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Book part
Publication date: 26 August 2014

Xiaoying (Catherine) Zhang and Bruce W. Stening

This paper explores what differentiates success from failure in post-acquisition integration. It seeks to overcome some of the limitations of previous research by adopting a more…

Abstract

This paper explores what differentiates success from failure in post-acquisition integration. It seeks to overcome some of the limitations of previous research by adopting a more holistic and dynamic examination of the process and by focusing on aspects that can be readily applied in practice. Four cases of mergers and acquisitions (M&A) in the global automobile industry are examined using secondary data and taking a grounded theory approach. The four cases comprise two pairs of successes and two pairs of failures. Two of the pairs comprise established multinational companies, while two others comprise emerging multinational companies’ acquisitions of Korean automakers; in each case, there was one successful M&A and one failure. It is inducted that what differentiates the successful cases from the failures is their different approaches to two common tensions in post-acquisition integration, namely, their approaches to integration strategy and people issues. A two-level framework is proposed in which post-integration is managed simultaneously and dynamically at the strategic and people levels. These inductive findings, if verified by a more broadly based empirical examination, will extend M&A theory by providing a more integrated and dynamic approach to post-acquisition integration, in which strategic and people perspectives are jointly taken into account and interact with each other, thereby creating value for both acquiring and acquired firms.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-78190-836-5

Keywords

Article
Publication date: 18 December 2018

Ying Zhang, Etieno Enang and Harry Sminia

Mergers and acquisitions being done by emerging market multinational corporations (EMNCs) increasingly attract scholarly attention. However, conclusions concerning the nature and…

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Abstract

Purpose

Mergers and acquisitions being done by emerging market multinational corporations (EMNCs) increasingly attract scholarly attention. However, conclusions concerning the nature and the theoretical underpinnings of EMNCs’ post-acquisition integration vary significantly, calling for an assessment of the state of affairs in this field. This paper aims to critically review the extant studies on EMNCs’ post-acquisition integration and to make a comparison with advanced economy multinational corporations’ (AMNCs’) post-acquisition integration, in order to formulate an agenda for future research.

Design/methodology/approach

A sample of papers from 21 leading journals in the fields of international business, management, human resource management and strategy published between 1991 and March 2018 are included in the literature review. Qualitative content analysis was conducted.

Findings

The topics are clustered into the four themes of strategies and processes, influencing factors, acquisition performance and antecedents of post-acquisition integration of EMNCs. The literature on EMNCs and AMNCs converges with regard to the broad methodological and theoretical approaches that have been adopted. Yet, EMNCs and AMNCs diverge on the detailed strategies and behavioral patterns of post-acquisition integration, mostly as a consequence of country of origin factors.

Originality/value

The paper identifies a number of deficiencies within existing research and suggests how they can be addressed in future research. By doing so, the paper deepens the argumentation of the third camp in the “Goldilocks debate” (Cuervo-Cazurra, 2012) arguing that the phenomenon of post-acquisition of EMNCs is “just right” for theory extension and development.

Details

Multinational Business Review, vol. 27 no. 1
Type: Research Article
ISSN: 1525-383X

Keywords

Article
Publication date: 19 February 2024

Mayank Varshney

Technology acquisition is a common phenomenon of acquiring external knowledge, but we have a limited understanding of conditions in which the acquirer integrates the target or…

Abstract

Purpose

Technology acquisition is a common phenomenon of acquiring external knowledge, but we have a limited understanding of conditions in which the acquirer integrates the target or not. On one hand, the acquirer may have a policy to integrate the target to benefit from its prior knowledge. On the other hand, the target may face challenges in continuing its knowledge creation and the acquirer may want to provide it autonomy to not disrupt it. This paper aims to identify conditions in which targets tend to be less integrated after acquisitions, allowing them to maintain more autonomy and contribute more to knowledge creation.

Design/methodology/approach

We test our arguments in the empirical setting of the global biopharmaceutical industry using a difference-in-difference approach on a longitudinal dataset of matched patents. We examine self-cites received by patents belonging to acquirers and the targets before and after the acquisitions.

Findings

We find that, on average, the targets’ prior patents do not receive more self-cites after the acquisition. We conclude that this is because their R&D activities are disrupted, suggesting a higher level of post-acquisition integration. However, more nuanced findings reveal that it may not be the case all the time. When the target has more research experience, is international or is specialized in complementary technologies, prior patents of targets continue to receive more self-cites after the acquisition. It indicates that the targets in such conditions continue knowledge creation, suggesting a lower level of post-acquisition integration.

Originality/value

Our findings contribute to post-acquisition integration research. While post-acquisition integration downside is common, we present conditions in which such a downside may be less likely. We highlight that the context of an acquisition may be an important determinant of the extent of integration of the target. Moreover, we supplement the integration research (cultural, structural and human resource and leadership perspectives of integration) by adding a knowledge-based perspective to it. Such dynamics have important implications for acquirers and targets in deriving value from the acquisition.

Details

Cross Cultural & Strategic Management, vol. 31 no. 1
Type: Research Article
ISSN: 2059-5794

Keywords

Book part
Publication date: 1 January 2004

Abhirup Chakrabarti and Will Mitchell

Most research of post-acquisition integration examines integration of individual business units. The research pays less attention to corporate level integration processes, by…

Abstract

Most research of post-acquisition integration examines integration of individual business units. The research pays less attention to corporate level integration processes, by which we mean the standardization of integration routines and synchronization of integration activities across a firm’s business units. We argue that corporate level acquisition activities and post-acquisition integration processes strongly influence long term corporate performance, particularly as a firm which comprises interdependent business units becomes geographically diffuse. Acquisitions tend to increase system diversity and goal diversity across business units. Some goal diversity is beneficial, but excessive goal diversity and the existence of system diversity can reduce long run corporate performance by requiring greater managerial effort and increasing the opportunity cost of managerial efforts. The negative effects become stronger as a firm becomes geographically diffuse or if business units are interdependent. Firms that employ active corporate level integration processes – particularly firms that acquire frequently and have interdependent business units – can enhance the benefits and eliminate some of the problems of diversity.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-0-76231-172-9

Article
Publication date: 29 April 2014

Manya Jaura and Snejina Michailova

The purpose of this paper is to examine the influence of cognition on knowledge sharing between members of the acquiring and acquired organisations in the post-acquisition

Abstract

Purpose

The purpose of this paper is to examine the influence of cognition on knowledge sharing between members of the acquiring and acquired organisations in the post-acquisition integration process. It specifically analyses differentiation between in-groups and out-groups, the perception of organisational identity and interaction among members of the acquired and acquiring organisations and how these three factors affect knowledge sharing.

Design/methodology/approach

The authors develop theoretical propositions and conduct an explorative pilot study on the basis of original interview data conducted with ten respondents in four Indian IT companies that have acquired firms abroad.

Findings

The authors find evidence for supporting the negative effect of in- and out-groups differentiation and the positive effect of interpersonal interaction on knowledge sharing among employees of the acquired and acquiring organisations. There was indicative, but less compelling, evidence for the negative influence of inter-group competition and the positive influence of perceived shared organisational identity on knowledge sharing. Different from the established view, the authors find that when Indian firms acquire firms abroad, they immediately initiate knowledge flows from the targets rather than going through a long period of integration prior to acquiring knowledge from the targets.

Research limitations/implications

The paper contributes to the scholarly conversation on cognition and knowledge sharing and argues that firms that are located in developing economies and that acquire firms abroad behave in a way somewhat different from what Western literature postulates. This invites for further studies, both theoretical and empirical, to shed light on this phenomenon. The present paper is focused only on one country, India, and on a single industry, the IT industry. It is limited in its empirical part, mainly due to enormous difficulties in getting access to the field.

Practical implications

The study demonstrates how central individuals are to the process of knowledge sharing and the accomplishment of organisational objectives in a post-acquisition context. Managers should understand that the knowledge their employees possess is a strategic asset, and therefore how they use it is influential in attaining organisational goals in general, and acquisition integration objectives in particular. The creation of task- and project-related communities or groups can help in establishing a shared organisational identity, especially after the turbulent event of one company acquiring another one. The creation of communities or groups where socialisation is encouraged can lead to employees interacting with one another and developing a sense of belongingness with the community or group. Over time, this belongingness can translate into a shared organisational identity, which is beneficial for the organisation. The findings suggest that the creation of task- or project-oriented communities and groups is a powerful way to achieve that.

Originality/value

The contribution of the paper is fourfold. First, while macro orientation dominates literature on the growth of the Indian IT industry, this study is conducted at the individual level of analysis, by focusing on managers in acquiring Indian IT firms. Second, whereas studies that have examined cognition and knowledge sharing have done so mainly through social capital lenses, this paper focuses on factors that are based on the inherent tendency of human beings to categorise themselves and other individuals. Third, the paper examines the links between cognition and knowledge sharing in an exciting context, namely, post-acquisition integration. Finally, while research on both post-acquisition integration and knowledge sharing is biased towards a Western context, this study investigates knowledge sharing and post-acquisition integration in the context of a major non-Western emerging economy.

Details

Journal of Asia Business Studies, vol. 8 no. 2
Type: Research Article
ISSN: 1558-7894

Keywords

Book part
Publication date: 19 September 2014

Duncan Angwin and Uma Urs

Post-acquisition integration matters for overall M&A outcome. However within this phase researchers have struggled to identify clear links between integration activities and…

Abstract

Post-acquisition integration matters for overall M&A outcome. However within this phase researchers have struggled to identify clear links between integration activities and post-acquisition outcome. This may be due to using organisational levels of analysis, where sub-organisational issues serve to confound findings. In order to unpack the post-acquisition phase, and to delve more deeply into organisations, this paper adopts a more granular perspective on integration activities by focusing upon the building blocks of organisations. Specifically we investigate ordinary routine amalgamation and their impact upon meta-routine outcome during acquisition integration. Drawing upon two longitudinal integration cases and using ‘retroductive’ analysis, two types of amalgamation are identified, namely ‘combination’ and ‘superimposition’. We find that, while the basic nature of routines, such as multiplicity and nestedness, inhibit routine amalgamation, external interference in the form of context, structural change or introduction of additional routines is needed to stabilise amalgamated routines. From our findings we are able to suggest a number of testable propositions about the factors that influence the amalgamation of routines. This empirical study contributes to the M&A literature by opening up the ‘black box’ of post-acquisition integration by providing details at a granular level of what actually happens during integrations.

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-78350-970-6

Keywords

Article
Publication date: 3 July 2017

Qi Ai and Hui Tan

This paper examines the role of acquirers’ prior related knowledge in the post-acquisition integration process. The purpose of this paper is to identify what constitutes the key…

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Abstract

Purpose

This paper examines the role of acquirers’ prior related knowledge in the post-acquisition integration process. The purpose of this paper is to identify what constitutes the key prior related knowledge that can contribute to the reverse knowledge transfer following Chinese firms’ outward mergers and acquisitions (M&As) to Europe, and explain how prior related knowledge affects such transfer of knowledge.

Design/methodology/approach

The authors employ a multiple case study approach. Semi-structured interviews were conducted from February 2012 to June 2013 with 24 managers.

Findings

The authors find that, in addition to knowledge about the target, prior international business experience, R&D capability, and industrial capabilities are key components of acquirers’ prior related knowledge that can contribute to the success of M&A integration and post-acquisition reverse knowledge transfer. Indeed, Chinese acquirers’ prior related knowledge can influence the reverse knowledge transfer from acquired firms to acquirers by directly improving acquirers’ absorptive capacity and building a harmonious organisational climate to facilitate such transfer.

Originality/value

This paper contributes to the absorptive capacity and the cross-border M&A literature. It extends the current knowledge on the key components of an acquirer’s prior related knowledge in the outward M&A by Chinese firms. It also uncovers how post-acquisition reverse knowledge transfer is affected by acquirers’ prior related knowledge.

Details

Journal of Organizational Change Management, vol. 30 no. 4
Type: Research Article
ISSN: 0953-4814

Keywords

Book part
Publication date: 4 January 2012

Dries Faems

Collaboration and acquisition have traditionally been observed as two alternative strategies when accessing external technologies. However, real option scholars have recently…

Abstract

Collaboration and acquisition have traditionally been observed as two alternative strategies when accessing external technologies. However, real option scholars have recently argued that firms can also engage in transitional technology sourcing trajectories where collaboration and acquisition are used as complementary strategies. While these real option scholars have identified factors that influence when partners are likely to shift from collaboration to acquisition, they remain silent on how such a transition can be effectively managed. Based on a multiple case study of four transitional technology sourcing trajectories between one new entrepreneurial and one established firm, this study therefore explores how the pre-acquisition collaboration stage and the post-acquisition integration are related to each other. Findings suggest that entrepreneurial companies may use the pre-acquisition collaboration stage as a period to evaluate the goodwill of the established partner. In addition, we point to the presence of pre-acquisition integration efforts and the extent of strategic convergence during the pre-acquisition collaboration stage as factors that substantially influence the success of the post-acquisition integration process in transitional governance trajectories.

Details

New Technology-Based Firms in the New Millennium
Type: Book
ISBN: 978-1-78052-118-3

Article
Publication date: 3 July 2017

Slađana Savović

The purpose of this paper is twofold: first, to examine the impact of organizational culture differences on post-acquisition performance, and second, to provide deeper…

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Abstract

Purpose

The purpose of this paper is twofold: first, to examine the impact of organizational culture differences on post-acquisition performance, and second, to provide deeper understanding of the mechanisms through which the impact occurs introducing into the analysis the mediating effect of employee attitudes.

Design/methodology/approach

The sample is based on domestic and international acquisitions in Serbia carried out during the period 2002-2011. Linear regression models were fitted according to Baron and Kenny procedures for mediation analysis. Statistical significance of the indirect or mediated effect is calculated by using the bootstrap test.

Findings

The results show that organizational culture differences positively impact post-acquisition performance. Moreover, employee attitudes are found to be a partial mediator of the relationship between culture differences and post-acquisition performance.

Practical implications

The presented results are especially useful for managers involved in the processes of acquisitions indicating that culture differences, if properly understood and managed, can be a source of value creation. Further, the results of the analysis indicate that managers must monitor and evaluate employee attitudes towards changes and help employees to face the challenges of change, thereby contributing the improvement of post-acquisition performance.

Originality/value

Previous research of organizational culture differences in transitional economies is limited, and this study is the first empirical investigation of the impact of organizational culture differences on post-acquisition performance in Serbia. This paper aids researchers and practitioners to identify the specific cultural challenges in the context of transitional economies.

Details

Leadership & Organization Development Journal, vol. 38 no. 5
Type: Research Article
ISSN: 0143-7739

Keywords

Book part
Publication date: 6 May 2004

Duncan Angwin

Managing Executives occupy a pivotal role in the acquisition process. It is virtually inconceivable that major Merger and Acquisitions (M&As) could proceed without their personal…

Abstract

Managing Executives occupy a pivotal role in the acquisition process. It is virtually inconceivable that major Merger and Acquisitions (M&As) could proceed without their personal sponsorship (Hayward & Hambrick, 1997). They are central to the negotiation and signing for such deals and it is these negotiations that raise questions over how the target company should be run post-acquisition, how it should be configured to fit within the newly expanded group and what sort of strategy may be appropriate for the future. Managing Executives embody their firm’s strategies and so are intimately connected with these issues of organisational fit and strategic rational. With negotiations focussed upon the future of their businesses and their personal places in corporate history, these contests can be very dramatic. The high stakes are evident in the substantial levels of acquired Managing Executive departure post-acquisition. Whilst we can observe that many acquired Managing Executives subsequently leave the enlarged firm, little evidence to date answers the question of why they have been retained or replaced?

Details

Advances in Mergers and Acquisitions
Type: Book
ISBN: 978-1-84950-264-1

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