Savor the climb but prepare for the fall: a contingency perspective on positive attainment discrepancy in cross-border acquisitions

This paper explores the effect of a firm’s positive attainment discrepancy (when performance exceeds aspiration levels) on the performance obtained by the organization following a cross-border acquisition. Building on the behavioral theory of the firm, this study suggests that the effects of performance feedback are non-linear, offering intriguing interpretations in response to recent calls in the literature highlighting the need to address several unresolved issues in the conceptualization of problemistic search. This work also argues that performance feedback results may be shaped by two contingency factors, namely the firm’s financial resources and the prior experience developing these activities. The hypotheses are tested on a sample of 352 cross-border acquisitions executed by Italian firms between 2010 and 2019. Findings confirm that the feedback-performance relationship follows an inverted U-shape, indicating that more rewarding performance is achieved at low to moderate levels of positive attainment discrepancy, while higher levels of this variable would lead to the opposite effect. Specifically, this dysfunctional outcome would be attributed to a state of overconfidence arising from such results, ultimately resulting in diminished future organizational performance. Furthermore, the results show that the availability of slack resources strengthens this curvilinear relationship between performance feedback and firm’s post-acquisition performance, whereas prior experience in acquiring firms does not play a significant role.