Human resources retention and knowledge transfer in mergers and acquisitions

Abstract

Mergers and acquisitions can be a mechanism used by firms to access innovative knowledge, including intellectual property, and to strengthen and expand their core capabilities. In the mergers and acquisition context, the creation of value depends on the transfer of capabilities and knowledge being carried out successfully during the post-acquisition integration process. The paper adopts this view. It examines the role of the top management and personnel who hold knowledge and skills linked to the capability of the acquired firm considered most valuable by the acquiring firm in the transfer of knowledge from the acquired firm to the acquiring firm. The paper also examines whether the impact of the retention of the acquired firm's high-value human resources (HVHR) on knowledge transfer is moderated by the degree of embeddedness of the knowledge to be transferred. Furthermore, the study identifies the factors that influence the retention of the acquired firm's HVHR. We tested the model using data from a sample of 57 domestic, related, friendly Spanish mergers and acquisitions belonging to a wide variety of industries. The results support the notion that the more embedded the knowledge, the greater the impact of the acquired firm's HVHR retention on the knowledge transfer. They also show that the autonomy granted to the acquired firm, the frequency of use of rich media among the personnel of both firms, and the acquired firm's pre-acquisition profitability are factors encouraging the acquired firm's HVHR to remain. The study contributes to the literature on knowledge transfer in mergers and acquisitions by highlighting the relevance of retention of the acquired firm's HVHR for knowledge transfer, as well as demonstrating the importance of taking into consideration the nature of the knowledge to be transferred. It also contributes to the literature on the implementation process in mergers and acquisitions by identifying factors available to managers to favor HVHR continuity in the acquiring firm or the one resulting from the merger.

Knowledge loss induced by organizational member turnover: a review of empirical literature, synthesis and future research directions (Part II)

“…tacit/explicit, have attracted enough attention to be tested with respect to KLT outcomes and choice of coping or preventive mechanisms, other knowledge dimensions, such as quality (Jackson, 2010), relevance, timeliness (Parise, 2007), "knowwhat", "know-how", "know-when", "know-why" and relational "know-whom" (Alavi & Leidner, 2001) are underexplored and, hence, require more attention by KLT research. Furthermore, as departing employees' network embeddedness is found to impact the effects of KLT on organizational performance (Parise et al, 2006;Parise, 2007), departing employees' roles and positions in both intra-and interorganizational knowledge networks Investigating relative importance of various HRM practices in preventing KLT Haesli & Boxall (2005) Exploring possible fits between various KM and HRM approaches Relationships Castro-Casal et al (2013), Levallet & Chan (2019), Martin-Perez & Martin-Cruz (2015), Martins & Meyer (2012), Massingham (2008Massingham ( , 2018, Massingham & Massingham (2014), Rao & Argote (2006), Sumbal et al (2017), Yang & Wan (2004) Testing relationships between antecedents, outcomes and moderating/mediating factors suggested by the reviewed studies and presented in the organizing framework (Figure 1) Establishing and testing relationships between the loss of a particular knowledge type and specific negative outcomes of KLT (e.g. between the loss of relational knowledge or "know-whom" and organizational learning and innovation capabilities) Testing the effects of organisational factors (e.g.…”

The acquisition of capabilities: How firms use dynamic and ordinary capabilities to manage uncertainty

“…The DC perspective requires a firm to assess and reassess its environment and anticipate and adapt to rapid change in order to maintain competitive advantage (Teece, 2014). Therefore, this perspective may be particularly useful in determining (and perhaps predicting) the probable outcomes of an acquisition to gain new knowledge (e.g., Castro-Casal, Neira-Fontela, & Álvarez-Pérez, 2013), or to learn a new product or capability outside a firm's current knowledge base (Dwyer & Kotey, 2016). Along the lines of these types of theory applications to explain activities, relationships, and outcomes in the M&A context, we seek to further examine and compare two categories of capabilities, dynamic and ordinary.…”

“…Research on DC (Teece & Pisano, 1994;Teece, Pisano, & Shuen, 1997) provides useful insights for how organizations adapt and manage strategic changes such as through M&A activity (Helfat et al, 2007). For example, an organization's M&A goal may be to extend its knowledge base to new areas by acquiring unique resources or capabilities to provide a new source of competitive advantage (Barney, 1991;Castro-Casal, Neira-Fontela, & Álvarez-Pérez, 2013) depending on the type of industry environment (Helfat & Peteraf, 2003;Teece, Pisano, & Shuen, 1997). In comparison with TCE where opportunism is a central concept and is especially important for assessing economic activity that involves transaction-specific investments in human and physical capital (Williamson, 1979), DC helps explain mixed performance outcomes of unrelated acquisitions (e.g., Bergh, 1997), where the sole purpose is not for gaining external financial resources (Chatterjee & Wernerfelt, 1991).…”

“…Additional considerations in the assessment of organizations performing dynamic and ordinary capabilities acquisitions include taking into account variables like similar managerial style (Helfat & Martin, 2015) or knowledge-based resources (Castro-Casal, Neira-Fontela, & Álvarez-Pérez, 2013;Riviezzo, 2013). In this case, the combination of similarity and complementarity aligns with gaining operational efficacy (as defined by TCE) and the addition of new resources and capabilities described by DC (and RBV).…”

Is high-quality knowledge always beneficial? Knowledge overlap and innovation performance in technological mergers and acquisitions

“…Previous literature on knowledge transfer has argued that the higher the quality of the knowledge, the more complexly it is embedded within a firm’s knowledge reservoirs, that is, people, tasks, tools, and their networks (Argote & Ingram, 2000; Argote & Miron-Spektor, 2011). This complexity of high-quality knowledge is the source of its inimitability and asset specificity (Kogut & Zander, 1993; Castro-Casal, Neira-Fontela, & Álvarez-Pérez, 2013). In addition, the ambiguity caused by the tacitness of the knowledge components makes knowledge transfer difficult, especially when there is no overlapped routine compatible with both actors of learning (Uygur, 2013).…”