An Empirical Research On The Relationship Between Post-acquisition Control And Post-acquisition Performance In The Perspective Of Legitimacy

Acquisition is one of the most significant way for Chinese firms acquiring competitive advantages through vertical and horizontal integration. Acquisitions have been considered as the best way to expand in size and become industry-diversified and market-diversified. However, a large number of cases failed. The key point of the argument about whether acquisitions can creat wealth is how to do the right acquisitions and do the right decisions after the acquisitions. The core of the post-acquisition relationship between an acquiring firm and an acquired firm should be how the acquiring firm control the acquired firm. The acquiring firm should consider how to control and manage the acquired firm to achieve its strategic goal. An acquisition is complicated, since it is not only about transferring of some resources, but also involved many institutional forces and social relationships. The institutional theoreists argued that these institutions related to the acquisition can have direct and potential effect on corporate behavior and firm performance. So, the acquiring firm should make appropriate decisions and do the right adjustments after the acquisition in the context of different external and internal conditions.Based on a sample of 117 acquisitions, this paper did an empirical research on the relationship among post-acquisiton control, acquisition legitimacy and acquisition performance. There are several foundings as follows. First, post-acquisition infomal control has significant positive effect on acquisition performance and formal control has no influence on acquisition performance. Second, acquisition performance is positively related with internal legitimacy but not related with external legitimacy. Furthermore, the relationship between post-acquisition control, including formal and informal control, and acquisition performance is positively moderated by external legitimacy. Interestingly, internal legitimacy has negatively moderating role on the relationship between informal control and acquisition performance.Because most current researches related to acquisitions focus on pre-acquisition characteristics and there is limited studies paying attention to post-acquisition control, this paper is valueable for domestic empirical researches of acquisitions. Besides, the measurement of legitimacy in this paper is an exploratory empirical study based on the institutional theory. Based on the foundings, some suggestions are provided for Chinese firms which have done or will do some acquisitons. In the end, some limitation of this study is pointed out, which show some interesting and important future direction for further research.