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Experience spillovers across corporate development activities

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This study develops a theoretical explanation for the existence of positive and negative experience effects across corporate development activities. The authors suggest that the similarity in two activities' execution decisions influences both the sign and magnitude of experience spillovers. The argument is used to understand how alliance experience and acquisition experience influence the performance of acquisitions in the US commercial banking industry. The empirical evidence indicates that the spillover effect of alliance experience on acquisition performance is a function of the decisions made in the post-acquisition phase regarding the level of integration and the replacement of top management. They also find a U-shaped relationship between acquisition experience and acquisition performance as well as between alliance experience and acquisition performance, suggesting the presence of negative transfer effects both within and across activities.

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