Managerial Redeployment in Acquisitions

Abstract

Acquisitions are an important means through with firms can reconfigure and redeployment its resources. Among the resources being redeployed, human capital and managerial resources take a primary role. Providing a more comprehensive model of (human) resource reconfiguration post-acquisition, we investigate different mechanisms through which managers are redeployed and externally sourced—transfer, promotion and hiring—and discuss their relative advantages in relation to the ‘coordination-autonomy dilemma’ in acquisitions. We hypothesize (and find) that (1) redeployment of managers is preferred over the external resource acquisition. (2) The redeployment strategy adopted by the firm is conditional to (1) complexity of the acquisition, and (3) the quality of the acquisition target. Specifically, target managers are more likely to be redeployed by: i) transfer from the acquirer when the acquisition is complex ii) promotion within the target when the quality of the acquisition target is high.