Learning ‘from’ vs. learning ‘about’ partners in pre-acquisition strategic alliances: The role of familiarity

Abstract

The relationship between pre-acquisition alliances and post-acquisition performance has been widely recognized, but there are differing explanations from existing theoretical perspectives. On the one hand, organizational learning emphasizes that prior strategic alliances allow the acquiring firm to learn from the target company, gaining new technological knowledge and skills. On the other hand, relational learning focuses on the acquiring firm's understanding of the target firm's working methods, culture, leadership styles, and overall organizational dynamics, i.e., learning about the target, facilitating the formation of psychological contracts and mutual understanding. To reconcile these perspectives, we explore the moderating role of familiarity. While recognizing the importance of acquiring new knowledge and skills in all alliances, we argue that building trust and understanding with the target firm is especially important in pre-acquisition alliances. As a result, post-acquisition performance will be largely influenced by the acquiring firm's familiarity with the partner's context, thereby enhancing the conditions for learning about the partner. We hypothesize that cultural and market familiarity positively moderate the relationship from pre-acquisition alliances and post-acquisition performance. Using data from SDC Platinum, EIKON, and ORBIS, covering 712 majority or full acquisitions, we find strong support for our hypotheses. Specifically, pre-acquisition alliances are most effective in domestic and industrially related acquisitions. Additionally, the benefit of previous strategic alliances diminishes as cultural distance increases. These findings hold up under various matching techniques and have substantial implications for both scholars and practitioners.