Knowledge Transfer and Resource Sharing as Value Creation Mechanisms in Inbound Continental European Acquisitions

Abstract

Despite the growing popularity of acquisitions as a European market entry strategy, existing research reveals that many such acquisitions fail to generate positive shareholder returns. In an extension of the literature on operational synergy and value creation within acquisitions, this paper examines the types of knowledge transfer and resource sharing sought by inbound European acquirers together with their relative success rates. Data from 121 acquisitions into Continental Europe reveal that acquirers emphasize the attainment of operational synergy via knowledge transfer, particularly within the marketing and distribution functions. Disturbingly, however, the results also show that firms' ability to successfully transfer functional knowledge consistently falls short of their expectations, as does their ability to share resources within those activities that have a high local market knowledge content. These results are interpreted in the light of the recent knowledge-based literature and implications for the value creation strategies of future European acquirers are outlined.

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