"Environmental Munificence, Prior Experience, and the Prevalence of Cross-border Acquisitions"

Abstract

This study examines the implications of organizational learning and the scarcity of economic resources on the types of merger & acquisitions (M&A) undertaken by large US firms. We explore whether companies are more likely to pursue foreign M&As over domestic M&A’s during periods of low environmental munificence in the home country and low organizational slack at the firm level. We further evaluate the moderating effect of the focal firm’s prior relevant experience on the relationship between its environmental munificence and nature of M&A attempt. Thus, drawing on the literature on environmental munificence, organizational search, and organizational learning perspectives, this study seeks to explain the resource-, learning-, and routine-based antecedents of cross-border M&A activities. Results analyzed from a sample of 8,410 cross-border M&A activity attempted by the S&P 500 companies during the period of 1994 to 2009 generally support our theoretical understanding that resources and learning significantly influence a firm’s acquisition behavior.