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Acquisition strategy and the market position of acquiring firms

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  • H. Donald Hopkins

Abstract

Research suggests that firms which emphasize unrelated diversification through mergers and acquisitions are often located in unfavorable market positions, in terms of the attractiveness of their industries and their competitive positions within these industries. However, these previous research efforts have not established whether such positions will also be linked to firms using non‐conglomerate acquisition strategies. This study utilizes three acquisition strategies—conglomerate, technology‐related, and marketing‐related—to hypothesize differences in the market position of acquisitive firms. Results show that, while acquisitive growth is generally associated with a decline in market position, one particular acquisition strategy, the marketing‐related strategy, is associated with a distinctly superior position. Firms utilizing this strategy were found to be in more profitable industries and to have higher market shares in these industries.

Suggested Citation

  • H. Donald Hopkins, 1987. "Acquisition strategy and the market position of acquiring firms," Strategic Management Journal, Wiley Blackwell, vol. 8(6), pages 535-547, November.
    • Handle: RePEc:bla:stratm:v:8:y:1987:i:6:p:535-547
    DOI: 10.1002/smj.4250080604
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    Cited by:

    1. Liang Chen & Pengxiang Zhang & Sali Li & Scott F. Turner, 2022. "Growing pains: The effect of generational product innovation on mobile games performance," Strategic Management Journal, Wiley Blackwell, vol. 43(4), pages 792-821, April.
    2. Ljubownikow, Grigorij & Ang, Siah Hwee, 2020. "Competition, diversification and performance," Journal of Business Research, Elsevier, vol. 112(C), pages 81-94.
    3. Meglio, Olimpia & Risberg, Annette, 2011. "The (mis)measurement of M&A performance—A systematic narrative literature review," Scandinavian Journal of Management, Elsevier, vol. 27(4), pages 418-433.
    4. Hopkins, H. Donald & Chaganti, Raj & Kotabe, Masaaki & Co-editors, 1999. "Cross-border mergers and acquisitions: Global and regional perspectives," Journal of International Management, Elsevier, vol. 5(3), pages 207-239.
    5. Xiaoting Hu & Ximing Yin & Zhanming Jin & Jizhen Li, 2020. "How Do International M&As Affect Rival Firm’s Sustainable Performance? —Empirical Evidence from an Emerging Market," Sustainability, MDPI, vol. 12(4), pages 1-17, February.
    6. Gammelgaard, Jens, 2001. "Time and Path Dependencies in Foreign Acquisition Behaviours The History of Danish Takeovers Abroad 1888 to 1993," Working Papers 3-2001, Copenhagen Business School, Department of International Economics and Management.

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