Behind Mergers and Acquisitions: Alliance Network Embeddedness and Learning Approaches

What drives acquisitions? This article departs from the previous literature by treating a firm's acquisition activities as embedded in the industry alliance network and influenced by learning from previous alliance relations. Specifically, we investigate how a firm's alliance network position (closeness centrality and structural holes) and its alliance learning approach (exploitation versus exploration) affect its future acquisition intensity—the number of its subsequent acquisitions. Data from the U.S. computer industry reveal that a firm’s closeness centrality and structural hole position can have negative and positive effects of its subsequent acquisition intensity, respectively. Further, a firm’s learning approach in prior alliance relations not only affects its acquisitions, but also interacts with its network embeddedness. Consequently, a proper match between a firm’s alliance learning approach and its structural position in the alliance network becomes critical for understanding acquisition behaviors.