Behavioral motivation for target selection in acquisition- A linkage between aspiration and environment -

Abstract

This paper explores how acquirers prior performance influences their selection of target firms across different industries contingent upon environmental conditions. Although extensive stream of research has advanced our understandings on what motivates a particular firm to pursue the acquisitions, a critical question still remains on what leads firms to select targets in different industries once they have decided to acquire. Using the sample of U.S. manufacturing firms, the paper argue that motivation to employ specific acquisition strategy (i.e., related or unrelated acquisition) is simultaneously affected by an individual performance feedback condition and environmental characteristics that acquiring firm compete in. Through incorporating behavioral perspectives with task environment dimensions (i.e., dynamism), the study examines the contingency effects of environmental condition upon firms acquisition strategies. Therefore, the study contributes to both streams of performance feedback theory and acquisition literature by identifying more integrative approach of antecedents that explains differences in acquisition behaviors.