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Empirical studies of the relationship between acquisition experience and acquisition performance have had mixed results. Interestingly, these studies have found that acquisition experience does not necessarily increase acquisition performance. In particular, the extent to which the recency of the acquisition experience affects the performance of the focal acquisition remains equivocal. To investigate this issue, the authors adopt a perspective based on the concept of organizational forgetting. In the context of operations management, organizational forgetting explains the decrease in productivity that firms experience as a result of knowledge depreciation over time and interruptions to production. Cognitive psychology scholars find that the forgetting process follows specific laws. On the organizational level, these laws indicate that the organizational memory may deteriorate over time for three reasons: inefficient encoding, decay, and disuse. In the context of acquisitions, the authors examine how forgetting depreciates acquisition experience and, therefore, increases the likelihood of failure in subsequent acquisitions. They carry out a survival analysis on a population of 731 U.S. firms acquired by French firms between 1988 and 2006. The research shows that acquisition experience that is old or recent has no significant impact on acquisition performance. However, medium-term acquisition experience reduces the likelihood that the focal acquisition will fail. These findings are consistent with the laws on forgetting. This research also provides evidence of the existence of reinforcement mechanisms as well as a paradoxical influence of past alliances with the target.

We examine whether firms learn from their major acquisition failures. Drawing from a threat-rigidity theoretical framework, we suggest that firms do not learn from their major acquisition failures. Furthermore, we hypothesize that host-country experience reinforces the negative effects of major acquisition failures. Our research hypotheses are tested using an event history analysis of 741 acquisitions undertaken by French listed and non-listed firms in the USA between January 1988 and December 2008. We use failure divestment (divestment resulting from acquisition failure) as a proxy for acquisition performance. Consistent with our theoretical framework, we find that major acquisition failures have a negative impact on future acquisition performance. Furthermore, we find that such negative effects are reinforced by firms' host-country experience.

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