“The Locus of Acquisition Capability Development: Organizational Hierarchy and the Context Specificity of Experience” by Dr. Mario Schijven
Dr. Mario Schijven
Assistant Professor of Business Administration
University of Illinois at Urbana-Champaign
Breaking with the existing literature’s implicit assumption that acquisition capability development is pursued in corporate headquarters, we theorize that acquiring firms develop multiple, distinct pockets of acquisition experience at different hierarchical levels. We argue that the experience gained within the boundaries of an individual business unit is inevitably more context-specific than the more heterogeneous, firm-wide experience that accrues within corporate headquarters, thus rendering the business unit’s pocket of experience a more fruitful basis for learning. Notwithstanding its inherent shortcomings, however, we argue that corporate-level experience plays an important complementary role. Using a unique set of panel data on all acquisitions undertaken by 52 U.S. software firms and their 298 business units over the 48 quarterly periods from 1998 through 2009, we find considerable support for our arguments.