Retaliation Effectiveness and Acquisition Performance: The Influence of Managerial Decisions and Industry Context

• Published in: British journal of management 2022-04, Vol.33 (2), p.939-957
• Main Authors: Schriber, Svante, King, David R., Bauer, Florian
• Format: Article
• Language: English
• Subjects: Acquisition; Competitiveness; Retaliation
• ISSN: 1045-3172; 1467-8551; 1467-8551
• DOI: 10.1111/1467-8551.12480

Despite extensive interest in how acquisitions can increase firm competitiveness, research has given competitive retaliation to acquisitions limited attention. Consistent with process research on managerial decisions during acquisitions, we simultaneously consider the effects of retaliation and internal integration decisions on retaliation effectiveness and acquisition performance. From an international survey in Europe, we demonstrate how managerial integration decisions and the external environment influence retaliation effectiveness to acquisitions and their performance. Specifically, longer integration duration and an open merger and acquisition (M&A) strategy are associated with increased retaliation effectiveness. Meanwhile, a high level of industry M&A activity lowers it. We also confirm that increased retaliation effectiveness is associated with lower acquisition performance. These findings help balance an internal focus in acquisition research, and they clarify the performance implications of acquirer choices that may lead to competitive retaliation effectiveness, as predicted by competitive dynamics research.