Acquisition experience and production resource efficiency

Abstract

Purpose The purpose of this paper is to explore how the acquisition experience – an acquiring firm’s experience of acquiring and integrating the resources of an acquired firm – affects the production resource efficiency of the acquiring firm. Design/methodology/approach The authors used data obtained from US manufacturing industries over the 1992–2014 period. The sample includes 784 acquisitions by 417 firms. The proposed hypotheses were tested through econometric analysis. Findings Results show that the acquisition experience has a positive association with production resource efficiency. The acquisition experience is most positively associated with acquiring firms’ production efficiency when they successfully accomplished previous performance outcomes. While the literature has recognized the relatedness of acquiring and acquired firms as a contextual moderator, the interaction of the related acquisition and the acquisition experience has no impact on efficiency benefits. Originality/value This study enhances the understanding of how prior acquisition experience can be leveraged by acquiring firms to gain efficiency benefits in the manufacturing industry.