How Mindfulness and Acquisition Experience Affect Acquisition Performance

Management Decision, vol. 52, no. 6, pp. 1116-1147, 2014

Posted: 17 Apr 2015

See all articles by Thomas Hutzschenreuter

Thomas Hutzschenreuter

WHU - Otto Beisheim School of Management

Ingo Kleindienst

Aarhus University - Strategy and Organizational Behavior Group

Michael Schmitt

Southwestern Law School

Date Written: 2014

Abstract

Purpose – The purpose of this paper is to provide insights to the impact of acquisition experience from prior acquisitions on the performance of subsequent ones. The authors base the analysis on the concept of mindfulness which has recently gained increasing attention in organizational learning theory. The aim is to extend prior research on mindfulness in organizational learning by empirically addressing how mindfulness in knowledge transfer affects task performance in the context of a rare organizational event, i.e. an acquisition, and how it is moderated by the conditions surrounding that event.

Design/methodology/approach – Employing a path-related approach, the authors analyzed large acquisitions of multiple US acquirers in a sequence to be able to clearly identify feedback from preceding acquisitions on subsequent ones. The authors adopt individual acquisition events as the unit of analysis to demonstrate the effect of mindfulness on task performance, and follow the widely used approach of measuring acquisition performance by abnormal stock market returns around the time of an acquisition announcement.

Findings – The analysis reveals an alternating relationship between an acquirer’s acquisition experience and its acquisition performance. This relationship is positively moderated by an acquirer’s cash reserves and by the temporal spacing of its acquisitions, but negatively moderated by an acquirer’s market-to-book value.

Originality/value – Path-related approaches are rarely used in the mergers & acquisitions literature. The paper is based on the concept of mindfulness and identifies an up to now unrecognized pattern in the performance of multiple acquisitions.

Keywords: Mindfulness, Mergers & acquisitions, Empirical analysis, Acquisition experience, Moderations, Path, Acquisition performance, Alternating relationship

Suggested Citation

Hutzschenreuter, Thomas and Kleindienst, Ingo and Schmitt, Michael, How Mindfulness and Acquisition Experience Affect Acquisition Performance (2014). Management Decision, vol. 52, no. 6, pp. 1116-1147, 2014. Available at SSRN: https://ssrn.com/abstract=2595534

Thomas Hutzschenreuter (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Ingo Kleindienst

Aarhus University - Strategy and Organizational Behavior Group ( email )

Aarhus, 8000
Denmark

Michael Schmitt

Southwestern Law School

3050 Wilshire Blvd.
Los Angeles, CA 90010
United States

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