Professor of Strategy
Also INSEAD Working Paper N 97/68/SM. This paper studies redeployment of resources between target and acquiring businesses following horizontal acquisitions. The analysis draws from perspectives that emphasize the strategic importance of resources that are subject to market failure. The authors define a five-part typology of R&D, manufacturing, marketing, managerial, and financial resources. They show that targets and acquirers frequently redeploy resources following horizontal acquisitions; especially resources that frequently face market failure. The authors then show that the magnitude of redeployment of each type of resource increases with the asymmetry of the merging businesses relative strength on the resource dimension. The research stresses evolutionary perspectives on business organizations that emphasize the importance of organizational differences in competitive markets. The central premise of their research is that the market for businesses is often more robust than the market for resources.