The micro-foundations of industrial diversification through foreign acquisitions: the multifaceted role of CEO experience

This paper examines the micro-foundations of cross-border industrial diversification strategies. We examine the impact of observable CEO experience attributes on the propensity to acquire foreign target firms in unrelated (versus related) industries. We test our hypotheses on a sample of UK-based firms that engaged in cross-border acquisitions between 2010 and 2016. Our findings support an inverted U-shaped relationship between life experience of the CEO and the likelihood of engaging in unrelated foreign acquisitions. Further, we find that CEOs’ broad-based work experience, across countries or industries, is associated with a higher propensity to engage in unrelated foreign acquisitions. Finally, CEOs’ education experience in MBA-type qualifications is associated with a preference for related foreign acquisitions. We discuss the theoretical implications of these findings and outline directions for future research in the context of micro-foundations in international business, strategic leadership, and upper echelons theory.