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Closing resource gaps: toward a resource‐based theory of advantageous mergers and acquisitions
Author(s) -
Eschen Erik,
Bresser Rudi KF
Publication year - 2005
Publication title -
european management review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.784
H-Index - 32
eISSN - 1740-4762
pISSN - 1740-4754
DOI - 10.1057/palgrave.emr.1500039
Subject(s) - mergers and acquisitions , closing (real estate) , resource (disambiguation) , resource acquisition is initialization , business , economic rent , industrial organization , resource based view , shareholder , competitive advantage , tender offer , marketing , economics , microeconomics , resource allocation , finance , computer science , market economy , corporate governance , computer network
This paper applies resource‐based theory to explain the success or failure of resource‐driven merger and acquisition decisions. A two‐step model identifies prerequisite conditions for deriving competitive advantage and superior financial results from mergers and acquisitions designed to acquire new resources. In a first step, we analyze alternative sources of new resources such as factor markets, internal development, and cooperation, and present a framework that explains under what conditions mergers and acquisitions are an appropriate means for closing resource gaps. In a second step, we present conditions that define financially advantageous mergers and acquisition strategies. If strategically valuable and cospecialized resources of the acquiring and the acquired firms are combined, the shareholders of both the target and the acquirer can expect to appropriate rents.