Do prior alliances with the target affect acquisition performance? the dangers of a honeymoon before marriage

Pierre Xavier Meschi, Emmanuel Metais, Katsuhiko Shimizu

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

This paper investigates whether the effect of pre-acquisition alliance between the acquirer and the target on subsequent acquisition performance is dependent on the duration of the pre-acquisition alliance. Our examination of the effects of pre-acquisition alliance duration on acquisition outcomes incorporates the concept of honeymoon period (Fichman & Levinthal, 1991). We hypothesize that an acquisition decision is vulnerable to bias and illusion if the decision is made during the honeymoon period of the pre-acquisition alliance. On the contrary, acquisition decisions made after the honeymoon period of pre-acquisition alliance is over reflect more exact information and a more sober understanding of the target. This hypothesis is examined in a panel database made up of acquisitions performed by French firms in the US between January 1988 and December 2006. We show that there is an inverted U-shaped relationship between the duration of pre-acquisition alliance and the probability of acquisition failure. Our results also highlight that the non-monotonic relationship between the duration of pre-acquisition alliance with the target and the probability of acquisition failure is moderated by the degree of partner commitment to the alliance.

Original languageEnglish
Title of host publicationAcademy of Management 2011 Annual Meeting - West Meets East: Enlightening. Balancing. Transcending, AOM 2011
PublisherAcademy of Management
DOIs
Publication statusPublished - 2011
Event71st Annual Meeting of the Academy of Management - West Meets East: Enlightening, Balancing, Transcending, AOM 2011 - San Antonio, TX, United States
Duration: 2011 Aug 122011 Aug 16

Other

Other71st Annual Meeting of the Academy of Management - West Meets East: Enlightening, Balancing, Transcending, AOM 2011
CountryUnited States
CitySan Antonio, TX
Period11/8/1211/8/16

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Keywords

  • Acquisition performance
  • Honeymoon period
  • Pre-acquisition alliance

ASJC Scopus subject areas

  • Management Information Systems
  • Management of Technology and Innovation
  • Industrial relations

Cite this

Meschi, P. X., Metais, E., & Shimizu, K. (2011). Do prior alliances with the target affect acquisition performance? the dangers of a honeymoon before marriage. In Academy of Management 2011 Annual Meeting - West Meets East: Enlightening. Balancing. Transcending, AOM 2011 Academy of Management. https://doi.org/10.5464/AMBPP.2011.81.a