Stakeholder Orientation and Acquisition Performance
| Author | Emanuele L. M. Bettinazzi,Maurizio Zollo |
| DOI | http://doi.org/10.1002/smj.2672 |
| Published date | 01 December 2017 |
| Date | 01 December 2017 |
Strategic Management Journal
Strat. Mgmt. J.,38: 2465–2485 (2017)
Published online EarlyView 12 July 2017 in WileyOnline Library (wileyonlinelibrary.com) DOI: 10.1002/smj.2672
Received 20 May 2015;Final revision received15 February 2017
Stakeholder Orientation and Acquisition Performance
Emanuele L. M. Bettinazzi1*and Maurizio Zollo2
1Department of Strategy and Organization, EMLYON Business School,Ecully, France
2Department of Management and Technology, Invernizzi Center for Research on
Innovation, Organization, Strategy and Entrepreneurship (ICRIOS), BOCCONI
University, Milan, Italy
Research summary:In this article, we study how a rm’s stakeholder orientation affects the
performance of its corporate acquisitions. We depart from prior literature and suggest that
orientations toward employees, customers, suppliers, and local communities will affect long-term
acquisition performance both directly and through its interactions with process characteristics,
such as preacquisitionrelatedness and postacquisition integration. Analyses of data on a sample of
1884 acquisitions show overall a positive association between acquirers’ stakeholder orientation
and acquisition performance. In addition, we nd support for a positive moderation of business
relatedness on the performance impacts of stakeholder orientation. Structural integration has a
similarly positive moderation effect only for some of the stakeholder categories.
Managerial summary: Does collaboration with stakeholders during an acquisition pay off in
terms of performance? The results of this research show that it is worth engaging stakeholders
during the M&A process, but that the efcacy of involvementpractices may depend on the type of
stakeholders and the characteristics of the acquisition. While acquiring rms that take account of
suppliers and local communities consistently overperform in their acquisitions, the inclusion of
employees might be not benecial (and even harmful) when the target rm operatesin a dissimilar
business or when managers do not plan to maintain it as a separate entity. Copyright © 2017 John
Wiley & Sons, Ltd.
Strategic management scholars have studied merg-
ers and acquisitions since the inception of the eld.
To date, merger and acquisition (M&A) literature
has implicitly adopted a theory of the rm that
assigns primacy to the interests of shareholders
over those of other stakeholders (e.g., Jensen &
Ruback, 1983; Seth, 1990; Singh & Montgomery,
1987). This may be problematic for understanding
the drivers of acquisition performance because
there is a signicant amount of heterogeneity
Keywords: stakeholder orientation; M&A process; acqui-
sition performance; stakeholder relations; relational capital
*Correspondence to: Emanuele L. M. Bettinazzi, Department
of Strategy and Organization, EMLYON Business School, 23
Avenue Guy de Collongue, 69134 Ecully, France. E-mail:
bettinazzi@em-lyon.com
Copyright © 2017 John Wiley & Sons, Ltd.
in how different rms consider nonshareholding
stakeholders’ relationships when pursuing rm
objectives, and because this heterogeneity might
be an important factor in explaining the variance in
M&A performance.
We refer to this phenomenon as heterogeneity
in stakeholder orientation, dened as the degree
to which a rm’s management decides to focus its
attention on stakeholders and integrate their inter-
ests and knowledge in its decision making (Har-
rison, Bosse, & Phillips, 2010; Tantalo & Priem,
2014). Heterogeneity in stakeholder orientation can
derive from a number of factors, such as governance
structures (Wang & Dewhirst, 1992), institutional
contexts (Kacperczyk, 2009), or managerial moti-
vations (Berman, Wicks, Kotha, & Jones, 1999).
2466 E. L. M. Bettinazzi and M. Zollo
In this article, we adopt a stakeholder-based
view of the rm (Blair & Stout, 1999; Freeman,
Harrison, Wicks, Parmar, & de Colle, 2010) to
study the process and performance of mergers and
acquisitions. To do so, we relax the M&A litera-
ture’s implicit assumption regarding the homogene-
ity in the extent to which the knowledge and inter-
ests of nonshareholding stakeholders are taken into
account in decision-making processes.
One of the article’s central claims is that the
heterogeneity in stakeholder orientation is likely to
be reected in how rms manage their acquisition
processes. In particular, there might be consid-
erable variation among acquirers in the attention
they give to their relationships with different
stakeholder categories and the extent to which their
capabilities and relationships are leveraged during
the acquisition processes (Haspeslagh & Jemison,
1991; Pablo, Sitkin, & Jemison, 1996). To date,
the M&A literature has not focused on the effects
of this particular dimension of rm heterogeneity
to explain variance in acquisition performance.
The main goal of the present study is therefore to
develop and test a theory about the inuence of an
acquiring rm’s orientations toward stakeholders
on its M&A performance.
It is worth noting that this article does not start
from the assumption that the acquirer’s stakeholder
orientations will only have positive consequences
for its M&A performance. For instance, the positive
implications of integrating the interests and knowl-
edge of a specic category of stakeholders (e.g.,
employees) may be outweighed by the costs asso-
ciated with the allocation of managerial attention
and resources to the relationships with that cate-
gory. In developing our theoretical contribution, we
emphasize both the costs and benets of acquirers’
orientations toward differentstakeholder categories.
We test our hypotheses using a unique sample
of 1,884 acquisitions undertaken by large US-based
listed rms across industries between 2002 and
2010. Our data shows that orientations toward
stakeholders have an overall positive impact on
acquisition performance and that business related-
ness positively inuences the strength of this rela-
tionship. Beyond the general effect of stakeholder
orientation, the results also show that orientations
toward specic categories of stakeholders yield
heterogeneous effects on acquisition performance
depending on the degree of structural integration.
The rest of the article is structured as follows: in
the next section, we build on the stakeholder-based
view (SBV) to dene the concept of stakeholder ori-
entation and to identify how orientations manifest in
rm behaviors. The third section presents the meth-
ods and the data used to test the hypotheses, while
the fourth presents the results of our statistical anal-
yses. The article concludes with a discussion of our
results and some suggestions for future research.
Theoretical Development
Stakeholder Orientation
The stakeholder-based view of the rm holds that
an organization can be seen as a set of interdepen-
dent relationships between its stakeholders (Blair &
Stout, 1999; Freeman et al., 2010), who are jointly
committed to its success, and who contribute spe-
cic forms of capital, including nancial, human,
and social capital (Kochan & Rubinstein, 2000) to
that end. Several denitions of stakeholders have
been used in the literature. In this study, we adopt
Post, Preston, and Sachs’s (2002: 8) denition,
which describes a rm’s stakeholdersas those “indi-
viduals and constituencies that contribute, either
voluntarily or involuntarily, to its wealth creating
capacity and activities.” In line with this deni-
tion, we focus on those stakeholder groups that “the
rm needs in order to exist” (Dunham, Freeman, &
Liedtka, 2006: 25): employees, customers, suppli-
ers, and local communities.1
Received literature suggests that these stakehold-
ers can be more or less involved in scanning the
environment, making decisions about prioritizing
issues the rm needs to attend to, generating and
selecting alternative responses to these issues, and
determining how such responses are executed.
From a practical standpoint, a higher level of orien-
tation toward a stakeholder category translates into
a set of routinized behaviors aimed at assessing the
quality of the relationship with these stakeholders
(Reynolds, Schultz, & Hekman, 2006), exchanging
information with them, and incorporating their
interests and knowledge into the rm’s decisions
1Logically, shareholders would be encompassed in this deni-
tion, however,we consider this category of stakeholder as residual
and focus instead on nonshareholding stakeholders. This does not
mean that we neglect this stakeholder category altogether,but, for
the purposes of this article, we see limited value in analyzing the
heterogeneity of rms’ shareholder orientations. Several previous
nance-related studies havealready focused on the extent to which
orientations toward shareholders may impact acquisition perfor-
mance (e.g., Bigelli & Mengoli, 2004).
Copyright © 2017 John Wiley & Sons, Ltd. Strat. Mgmt. J.,38: 2465–2485 (2017)
DOI: 10.1002/smj
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