A mismatch between theory and practice?: the role of mergers and acquisitions (M&A) motives and measures on performance outcomes
Mergers and acquisitions (M&A) are complex, multi-level transactions in which ownership of one firm is merged with another firm, or one firm acquires ownership of another firm. A wide-range of factors can affect M&A performance outcomes such as the driving firm’s corporate strategy, target availability and selection decisions, and knowledge absorption and resource integration issues, all of which can contribute to the potential for suboptimal M&A outcomes and failure. Varying contextual factors that influence M&A outcomes also makes assessing M&A performance outcomes problematic. Given these numerous challenges, it is not surprising that scholars have yet to fully model, theorize, and predict the performance outcomes of M&A activity effectively. One important, yet relatively under theorized factor is the motive for undertaking M&A activity in the first place. In this dissertation, I address this persistent gap in the M&A literature, using a typology of different theoretical applications, to theorize, model, measure, and empirically validate how M&A motives relate to different M&A outcomes. I utilize a multi-method triangulation approach through three studies to demonstrate the foundational importance of M&A motives and then explore further the different theoretical applications and relationships with varying M&A outcomes. Specifically, I perform a cross-discipline M&A motive literature review (Study 1), develop a stepwise approach using big data of M&A motives (Study 2), and test specific relationships of M&A motives to M&A outcomes (Study 3). My contributions include an alignment of multiple theoretical frameworks and a more expansive conceptualization of M&A motives. I differentiate among antecedents and moderators to M&A outcomes through introducing a new M&A motive categorization typology. By assessing M&A motive measures and utilizing a triangulation method, I develop a new method for how to capture M&A motives from practice. Utilizing the new M&A motive measures, I show through empirical testing how the assessment of M&A motives can influence our understanding of the inconclusive M&A performance outcomes. My findings have implications for both research and practice by demonstrating how a firms’ motivations for engaging in M&A activity affect the likelihood of M&A success or failure, and how a variety of theory applications, and their constructs and measures helps better capture the varying M&A performance outcomes.