Search

We examine whether size-specific experience influences performance following large related, domestic acquisitions. Supporting a transfer theory of learning, our results suggest that although prior experience in making large, related acquisitions transfers positively to this focal situation, experience in making small related acquisitions hurts firm performance. We find that bidder-to-target dissimilarity in product offerings and geographic reach exacerbates the negative effects of experience in small related acquisitions. In contrast, perceived dissimilarity in organizational cultures curbs these negative effects. Moreover, retaining acquired top managers and engaging in less integration in large related acquisitions both aid acquirers in better drawing on experiences from smaller related acquisitions. [ABSTRACT FROM AUTHOR]

This study explores the independent and interactive effects of procedural justice and informational justice on post-deal value creation in large, related acquisitions. Our results show that informational justice and procedural justice affect different components of value creation. Procedural justice is critical in realizing market position improvements following the integration process, while informational justice is essential in achieving market position gains during integration and financial return gains both during and post-integration. Indicating that the interrelationships between different justice dimensions may be more complex than previously thought, we find that procedural justice reduces the positive effects of informational justice on financial return during the integration process, while it magnifies the effects of informational justice on the combined firms' market position during integration efforts. We explore the implications of these results for future research on the acquisition integration process and for practicing managers engaging in large, related acquisitions. Copyright © 2008 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

We highlight a largely unstudied phenomenon that affects postacquisition performance: nested acquisitions. Nested acquisitions occur when a firm acquires a target firm that has itself recently acquired another firm. In our study of publicly traded U.S. acquirers and targets from 2000 to 2014, we theorize that nested acquirers face unique integration difficulties that reduce acquirer postacquisition performance. Specifically, we build on Penrosian logic and theorize that nested acquisitions tax the managerial capacity of the acquiring and acquired firms more than nonnested ones and that, as nested acquisition complexity increases due to variance within the embedded nested targets (i.e., greater number, more recent, less related, and larger nested targets), the drain on managerial capacity also increases. Ultimately, these challenges increase the likelihood of reduced postacquisition performance. Given these suggested difficulties, we theorize that retaining focal target managers can aid the acquiring firm and thereby help to reduce negative performance outcomes. In our unique sample of matched-pair firms, we find that nested acquisitions are associated with lower postacquisition performance but that retaining target firm managers can reduce this effect. [ABSTRACT FROM AUTHOR]

In this article the authors discuss research they conducted on the diversification strategies used by multibusiness corporations. Two of the strategies that they identify include internal diversification that relies on the development of products or services and external diversification that relies on the acquisition of other firms. They hypothesized that multibusiness firms diversify into new business by using one of these two methods while avoiding mixing of the two strategies and that corporations that do mix strategies experience lower economic returns than corporations that avoid this method.

Even though knowledge‐based acquisitions (KBAs) are common, their performance often lags expectations due to difficulties during integration. Building on Penrose's foundational ideas that managers limit firm growth, we outline a theoretical model that explores how an acquirer's integration capacity mediates the impact of acquirer and target characteristics (influenced by contextual conditions) on the performance of KBAs. Our theoretical model, based on research consistent with the resource‐based view and resource orchestration, suggests the success of acquisitive growth rests on the quality and quantity of an acquirer's managerial talent. This contributes to research by identifying conditions where acquisitions can provide a means of growth. Additionally, it provides managers a means to assess whether an identified target firm is within an acquirer's integration capacity. [ABSTRACT FROM AUTHOR]

We consider a knowledge flow that dominates the international acquisition context but can actually harm foreign acquired firms' performance: non-location-specific knowledge transfer from acquirers to acquired firms ( N-LSKT). Considering its behavioral consequences, we argue that such knowledge transfer often may destabilize existing power structures in foreign acquired firms prompting conflict and power struggles, and as a result negatively affects their performance. We find support for this adverse knowledge transfer effect. Only at very high levels of N-LSKT, when acquirers are likely to extend their own capabilities and associated power structures more completely, do the performance effects improve. Further, predeal success of acquirers and post-deal functional integration amplify, while acquirers' strategic control over the acquired firm alleviates the generally negative effects of N-LSKT. Copyright © 2015 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This study aims to bring together seemingly contradicting arguments in the literature about the role of cultural distance in international acquisitions. We offer a model that postulates that cultural distance relates negatively to international acquisition performance because it taxes integration capabilities during international acquisitions, but that cultural distance also elevates the positive association of integration capabilities and international acquisition performance because it provides more learning opportunities that can only be exploited with strong integration capabilities. Empirical tests with a sample of international acquisitions by 118 US multinational companies provide support for the proposed model. On one hand, we find that cultural distance impedes understandability of key capabilities that need to be transferred, and constrains communication between acquirers and their acquired units, bringing about a negative indirect effect on acquisition performance. On the other hand, we find that cultural distance enriches acquisitions by enhancing the positive effects of understandability and communication on acquisition performance. Acquirers that can overcome the impeding effects of cultural distance on understanding key capabilities and effective communication appear to reap significant performance gains. Our study provides initial support for a double-edged sword effect of cultural differences on acquisition performance, and illustrates the importance of integration capabilities. [ABSTRACT FROM AUTHOR]

The above article (DOI: 10.1000/smj728) was published online on 20 November 2008 in Wiley Interscience (www.interscience.wiley.com). Printing errors were subsequently identified in the article: Page 14. Table 1: row 13 should be labelled ‘Post-integration financial return’. Page 14. Table 1: row 14 should be labelled ‘Post-integration market position’. Page 17. lines 48-50: ‘Improving financial return requires removal of critical organizational elements with which organization members feel tightly connected.’ should read ‘Improving financial return requires removal of critical organizational elements such as company names, departments, products, and people with which organization members feel tightly connected.’ [ABSTRACT FROM AUTHOR]