1. ¹Bilfinger Berger AG, Mannheim, Germany
2. ²Free University of Berlin, Berlin, Germany

Correspondence: RKF Bresser, Free University of Berlin, D-14195 Berlin, Germany. Tel: +49 30 8385 4055; Fax: +49 30 8385 5876; E-mail: bresser@wiwiss.fu-berlin.de

Abstract

This paper applies resource-based theory to explain the success or failure of resource-driven merger and acquisition decisions. A two-step model identifies prerequisite conditions for deriving competitive advantage and superior financial results from mergers and acquisitions designed to acquire new resources. In a first step, we analyze alternative sources of new resources such as factor markets, internal development, and cooperation, and present a framework that explains under what conditions mergers and acquisitions are an appropriate means for closing resource gaps. In a second step, we present conditions that define financially advantageous mergers and acquisition strategies. If strategically valuable and cospecialized resources of the acquiring and the acquired firms are combined, the shareholders of both the target and the acquirer can expect to appropriate rents.