Why Companies Do Not Pursue Attractive Mergers and Acquisitions ...

Chatterjee, Lubatkin, Schweiger, and Weber (1992) sought to establish the benefits of this perspective by relating strategic fit and organisational fit to performance. While their criterion variables are very narrowly defined (e.g., organisational fit is equated to managements’ perceptions of cultural differences; good performance is equated to increases in shareholder wealth), their findings broadly support the assertion that benefits result from acquisitions having high levels of both.

In sum, in value-creating or strategic acquisitions, strategic fit represents the potential for a candidate to contribute to the acquirer’s objectives and to complement or augment its strategies in part through synergy effects; organisational fit and softer issues like “people, cultures and politics” (Soderberg & Vaara, 2003, p. 3) influence the extent to which synergies can be achieved (Haspeslagh & Jemison, 1991; Jemison & Sitkin, 1986a) in the postacquisition period.

The implications of the use of the strategic fit and organisational fit concepts for selecting candidates appear in figure 1.2. Failure can be avoided by forgoing acquisitions in the lower left cell; success can be achieved by focusing on candidates in the upper right cells. The priority placed on candidates in the other cells would depend on the balance of risks and rewards the acquirer chooses.

The rational, the analytical approach, and the general decision-making context that the use of this model suggests have some support in the literature (Hitt & Tyler, 1991). The outputs of the analysis based solely on this model, however, would be suspect to process scholars, who consider the rational approach to be simplistic and facile. Mintzberg, Raisinghani, and Theoret (1976), for example, found little evidence of the “rational analytic” model in their analysis of strategic decisions of all types, and they suggested the possibility that analysis is accomplished by lower level technocrats who provide it to higher level senior managers. The latter then use it as input for decisions but ultimately rely more on judgment and bargaining. And Bourgeois and Eisenhardt (1988, p. 818) cited Simon (1957) and Cyert and March (1963) as among the authors who consider the model “unrealistic” because it doesn’t take into account cognitive and other limitations on decision-making.