Disruption, Specialization and Employee Exit: Vertical Acquisitions in the U.S. Video Game Industry

43 Pages Posted: 28 Mar 2019

See all articles by Johannes Loh

Johannes Loh

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management)

Pooyan Khashabi

Ludwig Maximilian University of Munich - Institute for Strategy, Technology and Organization (ISTO)

Jörg Claussen

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management); Copenhagen Business School - Department of Innovation and Organizational Economics

Tobias Kretschmer

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management); Centre for Economic Policy Research (CEPR)

Date Written: March 18, 2019

Abstract

In knowledge-intensive industries, targets often get acquired for their human capital. However, acquisitions are also known to trigger employee exit, which may diminish the very asset acquirers are trying to get under their control. We argue that acquisitions disrupt the complementarity between employee skills and employer activities and thereby impact the productivity in the value creation process, which ultimately drives exit decisions. Analyzing vertical acquisitions in the U.S. video game industry we find strong evidence that a higher degree of individual disruption translates into a higher likelihood of post-acquisition employee exit. Moreover, employees with specialized skills are more strongly affected by disruption, while generalized employees are less affected by disruption through acquisition. The findings have implications for the likely success of related and unrelated acquisitions.

Keywords: strategic human capital, employee exit, acquisitions, video games, specialization

JEL Classification: J63, G34, J24, M50

Suggested Citation

Loh, Johannes and Khashabi, Pooyan and Claussen, Jörg and Kretschmer, Tobias, Disruption, Specialization and Employee Exit: Vertical Acquisitions in the U.S. Video Game Industry (March 18, 2019). Available at SSRN: https://ssrn.com/abstract=3354763 or http://dx.doi.org/10.2139/ssrn.3354763

Johannes Loh (Contact Author)

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, DE 80539
Germany

Pooyan Khashabi

Ludwig Maximilian University of Munich - Institute for Strategy, Technology and Organization (ISTO) ( email )

Kaulbachstr, 45
Munich, 80539
Germany
+49 89 2180 5415 (Phone)

Jörg Claussen

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, DE 80539
Germany

Copenhagen Business School - Department of Innovation and Organizational Economics ( email )

Kilevej 14A
Frederiksberg, 2000
Denmark

Tobias Kretschmer

Ludwig Maximilian University of Munich - Faculty of Business Administration (Munich School of Management) ( email )

Kaulbachstr. 45
Munich, DE 80539
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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