Examining Links between Pre and Post M&A Value Creation Mechanisms - Exploitation, Exploration and Ambidexterity in Central European SMEs

Value creation in acquisitions is a complex topic with divergent theoretical roots and mixed empirical evidence. In empirical research, the study of strategic fit between an acquirer and target as an important indicator of synergy often yields ambiguous findings, for two major reasons: the conceptualization of the fit construct and that construct's missing link with issues of post-merger integration. In this paper, we apply exploration and exploitation as different concepts of learning to conceptualize the strategic fit among organizations involved. We do not draw a direct relationship regarding M&A performance, but instead treat the success of post-acquisition exploration and exploitation as a mediator in the fit-performance relationship. With a sample of 101 acquisitions of small and medium-sized firms from the German-speaking part of Europe, we find evidence for our proposed hypotheses. First, fit regarding these two learning modes improves performance; second, a synergistic effect exists between exploration and exploitation; third, ambidextrous post-merger development in exploration and exploitation negatively affects M&A performance; and fourth, acquisition experience benefits the transfer of pre-merger strategic fit to the success of post-merger activity. Based on those findings, we derive implications for theory and practice.