Friday, October 10, 2014 | 2:00pm – 3:30pm | Room 335, HSBC Business School Building

Abstract

A firm’s acquisition experience is expected to affect the outcome of its subsequent acquisitions. However, the research findings in this area have been inconclusive. This study investigates acquisition success and failure at both the firm and industry levels to show how different types of acquisition experience affect subsequent acquisition performance. Insights from both attribution theory and organizational learning theory are integrated to propose that managers may develop different causal attributions for their acquisition successes or failures depending on success and failure experience in the industry in general. The joint effect influences the performance of their subsequent acquisitions. Data on the acquisitions of American biotechnology and computer firms during the period 1980–2010 suggest that industry-wide acquisition success helps alleviate managers’ attribution biases, improving the performance of subsequent acquisitions. However, industry-wide acquisition failures amplify managers’ attribution biases in their own acquisition successes, impairing the performance of subsequent acquisitions.