Faultline Strength: The Contingent Value of TMT Cross-border Acquisition Experience

Abstract

Research has shown that the acquisition experience of top management team (TMT) matters for internationalization in terms of cross-border acquisition speed and performance. However, the question of how acquisition experience takes effects during the TMT decision-making process remains less known. To bridge this gap, this study focuses on one of the most important team structural attributes – faultlines– to investigate how faultline strength affects acquisition experience accumulating and sharing among TMT members and thus influences the speed and quality of acquisition decisions. Using a sample of cross-border acquisitions conducted by 292 Chinese MNEs during 2003-2013, we found that the effects of TMT acquisition experience on future acquisition speed and quality depend upon TMT fautline strength. On the one hand, faultline strength weakens the positive impact of acquisition experience on subsequent acquisition frequency, on the other hand, it strengthens the positive effects of experience on the performance of future acquisitions.