Abstract: We examine the conditions under which an alliance partnership is likely to be followed by one partner acquiring the other parent. Although research generally suggests that an ally-then-acquire strategy can create value, little empirical evidence has been found and comprehensive contingencies have yet to be developed. We therefore create predictions about the reasons to acquire, integrating on three theories: contingency theory, transaction cost economics and the knowledge-based view. We base our predictions on a detailed categorization of the alliance content. We test our predictions on 22 years of cross industry dyad-level data. Results show that it is far more common to eventually acquire an alliance partner than can be expected from previous research. We tentatively find that the KBV aligns best with our main results.

Abstract: Integration is key for value creation post-acquisition. Serial acquirers that carry out a stream of acquisitions develop capabilities to integrate the target and the acquirer’s organizations through learning from experiences. Implementing a stream of acquisitions poses challenges in terms of leveraging target capabilities and absorption of knowledge, in addition to managing multiple and complex changes. Through an explorative case study of a multiple acquirer we examine how integration capabilities evolve. Our findings show that learning from past acquisition experience is challenging, and less automatic than expected. We identify two sets of mechanisms that impede the development of integration capabilities, the first addresses fragmented learning processes whereas the second sheds light on the fragility characterizing organizations of serial acquirers.

Abstract: This study examined the impact of an acquisition announcement on a market reaction to an acquirer’s alliance partner in a bilateral alliance. From a transaction-cost perspective, we argue that the market valuation of an alliance partner around an acquisition announcement is negative, because the stock market recognizes that an acquisition causes an unanticipated increase in the uncertainty of the acquirer’s behavior, decreasing the expected value from the alliance. In addition, the negative impact of an acquisition announcement depends on alliance and acquisition characteristics, which determine the degree of unanticipated increase in the acquirer’s behavioral uncertainty and the alliance’s tolerance of this unanticipated increase. Using an event study of 347 alliances associated with 150 acquisitions of Japanese public firms, we found general support for our hypotheses.

Abstract: Acquiring knowledge of a partner’s pre-existing capabilities plays an important yet ambiguous role in collaborative relationships. We show how contracts solve the tension between productive and destructive uses of knowledge by developing a model in which a seller invests to acquire knowledge from a buyer. We show that, when the buyer’s capabilities are vulnerable to the revelation of sensitive knowledge, the seller overinvests as he expects to use knowledge as a rent-seeking threat. We also show that a non-renegotiable closed-price contract prevents such overinvestment. Finally, when the seller can use his knowledge both as a rent-seeking threat and to directly expropriate the buyer’s capabilities, an optimal contract minimizes the seller’s knowledge investment. Our model explains observed contracts and managerial practices that incentivize efficient knowledge investments.