Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

What is it about?

We explore the role of resource interactions in explaining firm performance in the context of acquisitions. While we confirm that acquisitions do not lead to higher performance on average, we do identify that complementary resource profiles in target and acquiring firms are associated with abnormal returns. Specifically, we find that the interaction between acquiring firm marketing resources and target firm technology resources positively reinforce (complement) each other. Meanwhile, the interaction of acquiring and target firm technology resources negatively reinforce (substitute) one another.

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Why is it important?

Complementary resources between an acquirer and target can improve acquisition performance.