Lally School of Management, Rensselaer Polytechnic Institute, United States
Strategy scholars have long explored why certain M&As are more effective than others. Moving beyond the traditional resource-fit perspective, this study suggests that cognition fit is a more fundamental factor. While it may not be as directly involved in economy of scale or scope as other factors, cognition fit acts as a critical threshold. A certain level of cognition alignment needs to be met to ensure smooth combination and coordination, thereby allowing the positive impacts of other factors on M&A performance to materialize. Drawing from the Time, Interaction and Performance (TIP) Theory, we focus on temporal focus similarity in particular. Using US public M&A cases as the sample and adopting choice model and Necessary Condition Analysis, our study finds: (1) Firms with different temporal focuses are less likely to merge; (2) Acquirers and targets with different temporal focuses require more time to complete their transactions; (3) Having a similar temporal focus between the acquirer and the target is necessary (although not sufficient) for achieving high M&A performance. By introducing a necessity-based perspective to the cognitive fit literature in M&As, our research offers new insights into the intricate interplay between resource fit, cognition fit, and M&A efficiency.
