Challengers, elites, and owning families: A social class theory of corporate acquisitions in the 1960s

This paper analyzes data on 461 large U.S. industrial corporations to deter mine the factors that led large firms to participate in the wave of diversi fying acquisitions that peaked in the late 1960s. We elaborate and test a c lass theory of corporate acquisitions, maintaining that firms pursued acqui sitions in this period when they were commanded by well-networked challenge rs who were central in elite social networks but relatively marginal with r espect to social status, isolated from the resistance of established elites , and free from control of owning families. We also consider a wide range o f factors highlighted by alternative accounts of acquisition likelihood, in cluding resource dependence, institutional pressures, and principal-agent c onflicts. The results provide support for our main theoretical arguments, e ven when controls related to alternative explanations are taken into accoun t.