Stakeholder Orientation and Likelihood of Being an Acquisition Target

Abstract

This study examines how a firm’s stakeholder orientation influences its likelihood of being targeted for an acquisition from two distinct perspectives: stakeholder resource evaluation and recombination. Contrary to prior research finding a positive relationship, we argue that this relationship is negative because as intangible, socially complex resources, stakeholder relationships pose difficulties for external evaluation (information mechanism) and for transfer and integration post-acquisition (combination mechanism). Using a longitudinal sample of 3,684 U.S.-listed firms, we find support for our theory, with robust evidence supporting both mechanisms. The study contributes to strategy research by integrating stakeholder and resource-based view literatures, showing how causal ambiguity surrounding stakeholder relationships can deter acquirers and thus, identifying an unintended consequence of governing for stakeholders –reduced marketability to potential buyers.