Inaugural address Louis Mulotte: Companies should not be looking outward for growth, but inward
The pursuit of growth is an ever-present theme in the world of business, where headlines often focus on high-profile acquisitions and corporate giants swallowing up smaller firms. In his inaugural address, professor Louis Mulotte offers a thought-provoking argument: these mergers and acquisitions may not be the optimal route to expansion. Instead, he advocates for a less-publicized, alternative strategy—organic growth from within the company.
For over 15 years, Louis Mulotte's research has revolved around the intricate decisions that companies make when it comes to expanding their operations. His primary interest lies in understanding why firms lean toward acquisitions and strategic alliances rather than nurturing internal growth. “A company's primary source of growth typically emanates from internal investments, such as research and development or the introduction of new products. Acquisitions, on the other hand, present substantial risks, raising questions about why they are so heavily favored.”
CEO personalities and decision-making
One captivating facet of Mulotte's research lies in the influence of CEO personalities on corporate choices. He claims that CEOs with dominant personalities tend to pursue frequent, daring, large-scale, and financially burdensome acquisitions. This underscores how the personal characteristics of decision-makers can significantly impact a company's strategies and performance.
It is crucial to recognize that acquisitions cannot replace the value of sustained internal growth, particularly over the long term.
Importantly, professor Mulotte does not categorically discourage corporate acquisitions. While they have their place, he sounds a warning against the “acquisition trap,” stressing that firms should diligently explore alternative growth avenues before resorting to acquisition. “It is crucial to recognize that acquisitions cannot replace the value of sustained internal growth, particularly over the long term,” he cautions.
Real-world insights
In his inaugural address, Louis Mulotte draws from real-world examples to elucidate the delicate balance between internal and external expansion methods. Certain companies, such as Philips, have masterfully navigated their way into new markets with resounding success. Mulotte attributes this achievement to a robust emphasis on internal investments, coupled with the judicious use of acquisitions and strategic alliances to access resources that cannot be cultivated internally.
Note for the press
Prof. dr. Louis Mulotte is Professor of Organization & Strategy within the Department of Management at the Tilburg School of Economics and Management (TiSEM). He will deliver his inaugural address on 27 October 2023, at 4.15 PM, in the Auditorium of Tilburg University. The address is titled: “Corporate Scope Decisions: The Challenge of Balancing Deliberate Choices and Constraints.” A livestream will be available.
For more information or interview requests, please contact Louis Mulotte directly (l.mulotte@tilburguniversity.edu) or get in touch with TiSEM's science communicator Laura van Gelder (l.f.vangelder@tilburguniversity.edu).