Acquisition Experience and Acquisition Success: Examining the Mediating Role of Acquisition Implementation and Mode Selection Capabilities

Recent studies explore how firms’ experience with corporate acquisitions can influence acquisition outcomes and firm performance. Although discussion has focused on the idea that acquisition experience may improve performance by improving firms’ capability to implement acquisitions, little research has systematically tested the idea that acquisition implementation capabilities might mediate any impact of experience on performance. Moreover, the literature has paid little attention to an important preceding step, the selection of when acquisitions are appropriate to use as a means of obtaining targeted resources. This paper draws on the organizational learning literature to argue that acquisition experience improves firms’ ability to select acquisitions in appropriate governance conditions as well as their ability to implement acquisitions effectively. Using a sample of 162 acquisitions in the international telecommunications industry, we find that both types of acquisition capability increase with acquisition experience and, in turn, contribute to both acquisition success and long-term firm survival. We found that an apparent positive direct impact of acquisition experience on acquisition success disappears when one accounts for the mediators of acquisition selection and implementation capabilities.