Uncertainty of M&As under asymmetric estimation

The acquisition of capabilities: How firms use dynamic and ordinary capabilities to manage uncertainty

“…For example, if a firm faces a strategic choice on how to expand in an environment through acquisition with plentiful resources, the acquisition of a known choice related to core capabilities is seen as less risky than acquiring a more unknown quantity for a capability (Coff, 1999;Gerbaud & York, 2007). Firms opting to invest in a lesser-known quantity even within an environment of resource abundance still face the increased uncertainty of M&A and thus increased costs to the transaction (Boeh, 2011;Coff, 1999;Kanungo, 2021). Thus, stated formally, we would expect the following relationship: Hypotheses 4a and 4b: An environment of high munificence will positively moderate the longer-term performance of firms pursuing acquisitions of ordinary capabilities and negatively moderate the longer-term performance of firms pursuing acquisition of dynamic capabilities (ceteris paribus).…”

“…Another contextual element that adds to the complexity of understanding both how capabilities and M&A can affect firm outcomes is the level of uncertainty. Uncertainty as a context can be considered a multi-level construct, referring to uncertainty regarding a specific M&A transaction (Kanungo, 2021), or more broadly within an industry, across industries, or related to global macroeconomic conditions (Jalonen, 2012). Uncertainty has a special place within the strategic management literature in that multiple theoretical frameworks define boundary conditions based upon the 'type of uncertainty.'…”