The role of acquisitions in reshaping business capabilities in the international telecommunications industry
This paper focuses on the relationships between observed processes of post-acquisition activities within four cross-border horizontal acquisitions that occurred in the telecommunications equipment manufacturing sector between 1988 and 1992. We discuss the desirability of such acquisitions from a corporate and social welfare standpoint. We report a detailed survey of the context, post-acquisition activities and outcomes of the four acquisitions. The acquisition context includes industry characteristics, target characteristics, target strengths and acquisition motives. Post-acquisition activities include several dimensions of business restructuring, resource redeployment and creation of integration mechanisms. Acquisition outcomes include impact on business capabilities, financial performance and judgments of overall success. We conclude that the results provide stronger support for strategic reconfiguration and productive efficiency explanations for horizontal acquisitions than they do for market power, target mismanagement or resource appropriation explanations.
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