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Most studies explore the success of mergers and acquisitions through ex ante analyses based on the compatibility of resources and capabilities between the acquirer and target. As more than half of them fail, there seems to be room for enhancing our understanding of when and how acquisitions can actually improve firms' competitiveness. Diverging from these conventional approaches, the authors posit that attention should be at the strategic level. The purpose of this paper, therefore, is to explore the existence of compatibility between acquirers’ and targets’ competitive strategies and its effect on post-acquisition business performance.

Through the Thomson Reuters Eikon financial and acquisition databases, the authors built a unique data panel of 174 acquirer–target matched acquisitions in the manufacturing sector from 24 different countries between 2000 and 2020. The authors used a two-step System-GMM approach to address the hypotheses proposed in this paper. This methodology allowed to isolate and easily compare the differential effects of each possible combination of strategic similarity and dissimilarity between the target and acquiring company on the latter’s post-acquisition strategies.

The need to unravel the motives behind successful acquisitions has gained enormous interest in recent years among academics and managers to improve – or maintain – firm competitiveness. Through a panel data of 174 acquisitions among manufacturing firms (2000–2020), this study shows that differentiated firms improve their business performance by acquiring firms with similar strategies; nevertheless, their performance worsens if the acquired firm follows a cost-leadership strategy. Concerning acquirers with a cost-leadership strategy, the lack of clear behavioral patterns suggests that the lower knowledge absorption capacity associated with these firms might be a decisive factor in being able to assimilate and efficiently exploit the acquired firm's knowledge.

Overall, this approach offers a new and valuable perspective for practitioners because it improves understanding of the possible causes of merger failure and opens new attentions to consider in maximizing success and long-term competitiveness. The results of this study bring, thus, an unexpected result to this research: the importance of the acquirer’s strategy beyond the similarity or dissimilarity of the strategies of the acquirer and the acquired company.