Acquisition Experience and Value Creation

• Main Author: SRIKANTH, Kannan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2005
• Subjects: Consolidation and merger of corporations; employee motivation; organizational behavior; strategic planning; employee retention; financial performance; management literature; business planning; rate of return; Business Administration, Management, and Operations
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/4702; https://proceedings.aom.org/content/2005/1/G1.1.abstract?sid=f58e28c2-4567-4466-919a-25982498b3f3
• Institution: Singapore Management University

This study provides a conceptual framework and an empirical methodology to assess the impact of acquisition experience on acquisition performance. Previous literature on the impact of experiential learning on acquisition performance has led to mixed results. We suggest that these inconsistencies stem from two sources: inappropriate specification of performance, and neglect to account for acquisition management processes and value creation mechanisms. Most previous studies measure acquisition performance at an aggregate level, using stock market returns. In this study, we utilize patent data from technology sourcing acquisitions to measure performance tied to the focal acquisition. Using patent data, we also distinguish between two value creation mechanisms with differing levels of complexity. Our results indicate that experiential learning enables performance of the less complex value creation activities, while hindering performance of the more complex value creation activities. We find that performance measures that are closely related to focal acquisition performance provide different conclusions for the effect of experience than do studies conducted at more aggregate levels of performance.