Performance effects of operational efficiency and bargainingpower through different types of growth : A study between organic and inorganic growth

Abstract: Previous literature often argues that acquisitions are used as a tool for growth, and the value creation derives from the combination of businesses through synergy effects and the economies of scale. In the same academical and theoretical context, there is often a discussion on growth with a more organically approach, where the value comes throughresource utilization and internal efficiency. There is a broad range of research in the area,focusing on the impact of different types of growth strategies. More emphasis has been on inorganic growth. Hence, is there a superior combination of both, and how will each strategy impact the value creation for different types of stakeholders through internal and external efficiency. Previous results are not always harmonious regarding the relationship between the two growth strategies and the efficiency of a company. This study has focused on examining the relationship with a broad range of industries using accounting measures to answer the research question: What are the effects of organic and inorganic growth on operating efficiency and bargaining power? For the thesis, panel data analysis has been used which includes 8675 specific firm-year observed values from companies that is publicly listed in Sweden. The collected archival data has been tested through OLS regressions with fixed effects. Throughout the thesis and conducted research, a positivist paradigm has been used under a deductive approach. Emphasis is placed on previous literature and studies for more accurate statistical results. Further contributions to theoretical literature and the scientific research community have been added. This thesis has been analyzing empirical results using Resource-based view along with the Stakeholder- and Shareholder theory. With the conclusion that there is a significant relationship between organic growth and operating efficiency. On the other hand, it cannot be concluded that there is a relationship between inorganic growth and bargaining power. In addition, the relationship between growth strategy and efficiency measures will depend on which industry the company operates in.