Stakeholder synergies in acquisitions

Research Summary Acquisitions can create synergies by combining an acquirer's and a target's pre‐existing relationships with nonmarket stakeholders. We introduce the “reset effect” as a novel mechanism that occurs when a firm with cooperative stakeholder relationships combines with a firm that has conflictual relationships, prompting the affected stakeholders to re‐evaluate their pre‐acquisition strategies. We argue that post‐acquisition conflict with nonmarket stakeholders will decline when the cooperative and conflictual stakeholders brought together by an acquisition are aligned on one or more of the three elements that characterize stakeholder fields: (1) issues stakeholders care about, (2) relationships between stakeholders, and (3) preferences for how issues should be addressed. We find support for these arguments by studying changes in Fortune 500 firms' conflict with environmental movement organizations after acquisitions. Managerial Summary Acquisitions can create synergies by resetting a firm's relationships with external stakeholders. Studying 25 years of Fortune 500 acquisitions and environmental stakeholder interactions, we find that acquisitions can reduce stakeholder conflict when one firm's cooperative stakeholder relationships complement the other firm's conflictual ones. Complementary relationships exist when cooperative and conflictual stakeholders are aligned on issues or have pre‐existing relationships with one another. Simply combining conflictual‐cooperative stakeholder relationships is not enough, however, and post‐acquisition conflict can increase when stakeholder groups are divided over how issues should be addressed. These findings can help managers understand when an acquisition will ease or exacerbate external conflict with stakeholders.