A comparative study of acquisition-performance and divestment-performance relationship during and after an environmental jolt: empirical evidence from European manufacturing firms

The importance of creating a strategic fit between a firm and its external market environment has gained increased prominence amongst organizational theorist and managers because of the constant perturbances that firms nowadays are experiencing in their external market environments. These constant perturbances negatively impacts the ways firms compete and their overall performance. Therefore, a continuous re-evaluation and adjustment of firm’s strategy to fit with the changes in their environment is key for them to have a sustainable competitive advantage over their peers during a crisis (Makadok and Walker 2000). Hence the reason why, reorganization during a crisis has been proposed as a compulsory dynamic capability that firms must possess for competitiveness. Propelling firm behaviour or strategies that can be implemented for organizational change during crisis can be in form acquisition for increase in market share or divestment for corporate refocusing and value creation in existing products