Exploring the link between M&A Activity and ESG performance: A Resources-Based View Perspective.

Abstract

Purpose: This paper aims to analyse the link between ESG performance and M&A activities on the firm’s internal resources with the perspective of the Resources-Based View. Design/methodology: Narrative literature review searched in two databases, SCOPUS and Web of Science, to identify common literature themes and literature gaps Findings: The paper’s findings emphasise the potential value-creating effects of ESG performance in M&A deals. It suggests that well-governed acquirers are expected to fairly reward the target's ESG performance, recognising its potential to contribute to the combined entity's competitive advantage and shareholders' relationships. Furthermore, it highlights the nuanced nature of ESG performance and suggests that the individual components of ESG may have a differential impact on M&A value creation. Limitations: The method of narrative literature review may introduce bias when interpreting and synthesising the findings. Practical Implications: This paper gives a general overview from a firm’s internal resources perspective, which offers stakeholders and investors The healthcare industry's M&A success depends on factors like target selection, deal structure, and integration strategy, with an emphasis on considering ESG performance. The paper suggests that healthcare acquirers should prioritise high-ESG targets, structure deals with cash payments, be disciplined on valuation based on acquirer size, and dedicate resources to responsible target integration to maximise the benefits of consolidation in the healthcare industry. Originality/value: To the best of the author’s knowledge, this is the first paper that explores the link between M&A activities and ESG performance through the lens of the RBV .