Reducing cognitive bias in assessing combination potential in M&As

Roberto Evaristo, Sri Zaheer

Research output: Chapter in Book/Report/Conference proceedingChapter

3 Citations (Scopus)

Abstract

Top managers rarely have an accurate inventory of the capabilities buried within their firms. Although there are many reasons for such partial knowledge, cognitive biases play an important role for its existence. We argue that managers' cognitive biases could lead to lost opportunities and exposure to vulnerabilities as they engage in the complex cognitive tasks surrounding mergers and acquisitions. In this chapter, we propose a structured approach that managers can use to quickly assess the distribution of capabilities across merging firms to mitigate the impact of these biases. Strategic capability mapping (SCM) relies on an assessment of the distribution of capabilities, including where certain capabilities are located, their breadth and depth, and helps increase identification of potential complementarities and combination potential as well as reduce the merged firm's exposure to vulnerabilities such as losing areas of undiscovered strength. A description of the process and examples of successful application are provided.

Original languageEnglish (US)
Title of host publicationAdvances in Mergers and Acquisitions
EditorsSydney Finkelstein, Cary Cooper
Pages123-137
Number of pages15
DOIs
StatePublished - Dec 1 2012

Publication series

NameAdvances in Mergers and Acquisitions
Volume11
ISSN (Print)1479-361X

Fingerprint

Cognitive bias
Managers
Vulnerability
Strategic capabilities
Merging
Complementarity
Mergers and acquisitions

Keywords

  • Capability complementarities
  • Cognitive biases
  • Merger vulnerabilities
  • Strategic capability mapping

Cite this

Evaristo, R., & Zaheer, S. (2012). Reducing cognitive bias in assessing combination potential in M&As. In S. Finkelstein, & C. Cooper (Eds.), Advances in Mergers and Acquisitions (pp. 123-137). (Advances in Mergers and Acquisitions; Vol. 11). https://doi.org/10.1108/S1479-361X(2012)0000011009

Reducing cognitive bias in assessing combination potential in M&As. / Evaristo, Roberto; Zaheer, Sri.

Advances in Mergers and Acquisitions. ed. / Sydney Finkelstein; Cary Cooper. 2012. p. 123-137 (Advances in Mergers and Acquisitions; Vol. 11).

Research output: Chapter in Book/Report/Conference proceedingChapter

Evaristo, R & Zaheer, S 2012, Reducing cognitive bias in assessing combination potential in M&As. in S Finkelstein & C Cooper (eds), Advances in Mergers and Acquisitions. Advances in Mergers and Acquisitions, vol. 11, pp. 123-137. https://doi.org/10.1108/S1479-361X(2012)0000011009
Evaristo R, Zaheer S. Reducing cognitive bias in assessing combination potential in M&As. In Finkelstein S, Cooper C, editors, Advances in Mergers and Acquisitions. 2012. p. 123-137. (Advances in Mergers and Acquisitions). https://doi.org/10.1108/S1479-361X(2012)0000011009
Evaristo, Roberto ; Zaheer, Sri. / Reducing cognitive bias in assessing combination potential in M&As. Advances in Mergers and Acquisitions. editor / Sydney Finkelstein ; Cary Cooper. 2012. pp. 123-137 (Advances in Mergers and Acquisitions).
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