Abstract
In knowledge-intensive industries, targets often get acquired for their human capital. However, acquisitions are also known to trigger employee exit, which may diminish the very asset acquirers are trying to get under their control. We argue that acquisitions disrupt the complementarity between employee skills and employer activities and thereby impact the productivity in the value creation process, which ultimately drives exit decisions. Analyzing vertical acquisitions in the U.S. video game industry we find strong evidence that a higher degree of individual disruption translates into a higher likelihood of post-acquisition employee exit. Moreover, employees with specialized skills are more strongly affected by disruption, while generalized employees are less affected by disruption through acquisition. The findings have implications for the likely success of related and unrelated acquisitions.
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