In an effort to explain why business acquisitions often fail, scholars have begun to focus on the role of top executives of acquired companies. Acquired companies that retain their top executives tend to have more successful outcomes than those that do not. Furthermore, existing research suggests that retaining the highest-level top executives, such as the CEO (chief executive officer) and COO (chief operating officer), is related more positively to post acquisition success than retaining lower-ranked top executives. However, this explanation, while insightful, suffers from two limitations. First, the focus on positional rank does not recognize the variation in length of service that may exist in top executives posts across companies, nor does it address which particular top executives (with respect to length of service) should be retained to achieve a successful acquisition outcome. Second, the relationship between retained top executives and acquisition outcomes offered by existing research is subject to opposing theoretical explanations related to length of service. The resource-based view (RBV) suggests that keeping acquired company top executives with longer organizational tenure would lead to more successful outcomes, as those executives have idiosyncratic and nontransferable knowledge of the acquired company that would be valuable for the effective implementation of the acquisition. The opposing position, offered by the upper echelons perspective (UEP), suggests that retaining top executives having short organizational tenure would lead to more successful outcomes. as they would have the adaptability to manage most effectively during the uncertainty of the acquisition process.

Responding to these limitations, Bergh conducted a study of executive retention and acquisition outcome that focused on the organizational tenure of retained company top executives in 104 acquisitions, followed over 5 years. Bergh considered the acquisition successful if the acquired company was retained and unsuccessful if it was divested. Bergh’s findings support the RBV position. Apparently, the benefits of long organizational tenure lead to more successful outcomes than the benefits of short organizational tenure. While longer tenured top executives may have trouble adapting to change, it appears that their perspectives and knowledge bases offer unique value after the acquisition. Although from the UEP position it seems sensible to retain less tenured executives and allow more tenured ones to leave, such a strategy appears to lower the probability of acquisition success.
427: According to the passage, the research mentioned in the highlight part suggests which of the following about lower-ranked top executives and postacquisition success?
A) Given that these executives are unlikely to contribute to postacquisition success, little effort should be spent trying to retain them.
B) The shorter their length of service, the less likely it is that these executives will play a significant role in postacquisition success.
C) These executives are less important to postacquisition success than are more highly ranked top executives.
D) If they have long tenures, these executives may prove to be as important to postacquisition success as are more highly ranked top executives.
E) Postacquisition success is unlikely if these executives are retained.
428: The resource-based view, as described in the passage, is based on which of the following ideas?
A) The managerial skills of top executives become stongest after five years of their tenure.
B) Company-specific knowledge is an important factor in the success of an acquisition process.
C）The amount of nontransferable knowledge possessed by long-tenured top executives tends to be underestimated.
D) Effective implementation of an acquisition depends primarily on the ability of executives to adapt to change.
E) Short-tenured executives are likely to impede the implementation of a successful acquisition strategy.
429: The passage suggests that Bergh and a proponent of the upper echelons perspective would be most likely to disagree over which of the following?
A) Whether there is a positive correlation between short organizational tenure and managerial adaptability
B) Whether there is a positive correlation between long organizational tenure and the acquisition of idiosyncratic and nontransferable knowledge
C）Whether adaptability is a useful trait for an executive who is managing an acquisition process
D) Whether retaining less-tenured top executives of an acquired company is an optimal strategy for achieving postacquisition success
E) Whether retaining highest-level top executives of an acquired company is more important than retaining lower-ranked top executives
430: According to the passage, prior to Bergh’s study, research on the role of top executives of acquired companies in business acquisition success was limited in which of the following ways?
A) It did not address how the organizational tenure of top executives affects postacquisition success.
B) It did not address why some companies have longer-tenured CEOs than others.
C) It did not consider strategies for retaining longer-tenured top executives acquired companies.
D) It failed to differentiate between the contribution of highest-level top executives to postacquisition success and that of lower-ranked top executives.
E) It underestimated the potential contribution that lower-level top executives can make to postacquisition success.