Stakeholder Orientation and Experiential Learning: Evidence from Corporate Acquisitions

Abstract

This article examines how stakeholder orientation influences managers’ ability to learn from prior experience in corporate acquisitions. We argue that increased attention to primary stakeholders’ signals affects both positively and negatively managers’ capacity to analyze causal mechanisms in past acquisitions, draw inferences from them, and apply these inferences to subsequent acquisitions. On the one hand, attention to stakeholders’ inputs may enhance managers’ ability to interpret prior experience by giving voice to unnoticed details of past acquisitions. On the other hand, it may divert managers’ attention away from inferential mechanisms, reinforce confidence in existing practices, and limit managers’ ability to learn from acquisitions experience. We combine these theoretical effects to propose an inverted U‐shaped influence of stakeholder orientation on the relationship between acquisition experience and focal acquisition performance. We also propose that experience homogeneity and proximity to the knowledge domain of the focal firm act as boundary conditions on this influence. Analyses of a sample of 4619 corporate acquisitions by 504 US firms support our predictions.

The firm under the spotlight: How stakeholder scrutiny shapes corporate social responsibility and its influence on performance

“…Stakeholder scrutiny may enhance the CSR signal fit, tightening the correspondence between stakeholders' expectations and the actual signaler behavior. Firm learning through experience from the iterations with stakeholders focuses managers on crucial stakeholders' needs, improving the CSR fit (Bettinazzi & Zollo, 2022). For example, learning from institutional stewardship improves CSR fit, redirecting corporate behavior to the pledges of institutional investors (Barko et al, 2022).…”

Environmental, social, and governance demands in the boardroom

“…We show that it not only affects directors' individual decision-making (Adams and Licht, 2019;Adams et al, 2011), but also how stakeholder-oriented directors react to conformity pressure, thus to group-level dynamics. This finding resonates with general strategic management research showing significant firm-level challenges associated with adopting a stakeholder-orientation (Bettinazzi and Zollo, 2022;Garcia-Castro and Francoeur, 2016). Our research highlights that merely appointing directors with a high stakeholder-oriented 61 attitude alone will not suffice to ensure that boards keep the interests of multiple parties in mind when faced with complex decisionsdoing so may even come with unwanted side effects.…”

“…Along these notions, all directors are likely vulnerable to social influence and conformity pressure (Ma and Khanna, 2016;Veltrop et al, 2017). Yet, we argue that highly stakeholderoriented directors are even more prone to this pressure than directors who primarily focus on shareholders because they truly want to understand the conflicting demands within a dilemma from multiple perspectives so that they serve the interests of all parties involved (Bettinazzi and Zollo, 2022). Although this feature is positive in itself, we argue it may, paradoxically, make it more difficult for highly stakeholder-oriented directors to stand their ground against other views in complex decision dilemmas when right or wrong distinctions are not clear-cut.…”

“…Although most research on stakeholder-orientation has been conducted at the firm level (Asad, Hennig, Oehmichen, Wolff, and Haas, 2023;Bettinazzi and Zollo, 2022), there is also evidence that individual directors vary systematically in their proclivity to consider multiple stakeholder 59 groups in boardroom decision dilemmas (Adams and Licht, 2019;Adams et al, 2011). Drawing from classic psychological theorizing on social influence processes (Asch, 1951), however, we expect that directors with a high stakeholder-orientation may not automatically impact board deliberations as intended, because as they not only likely prone to the social influence from other directors, but even more so than directors with a shareholder orientation.…”

Unleashing synergy: exploring the impact of experiential learning and component technology on integration implementation strategy in cross-border technological acquisitions

“…EL gained through acquisition experience explains acquisition performance. For example, EL through acquisition experience enhances the chances of acquisition completion and improves the firm's dealing with the challenges of the complex pre-acquisition process, which increases the probability of explaining improved acquisition performance (Muehlfeld et al, 2012;Bettinazzi and Zollo, 2022). Experience with unsuccessful acquisition deals can increase the probability of CBA completion.…”