Outsourcing Experience: Examining Market Responses to Acquirers Relying on Advisor Experience

Abstract

In order to overcome potential limitations in their own experience with a strategic action, firms will often outsource to expert firms that have greater experience with such actions. In this study, the authors contribute to theory on organizational experience and learning by examining an important but understudied type of experience – outsourced experience. The authors show whether, and under what conditions, such experience may be beneficial for focal firms. In the context of acquisitions, the authors find that outsourced acquisition experience brought to acquisition deals by advisors is typically assessed by markets to be detrimental but may become beneficial if such experience is specific to the acquirer’s context. Further, the authors find that acquirers’ own knowledge can signal that they are less reliant on advisor experience, thus mitigating its potentially harmful effects. Theoretical and practical implications of the results are discussed.

Citation

Steinbach, A., Haleblian, J. and McNamara, G. (2024), "Outsourcing Experience: Examining Market Responses to Acquirers Relying on Advisor Experience", Finkelstein, S. and Cooper, C.L. (Ed.) Advances in Mergers and Acquisitions (Advances in Mergers and Acquisitions, Vol. 23), Emerald Publishing Limited, Leeds, pp. 63-88. https://doi.org/10.1108/S1479-361X20240000023005