Stakeholder Orientation and Experiential Learning: Evidence from Corporate Acquisitions

Abstract This article examines how stakeholder orientation influences managers’ ability to learn from prior experience in corporate acquisitions. We argue that increased attention to primary stakeholders’ signals affects both positively and negatively managers’ capacity to analyze causal mechanisms in past acquisitions, draw inferences from them, and apply these inferences to subsequent acquisitions. On the one hand, attention to stakeholders’ inputs may enhance managers’ ability to interpret prior experience by giving voice to unnoticed details of past acquisitions. On the other hand, it may divert managers’ attention away from inferential mechanisms, reinforce confidence in existing practices, and limit managers’ ability to learn from acquisitions experience. We combine these theoretical effects to propose an inverted U‐shaped influence of stakeholder orientation on the relationship between acquisition experience and focal acquisition performance. We also propose that experience homogeneity and proximity to the knowledge domain of the focal firm act as boundary conditions on this influence. Analyses of a sample of 4619 corporate acquisitions by 504 US firms support our predictions.