Experience and Cross‐Border Acquisitions: An Organizational Learning Perspective

Abstract

Building on organizational learning theory, and notably on the notion of strategic momentum, we examine the antecedents of cross‐border acquisitions, with a specific focus on the effect of experience. In particular, we unbundle firm experience into domestic and cross‐border acquisition experience. Using data on 763 acquisitions in the period 2007–2013, our results show the existence of a U‐shaped relationship between domestic acquisition experience and the likelihood of cross‐border acquisitions: acquisition experience in the domestic market is negatively related to subsequent international M&A activity up to a certain level, after which accumulation of experience in the domestic market generates process‐related capabilities that encourage subsequent cross‐border acquisitions. Empirical support is provided for an inverted U‐shaped relationship between prior cross‐border acquisition experience and the likelihood of subsequent cross‐border acquisitions: such experience encourages further acquisitions up to the point at which the coordination costs discourage further international expansion.