Navid Asgari, PhD

In many industries, firms’ portfolios of inter-organizational alliances enable them to realize novel complementarities and, thereby, enhance their performance. In such sectors, managers also frequently acquire other organizations to obtain access to critical resources. However, what managers may overlook is that acquisitions can destabilize existing alliance relationships. In this study we show that the acquiring firm’s capacity to effectively manage alliance-based assets is stressed once it inherits the target firm’s alliances. In general, target firm alliances become more challenging to sustain, and, in particular, those that hold a higher potential for novelty become more unstable. Consequently, when evaluating acquisitions, managers should look beyond obvious measures of a target alliance’s value and assess the post-acquisition integration challenges that may threaten its stability.