The influence of organizational acquisition experience on acquisition performance: A behavioral learning perspective

Drawing on work from behavioral learning theory in psychology, this study e xamines the influence of prior organizational acquisition experience on the performance of acquisitions. This theory, which examines both the conditio ns preceding organization events and organizational responses, predicts tha t experience effects may range from positive to negative. Consistent with t his theory, data from 449 acquisitions show an overall U-shaped relationshi p between organization acquisition experience and acquisition performance. In addition, the more similar a firm's acquisition targets are to its prior targets, the better they perform. These findings suggest that relatively i nexperienced acquirers, after making their first acquisition, inappropriate ly generalize acquisition experience to subsequent dissimilar acquisitions, while more experienced acquirers appropriately discriminate between their acquisitions. Behavioral learning theory, then, may enhance understanding o f organization experience effects.*