Does a Prior Alliance with the Target Affect Acquisition Performance? The Dangers of a Honeymoon before Marriage

Pierre Xavier Meschi, Emmanuel Metais, Katsuhiko Shimizu

Research output: Contribution to journalArticle

Abstract

Drawing from organizational learning theory, extant literature argues that a pre-acquisition alliance between an acquirer and its target is usually expected to have a positive impact on subsequent acquisition performance. Yet, since alliances and acquisitions are partially dissimilar events, negative transfer effects can bias inter-partner learning and negatively affect acquisition performance. To fill this gap, our paper explores pre-acquisition alliance duration and examines its effects on acquisition outcomes. We argue that a pre-acquisition alliance can have either beneficial or detrimental effects on subsequent acquisition performance, depending on the duration of the pre-acquisition alliance. We examine our hypotheses using a (1988–2008) panel database covering acquisitions by French firms in the US. We show an inverted U-shaped relationship between the duration of a pre-acquisition alliance and the probability of acquisition failure. Our results also indicate that this non-monotonic relationship is partially moderated by the degree of partner commitment to the alliance.

Original languageEnglish
Pages (from-to)427-444
Number of pages18
JournalEuropean Management Review
Volume15
Issue number3
DOIs
Publication statusPublished - 2018 Sep 1

Keywords

  • acquisition
  • event history analysis
  • honeymoon period
  • negative transfer
  • organizational learning theory
  • pre-acquisition alliance

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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