A Corporate Level Perspective on Acquisitions and Integration

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.

Organizational adaptation in an economic shock: The role of growth reconfiguration

“…Growth can lower performance when the cost of implementation exceeds the expected gains from the increased scale and scope of operations (Jemison and Sitkin, ; Trautwein, ). The cost of implementation transcends financial payments (Penrose, ), and can arise from unexpected opposition from employees (Schweiger and Denisi, ; Walsh, ) or from incompatible organizational processes and systems (Chakrabarti and Mitchell, ; Prescott and Visscher, ; Yunker, ). Such constraints may lengthen the time it takes for firms to implement growth, or require that firms reverse the growth process, such as by canceling announced acquisitions (Chakrabarti and Mitchell, ).…”

Characterization and Analysis of Cooperative Mergers and Their Results

“…Post‐merger integration are one of the key elements in the process and have been defined by Chakrabarti and Mitchell () as a process of adaptation in which the acquiring company and the acquired company perform a transfer of competences and work on achieving acquisition goals. This constitutes the most challenging phase during which value creation should be involved, but which may also involve numerous integration problems (Savovic ).…”

“…This phase of the merger is the motor of organizational change and development, and it plays the key role in an overall regeneration strategy. It includes post‐acquisition reconfiguration, redeployment, labour reductions and structural redesigning with the goal of decreasing costs and redundancies (Chakrabarti and Mitchell , Elsass and Veiga ). Faulty integration is a significant cause for merger failures (Shrivastava , Haspeslagh and Jemison , Habeck et al ).…”

“…This, together with a higher turnover (which does in fact happen) would bring about economies of scale and increased profits. The post‐acquisition integration plays a key role in an overall regeneration strategy, and includes post‐acquisition reconfiguration, redeployment, staff cuts and structural redesigning with the goal of decreasing costs and redundancies (Chakrabarti and Mitchell , Elsass and Veiga ).…”

Business transformation in heterogeneous environments: The impact of market development and firm strength on retrenchment and growth reconfiguration

“…Apart from the most immediate challenges associated with the process of retrenchment and reorganization (Cameron et al, 1987), retrenching firms must overcome the disadvantages of smaller size and subsequently grow and recover. Such challenges include the ability to implement the extent of expansions that are necessary to obtain the lower costs of large-scale operations (Penrose, 1959) and overcome challenges of gathering information, selecting acquisition targets, and implementing appropriate postexpansion integration that can in turn disrupt attempts to grow (e.g., Chakrabarti and Mitchell, 2005;Haspeslagh and Jemison, 1991;Zollo and Singh, 2004).…”