Superstitious Learning in Corporate Acquisitions

The prevalent finding on acquirer performance is a pattern of declining announcement returns over successive deals, which contradicts the claim of practitioners and the management literature that acquirers learn from their acquisition experience. We study a sample of 6,906 UK acquisitions completed between 1985 and 2004 and control for previous deals similarities, which other studies ignore. We find that returns for frequent acquirers decrease constantly but they remain positive through high order deals.

International Journal of Information Management, 2009

This paper seeks to explain why an acquiring organization was unable to leverage the expertise of the acquired organization even though both organizations were highly successful in their own right prior to the acquisition. It offers a knowledge-based perspective by teasing out the essential knowledge attributes pertinent to acquisitions. The research was carried out using an interpretative case study methodology at a Singapore-based multinational organization in the semi-conductor industry. The main data collection method used was face-to-face interviews with some 28 staff from October 2006 to December 2006, almost 2 years after the acquisition exercise. The findings suggest that the lackluster outcome could be traced to three knowledge attributes, namely, accessibility, applicability and cumulativeness. In conclusion, a number of practical and research implications are highlighted.

Scandinavian Journal of Management, 2010

2016

We provide evidence that following bad acquisitions, firms learn and effect changes to avoid repeating their mistakes. While theories of organizational learning postulate that firms should learn from the bad acquisitions, such learning may not occur if agency costs or self-attribution biases predominate. We define a bad acquisition when the acquirer reports a goodwill impairment loss. We find that acquirers make more prudent choices, exhibit greater operational improvements, and gain 1.8% more in shareholder returns on announcement when an acquisition follows a bad one than otherwise. Our results cannot be explained by endogeneity of goodwill impairment and are robust to using announcement return to proxy failure.

2019

The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use.

Palgrave Studies in Cross-disciplinary Business Research, In Association with EuroMed Academy of Business, 2018

Scholars advanced the importance of learning perspective on cultural integration in mergers and acquisitions (M&A). Yet, the conflicting results in M&A research requires systematic approach to understand the learning mechanisms in M&A. This paper examines managerial bias tendencies in mergers and acquisitions. We hypothesize and test whether perceptions of success increase the tendency to attribute success to management's actions and whether experienced failure leads to increasing attributions to cultural differences. The results of our analysis provide clear support for both hypotheses: experiences of success/failure have a positive effect on attributions to management's actions and a negative impact on attributions to cultural differences.

2002

This paper establishes a conceptual link between obstacles in the acquisition process and individual knowledge sharing hostility. While studies on failures of acquisitions exist from economics, finance, strategy, organization theory, and human resources management, this paper applies insights from recent literature on knowledge sharing hostility. We argue that this offers important insights into how individual behavior can prevent knowledge synergies in acquisitions. The paper outlines the specificities of knowledge synergies in three different modes of acquisition: (a) headquarters-oriented acquisitions, (b) subsidiary-oriented acquisitions, and (c) integrationoriented acquisitions. The paper then introduces a knowledge sharing hostility framework analyzing knowledge hoarding behavior, knowledge rejecting behavior, and behavior related to the substance of knowledge. The paper explores these dimensions in the three modes of acquisition. KEYWORDS acquisitions ■ acquisition failures ■ individual behavior ■ knowledge sharing ■ knowledge sharing hostility Acquisitions are increasingly becoming part of today's business environment, and the world has experienced an unprecedented wave of acquisitions in the last decade. Globalizing competition, rapid technological developments, and industry consolidations have, among other factors, touched off an enormous increase in acquisitions. In 1990, 8,587 acquisitions worth USD 406.8 billion (cross-border figures were 2,572 deals worth USD 152.7 billion) increased to 20,280 deals worth USD 2,764.8 billion (cross-border figures were 6,520 deals worth USD 974.3 billion). The deal value peaked in 2000, while the number of deals peaked in 1999 at 24,113 * This paper is written in the framework of the research project MANDI (Managing the Dynamic Interfaces between Knowledge and Culture). The project is financed by the LOK Program of the Danish Social Sciences Research Council, Copenhagen Business School and the following corporate partners:

Academy of Management Journal, 2012

Building on the codification and dynamic capabilities literatures, we pursue deeper insight into the underlying mechanisms of deliberate learning in the context of postacquisition integration. We argue that experience codification gives rise to inertial forces that hamper the customization of routines to any given acquisition. We theorize, therefore, that successful acquirers develop higher-order routines-as manifested in two complementary sets of concrete organizational practices-that prevent the generalization of inapplicable ("zero-order") codified routines. After drawing on in-depth qualitative data to help build our theoretical argument, we test it formally with unique survey data on 85 active acquirers.

Strategic Management Journal, 2012

This study develops and tests theory about the context-specificity and outcome-dependence of experiential learning in acquisition processes. First, we investigate whether learning from experience gained in different acquisition contexts is limited to influencing subsequent outcomes of same-context transactions. Second, we analyze whether learning patterns in response to prior successes and failures differ across acquisition contexts, depending on two properties of these contexts-the degree of structural variance and the level of stimulation of deliberate learning. Learning is assessed with respect to an underexplored organizational goal variable in acquisitions: completion of a publicly announced transaction. An analysis of 4,973 acquisition attempts in the newspaper industry in 1981-2008 largely supports our theory.

The Journal of High Technology Management Research, 2000

Many acquisitions of high-tech firms are motivated by the acquirers' desire to enhance their strategic technological capabilities. However, these capabilities are likely to be embedded to a large degree in the tacit and socially complex knowledge of the acquired firms' individual and collective human capital. This presents a dilemma for acquirers because, unlike tangible or financial assets, the acquired firms' valuable human assets cannot be purchased or owned outright and they can leave the firm at any time. Retention therefore is likely to be of central importance during acquisition implementation in knowledge-intensive firms. Using data from a sample of acquisitions in high-technology industries, the results of this study confirm that retention of specific types of human capital is critical for determining the success of the acquirers' efforts to gain valuable new technological capabilities. Applying the theory of relative standing to predict post-acquisition retention, we find that autonomy, status, and commitment significantly affect retention, but economic incentives do not. We discuss and integrate these results in the context of knowledge-based views of the firm and the existing literature on acquisition implementation.