In search for unobservables: What drives success of the acquiring firm in online business acquisitions?

Andrea Wiholm & Bettina Nyquist

Student thesis: Master thesis


Through the lens of the Resource‐Based View and its branch theories – Dynamic Capabilities, Knowledge‐based View and Resource‐Based Model, this paper places focus on firm resources as well as the combination of these and how they affect acquirer’s abnormal stock return. By testing a carefully selected number of factors, previously confirmed to have an impact on acquirer’s abnormal stock return, the paper seeks to increase consensus in the currently scattered literature on the subject. Analysing these factors in a new context – the online business – aims to shed light over a surprisingly underrepresented research context, and to test the theory’s applicability to more dynamic contexts. From each branch the researchers have derived one key ‘aspect’, argued to drive performance in acquisitions. These are ‘adaptive capability’ Dynamic Capabilities, ‘alignment of strategic emphases’ from Resource‐Based Model and ‘absorptive capacity’ from the Knowledge‐based View. While the three branches empirically have been examined isolated, this paper proposes a consolidated model to predict performance drivers in acquisitions. An event study is used, based on the assumption that the stock market has all publicly available information, and that the markets can rationally assess the three factors given the information available to them. All three aspects have been proven on a significant level to have a positive impact on performance, though not all measures tested for have contributed to these findings. Following three out of seven hypotheses are confirmed: – In the online business, complementing alignment between acquirer and target’s strategic emphases has a positive impact on acquirer’s performance – Absolute size of acquirer’s knowledge base has a positive impact on acquirer’s performance – In the online industry, a broad market focus of acquirer has a positive impact on acquirer’s performance In addition the following hypothesis has been rejected at a significant level: – Prior acquisition experience of the acquirer has a positive impact on acquirer’s performance

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2012
Number of pages138