Stakeholders and Organizational Learning: Theory and Evidence from Corportate Acquisitions

The purpose of this paper is to study the interaction between experiential learning and the quality of stakeholder relationships, in the context of complex strategic tasks, such as corporate acquisitions. We argue that a firm’s stakeholder orientation can have both positive and negative effects on its ability to extract knowledge from previous experience and apply it to a focal task. To model these relationships, we propose a direct effect on the capability to make inference from previous experience and an indirect effect on the influence that novelty (in terms of cognitive distance) of the focal task has on correct application of accumulated knowledge. We test these arguments on a sample of 1,718 corporate acquisitions by US listed firms and find evidence of a negative direct effect of stakeholder orientation on experiential learning. We also find evidence that problems associated with the application of accumulated experience to novel contexts increase with the level of stakeholder orientation of the firm.