Non-financial motivations in mergers and acquisitions: The Fiat–Ferrari case

Abstract

Most studies of mergers and acquisitions focus on the financial motivations (‘synergy’) of the acquiring and acquired firms, as well as managers’ self-interest and overconfidence. Few studies consider the contextual contingencies that motivate a merger and acquisition. This study examines non-financial motivations that drove the 1969 Fiat company’s acquisition of the Ferrari company. The financial records and historical context surrounding this acquisition are analysed through an institutional logics framework, examining annual reports, minutes of board meetings and media coverage of the acquisition. The findings suggest the acquisition was driven by family control, brand reputation and professional expertise, and that financial and accounting motivations had only marginal importance.

Keywords:

• Cars
• Ferrari
• Fiat
• institutional logics
• mergers and acquisitions
• non-financial motivations
• entrepreneurs
• directors
• family
• corporate
• professional
• board
• motor racing
• media

Notes

Acknowledgements

The authors are grateful to the two anonymous referees and the associate editor of the journal for their detailed and helpful comments. The authors wish to thank Robert Jupe, Warwick Funnell, Garry Carnegie, Tony Lupton and the audience of the Automotive Historians Australia conference held in Melbourne (Australia, 2016), the 9th Accounting History international conference, held in Verona (Italy, 2017), and the research seminar series held in Glasgow (UK, 2017), for their encouragement and valuable commentaries. The authors gratefully acknowledge the valuable assistance of Maria Vincenza Capobianco, Antonio Mulas (Chamber of Commerce of Turin), and Amelio Leonelli (Chamber of Commerce of Modena), for their collaboration in providing data, information and access to archives during our research.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 .The reform of 1993 (Law 580/1993, followed by the Decree Law 112/1998) has added to their remit, the general register office of for small and medium business activities, including limited companies whose data were originally provided to the courthouses only.

2. La Stampa and Il Corriere della Sera are not business-oriented newspapers; therefore some specific comments of financial arrangements could have been uncovered. However, both newspapers were the most popular national newspapers at the time, and therefore reflected Italian public opinion more than a specialised or local newspaper. The lack of further financial details on the acquisition of Ferrari in 1969 might signify a lack of interest in financial aspects of the transaction, compared with more relevant factors, such as racing results and innovation.

3. Gianni Agnelli, who succeeded Vittorio Valletta in 1966 had a plan for the company modernisation that was long hindered by the ‘old guard’, the group of managers who worked with Vittorio Valletta. Gianni Agnelli was described as being more pragmatic and interested in the industrial relationships (IlSole24Ore, 2018, accessed through: https://www.ilsole24ore.com/fc?cmd=art&codid=22.0.762409643&chId=14). The extended and very intense labour conflict which occurred in 1969 brought about a condition of deep, severe and enduring instability in the sector and in the life of the company that no one could have expected, but it made the process of corporate modernisation even more difficult.

4. Vittorio Valletta, Fiat’s post-World War II general manager, only left the presidency of the company in 1966, at 83 years of age, a few months before his death, in 1967. Under his leadership Fiat company grew with a rigid vertical management and disciplined work rules (Valletta, 1996).

Additional information

Notes on contributors

Laura Maran

Laura Maran is an Associate Professor of Accounting at RMIT University, Australia. She has a track record of high-quality publications in interdisciplinary accounting. Her primary field of expertise is on how history provides an important context to the modern-day dilemma of public sector management. She is associate editor of Accounting History and board member of A-ranked Journals. Her work informs real-world policy issues and bolsters the global interdisciplinary accounting community.

Lee Parker

Lee D. Parker is an RMIT University Distinguished Professor in Accounting and Visiting Professor at the Adam Smith Business School, University of Glasgow, Scotland. His research appears in over 200 articles and books on management and accounting. His Google Scholar H index is 51 and his citations total over 10,000. He is joint founding editor of Accounting, Auditing and Accountability Journal and serves on over 20 journal editorial boards internationally.