Who Do Firms Imitate? A Multilevel Approach to Examining Sources of Imitation in the Choice of Mergers and Acquisitions

This article takes a multilevel perspective to explore various sources of imitation. Three levels of imitation sources include firms’ own experience (firm level), actions of firms within the same product market (market level), and firms in different product markets but within the same industry (industry level). Hypothesis tests on mergers and acquisitions (M&As) that occurred from 1981 to 2000 in the financial service industry show that three levels of imitation occur independently and simultaneously and have significant impact on the choice of M&As. M&As by firms entering the focal product market, however, are not significantly associated with the likelihood of an unrelated M&A.