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In competitive strategy, timing advantages are often discussed in relation to first mover and fast follower advantages, innovation cycles, imitation speed, time-based competition and hypercompetition. There is also research on the value of signalling strategic commitment in gaining strategic advantage. However, there has been little discussion about the timing, and relevance, of strategic communications in different institutional contexts. When should strategy be communicated to the wider market, and do different institutional contexts affect the impact of these communications? This discussion paper examines the timing of voluntary communications during mergers and acquisitions (M&A) activity in the US and the UK in order to determine whether there are any differences in competitive advantage to communications timing in these contexts and whether modifiers, including actors in organisational fields, can make a difference. Introduction Timing is an important dimension of competitive strategy. Advantages associated with firms that reap timing benefits have in the past been studied in the context of first-mover and fast follower advantages (Geroski and Markides, 2005), innovation cycles, imitation speed, time-based competition (Stalk, Evans and Shulman, 1992), and hyper-competition (D’Aveni, 1994). In addition, there is evidence to support the importance of signalling strategic intentions to competitors (Yakis-Douglas, Angwin and Meadows, 2012), but little has been said about external strategy communications in institutional contexts, how they differ, and whether or not the timing of these communications matters. Strategy communications may matter as there are advantages associated with firms being perceived as legitimate in their institutional context. This may enable them to secure resources, and enhance organizational survival (Meyer and Rowan 1977). The timing of those communications may also be important in terms of appropriate behaviour for the context in which the firm is operating. How and when firms communicate strategy is particularly important during mergers and acquisitions (M&A), as the M&A process is all about securing resources and very often firm survival. Where firms are publically quoted, they need to communicate to markets to persuade investors of the legitimacy of their intentions, as this could make the difference between winning and losing in a contested bid through securing or failing to secure shareholder approval. In a hostile bid situation, where winners and losers are clearly defined, the investors’ decision processes could be conceived as communications contests between adversaries, with the winner better able to communicate the message investors wish to hear. For example, the failed bid for the London Stock Exchange was blamed upon top management inability to communicate its strategy to key investors. On December 13, 2004, Deutsche Boerse AG (DB), the owner of the German stock exchange in Frankfurt, announced a 530p per share bid for the London Stock Exchange (LSE) – both exchanges are amongst the largest in the world. The LSE was valued at £1.3bn, representing a 23% premium on the LSE share price two days earlier. Time your strategies carefully: when to communicate strategic intentions during M&A 2 DB shareholders were concerned by the announcement, believing the deal would be value destroying. The lack of timely and effective communication after the announcement, and the seeming indifference of DB management, led to growing concern about the governance of the company. It was not until March 2005 that the Chairman finally attempted to communicate with shareholders to allay their concerns about the proposed takeover. However, this communication came too late. The offer for the LSE was withdrawn on 7 March and the CEO of DB was forced to resign, along with the Chairman of the Board and other board members. This example illustrates the importance of communicating strategic commitment to the markets after the announcement of a proposed transaction. Researchers have overlooked the nature and effect of postannouncement voluntary (as opposed to communications demanded by legislation) communications and the extent to which different aspects of communication affect share prices and deal outcomes. Some studies have suggested that organisational goals may be achieved through manipulating legitimacy (Suchman, 1995: p.571-610), through the tactical use of strategic communications. Recent research by Vaara and Monin (2010), taking a recursive perspective on discourse, argues that firms may use specific messages to facilitate stakeholder buy-in to a transaction, even though those messages may subsequently come to constrain the acquirer in how mergers are managed post-deal – a problem if the original message was not an entirely accurate representation of the purpose and strategy of the deal. Although this research focuses on the content of pre-merger communication, such tactical actions may also be apparent in the timing of those messages. Mergers and acquisitions are a global activity, and yet the geographic contexts in which transactions take place can vary substantially on many dimensions including culture, politics and economics. International Business scholars have conceptualised these differences as types of ‘distance’ and carried out many studies, focusing on MNEs, to show that these businesses often have to operate differently in different institutional contexts. For this reason, communications practices may vary by geographic context. Also within each context, the Comparative Capitalism literature suggests that the configurations of national business systems can make a difference to corporate behaviour. Specifically institutional actors, such as lawyers, accountants and bankers may make a difference to corporate behaviour within a broad framework of national markets and administration. As well as the geographic context(s), mergers and acquisitions are known to occur in waves. This temporal context can see marked changes in levels of activity, with 2007 seeing record levels of M&A transactions globally and 2009 – 2012 being a lull in activity. To some extent there are links between M&A activity and general economic health in economies (although this relationship is very complex) and it is likely that perceptions of M&A may change over time – with markets favouring M&A more at some times relative to others. This may mean that the timing and content of M&A communications need to vary, with firms having to work much harder to persuade investors when they are risk averse as opposed to when they are feeling optimistic. For this reason, temporal context(s) may be just as important as geographic contexts. Time your strategies carefully: when to communicate strategic intentions during M&A 3 In order to research the timing of strategic communications in different contexts, our research question is three-fold. First, are there significant differences in the practice of voluntary communications across geographic contexts? Second, do these differences in practice make a difference to investors? And finally, are there any aspects of communications that are useful to firms regardless of context (geography and time)? Theory and Hypotheses We hypothesize that there will be differences in firms’ communication practices with respect to distance, timing, and the type of information. We then discuss share price reaction to communications in the context of these dimensions (distance, timing, and type of information) as well as the possible impact of a number of moderating variables. Distance Institutions define the ‘rule of the game’ (North, 1990), and from an International Business perspective they are perceived as constraining or incentivising strategic choice (Ingram and Clay, 2000). For instance, legal restrictions on foreign equity ownership may affect entry modes as well as timing of entry. In these terms, businesses need to adapt their strategy to the institutional environment in which they operate (Wan, 2005). For this reason, some institutional contexts are perceived as more responsive than others, or more demanding of companies with more rigorous enforced regulation i.e. quarterly reporting. Therefore it is likely that voluntary communication patterns may differ by institutional context, and institutionally-sensitive research into patterns of international voluntary disclosure may be informative. One of the criticisms of International Business theory is that it tends to be rather thin, perceiving institutional contexts as producing a generic set of constraints related to broad constructs such as ‘distance’ which may include geographic, cultural (Hofstede 1980), political, judicial and fiscal distances. Ghemawat (2001) has proposed an integrative perspective in these terms, with difference based upon cultural, administrative, political, geographic and economic distances. The underlying logic is based on transaction cost theory, that an increase in institutional distance is a cost for firms seeking to internationalise. In order to address the ‘thin’ perceptions of International Business, Comparative Capitalism research, using case studies, has enabled a richer understanding of institutional systems, such as Whitley’s (1999) national business systems. This has led to typologies seeking to identify ideal types, and subsequent research has endeavoured to support these classifications through cross case comparisons. From this perspective, institutions are once again seen as shaping actors capacity for action and their capabilities. However, the research from both perspectives has tended to examine cases where ‘distance’ between institutions is significant, assuming that firms’ strategies will be largely the same and consistent if the institutional contexts are similar. Recent calls for more sensitive investigation of institutional structures and linkages – a more nuanced view of diversity in country specifi