Alternative forms of charismatic leadership in the integration of mergers and acquisitions

It is becoming increasingly clear that post-merger and acquisition (M&A) performance, especially in terms of achieving the integration of merging firms, is strongly affected by organizational factors, such as leadership. This paper presents a theoretical model showing how alternative forms of charismatic leadership can be relevant to the implementation of M&As. A unique aspect of our conceptualization is that we recognize the distinction between charismatic leaders with more of a personalized versus socialized power motive, the behaviors emanating from each respective type, and likelihood of resulting effects on the post-combination organization of an M&A. We also propose that personalized charisma will result in an absorption strategy and accompanying stress, resistance to change, and turnover that vary in degree between acquiring and acquired firms. Conversely, socialized charisma will result in collaborative vision-formation and decision-making processes that will ultimately achieve transformation in both of the combining firms. We further argue that absorption strategies can result in effective integration of the target firm into the acquiring firm when the pre-merger condition of the former is unfavorable.     

Does merger & acquisition (M&A) strategy matter? A contingency perspective

This paper takes a contingency approach to investigate whether there are market performance variations for different types of M&A. Eight different types of M&A are identified in a typology based upon the conjunction of three contextual dimensions: external environmental, acquiring firm level strategy and CEO motivation. Drawing upon a sample of 1,926 domestic UK deals we evaluate the typology to determine whether the financial markets distinguish between different types of M&A. Results indicate significant market and risk-adjusted performance differences by M&A type. These confirm that a contingency approach to M&A performance has merit. We suggest that the proposed integrated typology, that recognizes the importance of multiple aspects of strategic fit to M&A performance, addresses the paradox that M&A practitioners continue to pursue deals despite widespread acceptance that they result in high failure rates.     

Strategically valuable resources and capabilities and successful M&A: a dyadic perspective

Mergers and acquisitions (M&A) are most popular external growth strategies. While the number of M&A has been increasing during the past decades, on average, only the shareholders of target firms gain value during the acquisition process, while acquirers do not receive abnormal positive returns. This paper analyses the impact of strategically valuable resources and capabilities on the success of M&A decisions. We test complementary resource-based hypotheses regarding the value of M&A for the shareholders of both transaction partners. Our sample consists of transactions in the pharmaceutical and biotechnological industry. The results of our study show that the shareholders of both transaction partners will gain above average positive returns only when the acquirer and the target own and combine strategically valuable resources and capabilities.     

超竞争环境下企业困境并购定价与时机研究

在超竞争环境下企业面临的竞争环境越来越动荡，企业的竞争优势呈现出短期性与临时性的特点，为了快速发展，越来越多的企业选择并购。本文以超竞争环境为研究背景，运用期权博弈理论，分析并建立了存在竞争对手的企业困境并购定价与时机选择模型，通过模型求解得到并购中主并企业给予目标企业的最优价值以及主并企业的最佳并购时机；此外，通过数值模拟重点分析了三个超竞争特征因子（竞争强度、竞争不确定性、企业价值损失因子）、企业困境因子以及竞争对手的溢价水平对企业困境并购时机的影响。本文研究发现：（1）被并企业得到的价值补偿比例及主并企业最佳并购时机均受到各超竞争特征因子、企业困境因子以及竞争对手溢价水平的综合影响；（2）竞争对手的存在会使目标企业得到的价值补偿比例增加；（3）超竞争环境下企业困境并购中主并企业的最佳并购时机取决于并购双方的相对价值比；（4）随着可能导致双方谈判破裂因素、事件的增多以及企业财务困境程度的增加，主并企业提前进行并购的可能性增加；（5）随着竞争强度、竞争不确定性、竞争对手造成溢价水平的增加，主并企业推迟并购时机的可能性增大。     

Experiential learning,M&A performance,and post-acquisition integration strategy: A meta-analysis

While research on mergers and acquisitions (M&A) capabilities is accelerating, our understanding of their antecedents and performance implications still remains rather fragmented. Previous research has outlined the importance of learning for building M&A capabilities, but no work has attempted to summarize previous empirical findings regarding different learning mechanisms and their impacts on M&A performance. Mainly drawing upon organizational learning theory and the dynamic capabilities perspective, this study consolidates research on the relationship between different learning mechanisms, post-acquisition integration strategies, and M&A performance. Using meta-analytical techniques, our study shows that the capability-building mechanism relying on deliberate investments in learning tends to be more effective than the capability mechanism based on mere experience accumulation. In addition, our findings indicate that a higher degree of integration is associated with enhanced M&A performance among firms with more developed experiential learning, highlighting the need to explore mediating effects of integration strategy choices on the experiential learning-performance relationship.     

Looking into the ‘black box’ – unlocking the effect of integration on acquisition performance

Extending research on the performance of Mergers and Acquisitions (M&As), this paper seeks to explain how the post-acquisition integration phase affects acquisition performance. Despite extensive research efforts, there remains a scant understanding of how acquisition implementation, particularly in the post-acquisition integration phase, impacts the performance of M&As. Based on an extensive study of eight acquisitions, in this paper, a grounded model detailing the mechanisms by which the post-acquisition integration phase affects acquisition performance is developed. The model posits that integration-related factors do not bear directly upon acquisition performance. Instead, their effect is mediated by functional organizations in both firms. When focusing into these functional mediating dynamics, we observe that integration-related processual, behavioral and cultural factors affect the identified functional mediators in different ways. Going forward, we echo calls for integrated perspectives to the study of M&A and M&A performance in particular.     

Customer knowledge sharing in cross-border mergers and acquisitions: The role of customer motivation and promise management

Knowledge is a vital source of competitive advantage and renewal for contemporary organizations. However, to date, few studies have scrutinized how mergers and acquisitions (M&As)—processes dependent on knowledge sharing—offer a valuable inter-organizational context through which to understand the attainment of customer knowledge sharing following M&As. Applying an integrated theoretical perspective from customer relationship management and M&A performance research, we study a Chinese–Finnish acquisition and customer firms of the acquired party across four advanced Western countries. We find that customer knowledge sharing is an active relationship management process that relies on the factors of customer dedication-based motivation vs. customer concerns about M&As to maintain relationships after acquisitions. In addition, and more importantly, we find that the promise management mechanisms—making promises, enabling promises, and keeping promises—of the M&A parties reinforce the motivational factors to maintain customer knowledge sharing in cross-border M&As. We propose a conceptual framework of customer knowledge sharing in cross-border M&As.     

The effect of board size on shareholder value: Evidence from bank mergers and acquisitions

This study examines the effect of board size on the economic impact of bank mergers and acquisitions (M&A) in the US. Using a hand-collected dataset of 508 M&A between 2012 and 2018, we find that board size is negatively related to acquirer excess returns. In an additional analysis, we show that large boards have positive value implications for banks that combine the CEO and chairman roles as well as for large banks. Our findings indicate that a “one-size-fits-all” approach to board size is not necessarily in the interests of shareholders; instead, a more flexible and proactive formulation is needed.     

How does decision-making involvement affect perceptions of speed during post-merger integration?

This article offers an empirical demonstration of how different employees perceive the speed of change during the post-merger integration (PMI) process. As such, it adds to the growing body of literature on the speed of integration in the aftermath of a merger or acquisition (M&A). It broadens our understanding of the M&A integration process as it goes beyond binary recommendations of ‘fast’ or ‘slow’ integration by highlighting the relationship between an employee's involvement in the decision-making process and their perception of the speed of change.We conducted a multi-level longitudinal study over a two-and-a-half-year period. Our qualitative research on two not-for-profit, higher education institutions, employed multiple sources of process data. Building from this, our article thus provides not only novel theoretical insights into the PMI process, but equally offers valuable managerial advice on how staff morale, turnover and change resistance might be more efficiently managed during PMI.     

Do synergies exist in related acquisitions? A meta-analysis of acquisition studies

Mergers and acquisitions (M&A) aim to increase the wealth of shareholders of the acquiring company, in particular by creating synergies. It is often assumed that relatedness is a source of synergies. Our study distinguishes between business, cultural, technological, and size relatedness. It discusses the reasons why these different forms of relatedness can lead to an acquisition success and we conduct a meta-analysis of 67 prior M&A studies. Results indicate that positive effects can be expected under specific conditions only and have a limited overall impact on acquisition success. A moderator analysis finds that synergies stemming from relatedness depend on industry-, country-, and investor-characteristics.

Cooperation and Knowledge Transfer within Buyer–Supplier Relationships: The Moderating Properties of Trust,Relationship Duration and Supplier Performance*

This paper examines the effect of relational factors on knowledge transfer within strategic buyer–supplier exchange. Prior research examining inter‐firm knowledge transfer has focused almost exclusively on horizontal forms of governance such as strategic alliances and joint ventures, whilst research on vertical forms, such as buyer–supplier relationships, is limited. We test the effect of four important relational properties: cooperation, trust, relationship duration and supplier performance. Quantitative data, gathered from 104 UK manufacturing firms in eight industry sectors, are used to analyse the hypothesized relationships through a moderated hierarchical regression model. Our study provides support for the importance of considering relational factors in the transfer of knowledge at the inter‐organizational level. In particular, the results indicate that knowledge transfer is positively influenced by the extent of cooperation, but that this relationship is moderated by the level of trust and the performance of the supplier firm. Managerial implications for these findings and future directions for research are then offered.     

The Challenge of Integration: A Review of the M&A Integration Literature

The integration of acquired or merging firms is a key driver of the success or failure of mergers and acquisitions (M&As). Over the last 30 years, a substantial body of research has addressed M&A integration, offering rich but widely dispersed insights into this phenomenon. This paper takes stock of the current knowledge, based on a review of articles published in scholarly journals. The review advances the conceptual understanding of the phenomenon by inductively developing an overarching framework for the M&A integration literature, where integration success is a function of context, structural and communication‐based interventions, which interact with collective sensemaking processes and negotiations among integration stakeholders. Based on this framework, a research agenda is suggested. I proposes that, in particular, the interaction between structural interventions and leadership warrants further study. Also, little is known about integration project management and integration team composition or the interaction between integration context and collective sensemaking processes. Finally, there is a shortage of research on temporal dynamics within integration projects. The review demonstrates that M&A scholars made substantial progress regarding our understanding of the M&A integration process, yet much remains to be done.     

Lessons from the flipside: How do acquirers learn from divestitures to complete acquisitions?

We examine whether experience from prior divestitures is associated with higher completion likelihood in subsequent acquisitions. We argue that through divestitures, firms could extract meaningful knowledge that is helpful for completing their acquisitions, such as a general understanding of acquisition deal-making stages, and the stories and aims of the target in an M&A transaction. In addition, viewing divestitures as the flipside of acquisitions, we conjecture that the selling firm can observe how the divested component of their business is acquired, and vicariously learn from these observations. We also investigate the relative importance of learning from divestiture vis-à-vis acquisition experience in determining acquisition deal completion. Finally, we contend that the effect of learning from divestitures on acquisition deal completion depends on acquisition experience and deal value. We find evidence supporting our conjectures in a sample of 2164 M&A transactions from the worldwide computer and printing industries between 1991 and 2010.     

Career Dis-integration and Re-integration in Mergers and Acquisitions:: Managing Competence and Motivational Intangibles

Mergers and acquisitions (M&A) are increasingly prevalent, powerful and risky corporate events. The resistance or support of people in the integration of two previously separate organizations plays a key role for their success or failure. In this paper we present a Career Concept approach to better understand and manage sources and incentives for individual contributions and reactions to M&A. As ‘merged’ corporations integrate previously separate organizations, they can often dis-integrate individual careers with lay-offs, reduced advancement opportunities, upset or changed career plans, and other resistance-generating changes. This is the poorest means of mobilizing motivation, experience, commitment and competence, all of which are usually seen as critical justifications for M&A in the first place. Organizations face opportunity to select new combinations and integrate work in ways that individual careers can be re-integrated into the goals of the M&A with the goals and motivations of participants affected by it, by recognizing and effectively supporting different motivational and competence profiles.     

The dynamic impacts of M&A on employment in Japan

This paper provides empirical evidence on the dynamic effects of merger and acquisition (M&A) on employment in Japan. The main contributions to the gaps in existing literature are: targeting employment effects of M&A, examining them by the deal type (merger and acquisition) and by the sector (manufacturing and non-manufacturing), tracing the effects in the long term, using large dataset with 9,880 sample firms and 2,530 M&A cases for the period from 1995 to 2008, and focusing on the case of Japan. Our main findings are: the “acquisition” with the key role of “extension and growth” proved to have positive effects in the dynamic terms on target firms’ employment, mainly in manufacturing sector with high labor productivity. On the other hand, the “merger” with key function of “consolidation” turned out to have negative impacts dynamically on post-merger firms’ employment, mainly in non-manufacturing sector with low labor productivity. The strategic implication might to be that the different employment responses to M&A events between manufacturing and non-manufacturing reflect the difference in labor productivity between them, i.e. the dual structure of Japanese economy.     

Theoretical foundations of cross-border mergers and acquisitions: A review of current research and recommendations for the future

Cross-border mergers and acquisitions (M&As) have gained in popularity over the last decade. However, research on this type of diversification strategy has not kept pace with this trend. While there is considerable research in the area, it is unfortunately fragmented, leaving gaps that need to be addressed. Herein, we examine the theoretical perspectives and research findings on cross-border M&As from three perspectives: cross-border M&As as a (1) mode of entry in a foreign market, (2) dynamic learning process from a foreign culture, and (3) value-creating strategy. Current empirical research on this topic is also tabulated and grouped by theoretical stream to indicate major findings. Most importantly, we identify gaps in the literature and highlight five important research issues that provide directions for future research.     

Recasting the dynamics of post-acquisition integration: An embeddedness perspective

M&A scholars have generally assumed that post-acquisition integration is a self-contained process. However this ignores that this process rarely unfolds as the only ongoing initiative in an organization. We contend that post-acquisition integration is not detached from other simultaneous change processes in the organizational context and this has important implications for our understanding of how integration dynamics actually evolve. To further understand this embeddedness we examine the unfolding of a post-acquisition integration process in a company faced with an unanticipated drop in demand due to the global economic crisis. Through a qualitative, longitudinal study conducted over three years, we carried out 151 interviews to uncover the unfolding of the post-acquisition process. We find that post-acquisition integration is embedded in a set of co-evolving processes. We highlight four mechanisms (coordination, cohesion, disconnection, alienation) that arise from the co-evolution of processes that either facilitate or impede integration. Our findings contribute to our understanding of post-acquisition integration dynamics by recasting the integration process as embedded in a set of co-evolving processes that shape its unfolding.     

The institutionalization of knowledge transfer activities within industry–university collaborative ventures

Due to the changing competitive landscape, organizations must increasingly focus on acquiring external knowledge to advance new technologies. This study examines the institutionalization of knowledge transfer activities between industrial firms and university research centers. Data were collected from 189 firms collaborating with 21 university research centers in the US. Results show that knowledge transfer activities are facilitated when industrial firms have more mechanistic structures, cultures that are more stable and direction-oriented, and when the firm is more trusting of its university research center partner. Implications for both industry and universities, including their effect on firm performance, are discussed.     

Mergers and acquisitions research — A bibliometric analysis

Mergers and acquisitions (M&A) remain a popular vehicle for organizational development to ensure future competitiveness. However, despite the extensive body of research in recent decades, significant gaps can be observed between the understanding of the phenomenon M&A in the literature and the importance of M&A activities in practice. Heterogeneous perspectives from different schools of thought, contradictory findings and controversies, and changing economic environments make M&A research a complex endeavor and highlight the need for integrative approaches and holistic perspectives. This paper takes a holistic view of M&A research to map interrelationships among key documents, authors, institutions, and countries; trace the evolution of M&A research over time; and suggest avenues for future research to expand the boundaries of M&A scholarship. For this purpose, a sample of 580 articles from 9 leading management science journals was examined bibliometrically, including 42,630 citations and 18,734 unique references for the years 1963–2019.     

Determinants of short-term value creation for the bidder: evidence from France

This paper analyses bidder short-term returns of 58 takeover bids that occur between 1997 and 2005 on the French market. Furthermore, the determinants of this performance are examined to improve understanding of the sources of value creation or destruction arising from M&A. This study reports that M&A are typically friendly, horizontal transaction, and relate to the entire target capital. The event study methodology is used to estimate bidder value creation. Three findings are shown in this study. First, we find strong evidence that the announcement of a takeover bid generates significant, high returns for the bidder with prebid blockholder position in the target (toehold) versus the bidder without toehold. In this case, there is a strong presumption that the synergies’ motive is the prime reason for the offer. Second, these results show that bidders with low potential growth positively influence share price around the bid announcement. In addition, the growth profile of the target is associated with value creation for the bidder.