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The Impact of Knowledge Codification, Experience Trajectories and Integration Strategies on the Performance of Corporate Acquisitions

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  • Harbir Singh
  • Maurizio Zollo

Abstract

This study addresses the following questions: (1) can organizations learn how to manage infrequent and heterogeneous tasks ? (2) If they can, then what are the mechanisms that might explain learning under these circumstances ?, and (3) what are the limitations under which these mechanisms operate ? A model based on explicit knowledge codification and tacit experience accumulation is submitted and tested using data from a sample of 183 acquisitions in the US banking industry. Measures of post-acquisition integration strategies and of pre-acquisition resource characteristics are included in the model. We find that tacit knowledge accumulation significantly impacts performance when the experiences are highly homogeneous, and that knowledge codification improves acquisition performance in the context of high post-acquisition integration, i.e. when the organizational challenge is particularly complex. Also, the level of integration between the two firms involved in the acquisition positively influences performance, while the replacement of top managers in the acquired firm impacts performance in a negative fashion. Implications are drawn for organizational learning theory and for a knowledge-based view of corporate acquisitions.

Suggested Citation

  • Harbir Singh & Maurizio Zollo, 1998. "The Impact of Knowledge Codification, Experience Trajectories and Integration Strategies on the Performance of Corporate Acquisitions," Center for Financial Institutions Working Papers 98-24, Wharton School Center for Financial Institutions, University of Pennsylvania.
  • Handle: RePEc:wop:pennin:98-24
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    1. Maurizio Zollo, 1998. "Strategies or Routines ? Knowledge Codification, Path-Dependence and the Evolution of Post-Acquisition Integration Practices in the U.S. Banking Industry," Center for Financial Institutions Working Papers 97-10, Wharton School Center for Financial Institutions, University of Pennsylvania.
    2. Richard A. Hunt & David M. Townsend & Elham Asgari & Daniel A. Lerner, 2019. "Bringing It All Back Home: Corporate Venturing and Renewal Through Spin-ins," Entrepreneurship Theory and Practice, , vol. 43(6), pages 1166-1193, November.
    3. Ahammad, Mohammad Faisal & Tarba, Shlomo Yedidia & Liu, Yipeng & Glaister, Keith W., 2016. "Knowledge transfer and cross-border acquisition performance: The impact of cultural distance and employee retention," International Business Review, Elsevier, vol. 25(1), pages 66-75.
    4. Thomas Keil & Yuval Deutsch & Tomi Laamanen & Markku Maula, 2023. "Temporal Dynamics in Acquisition Behavior: The Effects of Activity Load on Strategic Momentum," Journal of Management Studies, Wiley Blackwell, vol. 60(1), pages 38-81, January.
    5. Albert Banal‐Estañol & Jo Seldeslachts, 2011. "Merger Failures," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(2), pages 589-624, June.
    6. Rani Jeanne Dang, 2018. "From a hint of perfume to a sip of whisky: the recombination of knowledge from fragrance to spirits industry," Post-Print halshs-01795037, HAL.
    7. Lee, Po-Yen & Lin, Hui-Tzu & Chen, Hung-Hsin & Shyr, Yi-Hwan, 2011. "Dynamic capabilities exploitation of market and hierarchy governance structures: An empirical comparison of Taiwan and South Korea," Journal of World Business, Elsevier, vol. 46(3), pages 359-370, July.
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    15. Dutta, Dev K. & Malhotra, Shavin & Zhu, PengCheng, 2016. "Internationalization process, impact of slack resources, and role of the CEO: The duality of structure and agency in evolution of cross-border acquisition decisions," Journal of World Business, Elsevier, vol. 51(2), pages 212-225.
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    20. Srikanth Paruchuri & Atul Nerkar & Donald C. Hambrick, 2006. "Acquisition Integration and Productivity Losses in the Technical Core: Disruption of Inventors in Acquired Companies," Organization Science, INFORMS, vol. 17(5), pages 545-562, October.
    21. Meena Chavan & Renu Agarwal, 2016. "The Efficacy of Linkages for Relational Capability Building and Internationalization-Indian and Australian Mining Firms," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 15(1), pages 51-78, June.

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