers & acquisitions

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Global Capitalism Meets National Spirit

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  1. Global Capitalism Meets National Spirit By: Kent Copeland Eric Hamilton Chase Luft Adam Stone

  2. Part 1: Article Focus

  3. Article Focus • Corporate managers use of discursive resources • Focused now on discursive strategies of actors involved in mergers & acquisitions • Usually focused on financial and economic aspects

  4. Nordea • Major Nordic Bank Group • Built through Mergers & Acquisitions • Includes Swedish, Finnish, Danish, & Norwegian financial services company • Forerunner for Mergers & Acquisition • Acquisition of Christiania Bank ogKreditkasse (CBK) • Prolonged process • Norwegian State held majors shares

  5. Overview of Research on Mergers & Acquisitions • Strategic Perspective • Focused on decision-making processes • Used to attempt understanding management • Cultural Perspective • Cultural differences & contradictions, organizational justice, organizational politics, ambiguity, and gender • Societal Perspective • Considered social movements or fashions • Winners/Losers, Success/Failure of Mergers & Acquisitions

  6. Discursive Strategizing • Activating, Performing, & Connecting • Who are the Actors? • What is important for them? • 3 sources of legitimacy • Rationalistic Discourse • Nationalistic Discourse

  7. Method and Data • Prolonged Acquisition of CBK by Nordea • Initial offer in 1999 • Mergers, then final acquisition in October 2000. • Final name change in early 2001 • Intertextuality • 3 Stages of Analysis

  8. Part 2: Mergers and Acquisitions

  9. Mergers and Acquisitions • Merita (Finland) and Nordbanken (Sweden)- Oct. 1997 formed MNB • MNB acquires Unidanmark (Denmark) in March 2000 • MNB and U acquire Christiania Bank og Kreditkasse (CBK Norway) in Oct. 2000 • New group called Nordea

  10. Prolonged Cross-Border Acquisition • CBK is second largest bank in Norway • CBK is State controlled (35%) • Norway reluctant to give up control • MNB initial offer of U.S. $2.7 billion in Sept. 1999 • Labour Party took control of government offices in March 2000 – initially rejected offers • Four other banks showed interest in acquiring CBK • MNB’s 10th and final offer approved in Oct. 2000

  11. Rationalistic Discourse Three main arguments: • Need for banks to grow and globalize • Problems related to State ownership • Synergies realized by the acquisition

  12. Need for Banks to Grow and Globalize • Large banks provide services more cost-effectively and gain competitive advantage • Increases value of bank in market for shareholders • Nordic bank package is attractive target for future acquisition • Acquisitions are only avenue for expansion

  13. Problems Related to State Ownership • Politicians in Norway can’t keep up with financial world • Norwegian government inefficient and slow • State ownership is old-fashioned and detrimental to development • Privatization is inevitable

  14. Synergies Realized by the Acquisition • CBK could exploit the other bank’s competences and have better access to capital • MNB’s offer was referred to as a strategic fit • New Nordic bank group could draw interest from large continental European banks (particularly Dutch or German)

  15. Nationalistic Discourse • Norwegian newspaper – “Norway is in danger of becoming a subsidiary district in Europe’s periphery” • Norway wants to maintain decision making power • Norwegian nationalism is strong – prevented telecommunications merger

  16. Norwegians vs. Swedes • Norwegians viewed acquisition as a war with the Swedes • Norway as little brother being bullied by Big brother Sweden • Strong Norwegian patriotism

  17. “Norwegian Attitude” • Indecisive, difficult, patriotic, and suspicious of foreigners • Post acquisition integration could be difficult • Prevent rational decision making • Norway stayed out of the European Union and Euro zone

  18. Part 3: Making Use of Discursive Strategies and Resources (Key Players)

  19. Merita-Nordbanken (MNB) • Drew on and mobilized rationalistic discourse in justifying their series of offers for CBK • Objective was to secure rapid growth and market share in Norway and become the largest bank in the Nordic Countries • Attempted to appeal to Norwegian nationalist sentiments; welcomed the State of Norway as a shareholder • Emphasized both shareholders’ interests and Norwegian interests more generally • In favor of the acquisition

  20. Christiania Bank ogKreditkasse (CBK) • Mobilized rationalistic discourse in the media in stressing the strategic fit between the banks, and the compatibility between the visions of the managements • Employees felt positive because MNB had no plans for layoffs • CEO Tom Ruud became entangled in nationalistic discourse in ways that were, at times, beyond his control • In favor of the acquisition

  21. Den norshe Bank (DnB) • DnB, the largest Norwegian bank, faced the threat of increased competition in its domestic market • Supported a domestic restructure and offered to take over the struggling CBK • Top management drew from nationalistic and rationalistic discourses when looking after their intersts • Profited 200 million krone by selling its 9.98% share of CBK in the merger • Against the acquisition

  22. Handelsbanken • Sought to prevent MNB, one of its toughest competitors, from becoming one of the largest banks in the Nordic region • Made offer to acquire CBK, but image of a distinctly Swedish bank was problematic in Norway • Once MNB’s offer was taken, CEO Arne Martensson drew n rationalistic discourse to argue the price had become too high(interesting note: Handelsbanken’s original offer was higher in numerical terms than MNB’s) • Against the acquisition

  23. “Experts” (aka Financial Analysts) • The acquisition was about making money • It was about pursuing an ideological agenda whereby problems related to State ownership in financial institutions are solved • Argued that CBK needed to have more private owners in order to remain competitive • Nationalistic considerations are subordinated to rationalistic argumentation • In favor of the acquisition

  24. Centre-right minority government • Consisted of the Christian Democrats, the Centre Party, and the Liberals and were in power in Norway until March 2000 • Rejected MNB’s initial offer for CBK; wanted to secure Norwegian State ownership of financial institutions • Constantly drew on nationalistic discourse in the CBK case • Shifted their views of the acquisition after they lost power; wanted the State of Norway to only have a significant stake in the new bank • Ambiguous towards the acquisition

  25. The Labour Party • The largest parliamentary party in Norway • Used nationalistic discourse by hoping to devise a national solution to the banking and financial sector • Decided to concentrate Norwegian State ownership in one financial institution, DnB, and agreed to sell CBK to the highest bidder • Rationalistic discourse was mobilized to justify the deal • Ambiguous to the acquisition

  26. Part 4: Conclusion

  27. International Industrial Restructuring • Focused on cross-border acquisitions • Strategy development

  28. Strategy • Strategy = Language constructed to persuade others to accept understandings and take certain actions • How do actors make use of discursive strategies/resources in public discussion in pursuing/resisting international acquisitions? - Depends on position held • Financial/Economic rationale is insufficient - Combine rationalistic arguments with nationalistic sentiments - Rationalize nationalistic arguments • Nationalism = Financial ends/obstructs others’ strategies

  29. Rational Discourse (Media) • Cross-border acquisitions are taken-for-granted • Viewed as inevitable parts of global industrial restructuring • Gives voice to those arguing for cross-border acquisition • Caused by: corporate growth, competiveness, and efficiency • Usually reflects strategies, plans, analyses, or calculations when justifying viewpoints

  30. Nationalistic Discourse (Media) • Can challenge rationale of international industrial restructuring • Is often emotional response • Mobilized by those against cross-border acquisition, and those with ambiguous viewpoints • Varies between countries involved… • Built on relationship-specific social identification • Used to challenge or resist global capitalism

  31. Discursive Strategies • Same actors can draw on different/contradictory discourses at different times • May draw on same discourses as opposition to solidify their position in a certain direction • Position can be taken out of context due to lack of control over publishing (hypocrisy)

  32. Future Research Suggestions • Ability of actors to juggle with discursive resources over time - Differing profiles of media outlets • The ways in which corporate executives handle variation of discourse between business press and the tabloids - tabloids have negative/inverse effect • Dynamics involved in production of legitimacy in the media (things interpreted wrongly) • Intersection of business and politics remains under-researched

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