Do Acquirer Capabilities Affect Acquisition Performance? Examining Strategic And Effectiveness Capabilities In Acquirers

This paper examines acquisition performance from the perspective of acquirer capabilities. It argues that the strategic capabilities underpinning a firm's competitive strategy can be utilized to create economic value in acquisitions. Acquirers with strong cost leadership capabilities are expected to leverage these capabilities to reduce postacquisition costs as they integrate acquisition targets. Acquirers with strong differentiation capabilities are expected to utilize their strategic capabilities to increase post-acquisition revenues by improving branding, product design, sales, and services in their targets. The authors also explore the affect of an acquirer's effectiveness capabilities on acquisition performance. Lastly, they examine how acquirers organize these capabilities, either at the business unit or corporate-level, in order to maximize their affect on acquisition performance.