Cross-border and Domestic Acquisitions for Product Diversification

Drawing on strategic decision-making under uncertainty, we examine the relationship between internationalization and product diversification in the context of acquisitions. We bring into the picture the role of perceived uncertainty and we posit that cross-border acquisitions for product diversification, although being mutually exclusive in principle, may become complementary thanks to the moderating effect of past experiences. Building on a sample of 317 acquisitions made by 113 acquirers in the period 2007-2013, we find that cross-border acquisitions are negatively related to product diversification in the focal deal. However, we analyze the separate and joint effects of acquirer-specific characteristics, i.e. product diversification experience and cross-border acquisitions experience, and find evidence that the combined presence of these experiences has a moderating effect and becomes a predictor of future cross-border acquisitions for product diversification. Past experience therefore helps to reduce perceived uncertainty, encouraging decisions otherwise rejected.