Driving acquisition performance: how much integration is enough?

Abstract

Purpose

This paper aims to develop a generalizable framework for acquisition performance.

Design/methodology/approach

This paper attempts to simulate a controlled experiment by examining the strategies and performance of the same acquired company under different acquirers. The inductive methodology is used to derive a generalizable framework about the key factors impacting the performance of the acquired firm.

Findings

This study finds that the acquired firm’s performance is better when the environment is munificent and the acquirer uses an appropriate level of integration. Several antecedents of each of these dimensions were identified.

Research limitations/implications

Because the inferences are based on a small sample, the study’s framework needs to be tested in other settings and possibly empirically tested in larger samples to improve its generalizability.

Practical implications

Every year, corporations around the world spend large sums of capital on acquisitions and significant managerial resources on integrating the acquired firms, with decidedly mixed results. The framework proposed in the paper can help managers to improve the performance of their acquisitions.

Originality/value

Unlike prior studies that have quantitatively analysed mixed samples of acquisitions and often arrived at inconclusive results, this study uses the inductive approach based on a few case studies to derive a framework that can be applied across industries. The framework accounts for the key industry and transaction-related contingent factors that can influence the performance of acquisitions under varied circumstances.

Citation

Pangarkar, N. (2021), "Driving acquisition performance: how much integration is enough?", Journal of Business Strategy, Vol. 42 No. 6, pp. 420-427. https://doi.org/10.1108/JBS-05-2020-0106