| Line | In an effort to explain why business acquisitions |
| | often fail, scholars have begun to focus on the role |
| | of top executives of acquired companies. Acquired |
| | companies that retain their top executives tend to |
| (5) | have more successful outcomes than those that do |
| | not. Furthermore, existing research suggests that |
| | retaining the highest-level top executives, such as the |
| | CEO (chief executive officer) and COO (chief operating |
| | officer), is related more positively to postacquisition |
| (10) | success than retaining lower-ranked top executives. |
| | However, this explanation, while insightful, suffers from |
| | two limitations. First, the focus on positional rank does |
| | not recognize the variation in length of service that |
| | may exist in top executive posts across companies, |
| (15) | nor does it address which particular top executives |
| | (with respect to length of service) should be retained |
| | to achieve a successful acquisition outcome. Second, |
| | the relationship between retained top executives and |
| | acquisition outcomes offered by existing research |
| (20) | is subject to opposing theoretical explanations |
| | related to length of service. The resource-based view |
| | (RBV) suggests that keeping acquired company top |
| | executives with longer organizational tenure would lead |
| | to more successful outcomes, as those executives |
| (25) | have idiosyncratic and nontransferable knowledge |
| | of the acquired company that would be valuable for |
| | the effective implementation of the acquisition. The |
| | opposing position, offered by the upper echelons |
| | perspective (UEP), suggests that retaining top |
| (30) | executives having short organizational tenure would |
| | lead to more successful outcomes, as they would have |
| | the adaptability to manage most effectively during the |
| | uncertainty of the acquisition process. |
| | Responding to these limitations, Bergh conducted |
| (35) | a study of executive retention and acquisition |
| | outcome that focused on the organizational tenure of |
| | retained company top executives in 104 acquisitions, |
| | followed over 5 years. Bergh considered the |
| | acquisition successful if the acquired company was |
| (40) | retained and unsuccessful if it was divested. Berghs |
| | findings support the RBV position. Apparently, the |
| | benefits of long organizational tenure lead to more |
| | successful outcomes than the benefits of short |
| | organizational tenure. While longer tenured top |
| (45) | executives may have trouble adapting to change, it |
| | appears that their perspectives and knowledge bases |
| | offer unique value after the acquisition. Although |
| | from the UEP position it seems sensible to retain |
| | less tenured executives and allow more tenured |
| (50) | ones to leave, such a strategy appears to lower the |
| | probability of acquisition success. |