This study examines the Penrose effect in the context of newly public firms’ first acquisitions. We investigate how product market competition, digital capability, and their interactions influence how quickly newly public firms initiate their first acquisitions. Based on the empirical analysis of the first post-IPO acquisitions of 2,245 firms that went public from 2005 to 2019, we show that product market competition reduces firms’ tendency to pursue acquisitive growth. In addition, firms with stronger digital capability are more likely to transition to acquisitive growth quickly after IPOs. Furthermore, the negative impact of product market competition on the speed of the first post-IPO acquisition is less pronounced when the firm has stronger digital capability.
