Capability transformation through acquisitions: The interplay between interest alignment and knowledge leveraging mechanisms

Abstract

Purpose

Firms across many industries use acquisitions as a vehicle for renewing their capabilities. Many such acquisitions fail to achieve their goals, mainly because of the trade-offs involved in managing the post-acquisition integration process. The acquisition integration process not only is an important phenomenon by itself but also offers a unique opportunity to gain insight into how firms transform their capabilities more generally. Recent strategic management literature has begun to recognize the importance of incorporating individual-level cognitive, motivational and behavioral mechanisms into firm-level explanations, although empirical studies within this vein have been scarce.

Design/methodology/approach

This longitudinal inductive study traces the process of capability transformation in an acquisition of a medium-size entrepreneurial firm by a larger corporation.

Findings

The authors found that capability transformation involved a continuous interplay of knowledge leveraging and interest alignment mechanisms, converging around a set of practices that were considered critical for the capability. Only after firms achieved an agreement about this set of practices that knowledge leveraging efforts translated into actual performance.

Originality/value

The study contributes to the literature on competitive advantage by developing a better link between the potential advantage derived from the availability of knowledge-based resources and the translation of this availability into actual firm performance. This study also advances knowledge on managing post-acquisition integration process by demonstrating which managerial skills and actions contribute to the integration capability.

Citation

Goussevskaia, A., Arruda, C. and Lótfi, S. (2017), "Capability transformation through acquisitions: The interplay between interest alignment and knowledge leveraging mechanisms", Management Research, Vol. 15 No. 2, pp. 148-166. https://doi.org/10.1108/MRJIAM-02-2016-0647