Experience and Cross-Border Acquisitions: An Organizational Learning Perspective

Building on organizational learning theory, and notably on the notion of strategic momentum, we examine the antecedents of cross-border acquisitions, with a specific focus on the effect of experience. In particular, we unbundle firm experience into domestic and cross-border acquisition experience. Using data on 763 acquisitions in the period 2007-2013, our results show the existence of a U-shaped relationship between domestic acquisition experience and the likelihood of cross-border acquisitions: acquisition experience in the domestic market is negatively related to subsequent international M&A activity up to a certain level, after which accumulation of experience in the domestic market generates process-related capabilities that encourage subsequent cross-border acquisitions. Empirical support is provided for an inverted U-shaped relationship between prior cross-border acquisition experience and the likelihood of subsequent cross-border acquisitions: such experience encourages further acquisitions up to the point at which the coordination costs discourage further international expansion.