Social capital is not for sale: a supply network perspective on mergers and acquisitions

Abstract

Purpose-Mergers and acquisitions (M&As) often lead to significant changes in the focal supply networks, hence disrupting firm-level relationships. Little is known about the supply network implications of M&As, which can be a major issue especially for firms acquiring competitors that share suppliers, customers and associated resources. Using social capital as a theoretical lens, this research aims to investigate the implications of an acquisition on supply network relationships. Design/methodology/approach-The acquisition of a large truck manufacturer by its competitor is investigated using an exploratory case study methodology. A total of 24 interviews were conducted across 10 companies in the focal supply network with an analysis of financial data. Findings-The findings from the study provide evidence that firms seeking to acquire such relationships cannot directly buy the social capital embedded within those relationships. They identify pre-acquisition characteristics and post-integration factors to understand how the supply network as a whole draws on the structural, cognitive and relational dimensions of social capital to address discrepancies in the merging network. Originality/value-This study depicts an empirically grounded, theory-based account of a post-acquisition supply network integration process, showing how an M&A can drastically impact customer and supplier network relationships. The main contribution of this paper lies in extending our understanding of how social capital cannot be simply transferred from one organisation to another during an M&A. Rather, this work illustrates how social capital in supply networks is transformed by considering the pre-and postacquisition social capital dynamics of the merging networks.

Sustainable supply network structure: Understanding impact of inter-firms’ relations as drivers of supply network complexity

“…A different type of IFR which added to the general multifaceted nature in SSNS has been identified. This is because, as shown by the embeddedness hypothesis and the investigations, the conventional business exchanges in SSNS are inserted in a web of informal social exchanges (Chakkol et al, 2018a) IFR adds to expanding unpredictability in SNC adding to the precursors of SSNS. Kim et al (2015b) have inferred that IFR is one of the facets of the complexity in SSNS and more profound comprehension is expected to beat the complexity nature coming about because of these IFR.…”

“…With regards to SSNS, Chakkol et al (2018a) and Chakkol et al (2018b) have expressed that SSNS have been encountering expanded multifaceted nature through broad IFR. For instance, in SSNS of vehicle producers, a provider may supply parts to a maker, while this maker may simultaneously supply different parts to a similar provider organization.…”

“…Fundamentally, SNC of SSNS is shaped by the network or connections between firms where the combination logically frames a definitive structure, which is simply SN. The connections are additionally referred to in the literature as IFR (Chakkol et al, 2018a;Chakkol et al, 2018b). An IFR represent two hubs (or dyad) and one connection in a network term.…”

“…The firm needs assets from its provider firm, and the provider needs agreements and instalments from the purchaser. Contracts make the SN's Formal Inter-Firm Relation (FIFR) (Chakkol et al, 2018a). FIFR directly affects SNC through ties availability.…”

“…Firms' attributes are responsible for producing sensible and effective decision making. As expressed by Chakkol et al (2018a) and Osman (2018), firms must enlighten another important element responsible for the supply network sustainability (i.e. IFR).…”