The DySIIM model for managing IS integration in mergers and acquisitions

Henningsson, Stefan; Carlsson, Sven

doi:10.1111/j.1365-2575.2011.00374.x

Cited by 39 publications

(49 citation statements)

References 43 publications

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“…Although prior studies (Alaranta & Kautz, 2007;Chao & Lin, 2009;Halonen et al, 2009) have suggested that environmental factors affect platform development, our study enhances this literature by identifying the challenges that result from these factors, which in turn are addressed by strategies used in the focal organization. Our findings also confirm some aspects of the dynamic system of IS integration in M&A situations that was developed by Henningsson & Carlsson (2011). For example, our study highlights how the potential of IS to provide synergy was initially not recognized by the majority of the stakeholders.…”

Section: Discussionsupporting

confidence: 87%

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The roles of contextual elements in post-merger common platform development: an empirical investigation

Jain

Ramesh

2015

European Journal of Information Systems

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With congeneric mergers, which involve firms with interrelated but not identical business lines that develop diverse products and services, a major challenge for organizations is the development of a common platform that fulfills similar business functions across multiple divisions. Through a field study of a postmerger common platform development initiative, we develop a framework that highlights how environmental and organizational contexts shape the process of common platform development (CPD). Our study provides an account of how the focal organization transitioned to a platform-based approach by achieving a balance between stable and flexible aspects of the common platform through negotiations among the divisions acquired through mergers and acquisitions. These negotiations were enabled through various boundary-spanning activities and the guided successive enrichment of boundary objects used in CPD process.

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Section: Discussionsupporting

confidence: 87%

“…This evolution was facilitated by the boundary spanning activities carried out in the platform development process. Thus our study suggests an additional link between synergistic potential and intentions and reactions not included in the DySIIM model (Henningsson & Carlsson, 2011).…”

Section: Discussionmentioning

confidence: 90%

The roles of contextual elements in post-merger common platform development: an empirical investigation

Jain

Ramesh

2015

European Journal of Information Systems

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“…These assumptions are often not valid for transfer of IT capabilities between acquirers and targets in M&A for two reasons. First, the pervasive IT integration challenges and failures observed in M&A integrations indicate that IT capability transfers are difficult and costly (Merali & McKiernan, 1993;Johnston & Yetton, 1996;Wijnhoven et al, 2006;Mehta & Hirschheim, 2007;Henningsson & Carlsson, 2011;Tanriverdi & Du, 2011a, b). A survey by PricewaterhouseCoopers finds that about 83% of acquirers are not able to integrate IT (Shay, 2002).…”

Section: Hypotheses Developmentmentioning

confidence: 97%

“…That is, acquirers can transfer their superior capabilities to targets without having to endure much difficulty or incur significant costs. However, the IS literature on IT M&A integrations indicates that integrating IT capabilities of acquirer and target in M&A is notoriously difficult and costly (Merali & McKiernan, 1993;Johnston & Yetton, 1996;Wijnhoven et al, 2006;Mehta & Hirschheim, 2007;Henningsson & Carlsson, 2011;Tanriverdi & Du, 2011a, b). These difficulties indicate that IT capabilities are often not scale-free in M&A.…”

Section: Introductionmentioning

confidence: 97%

When IT capabilities are not scale-free in merger and acquisition integrations: how do capital markets react to IT capability asymmetries between acquirer and target?

Tanriverdi

Uysal

2015

European Journal of Information Systems

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In mergers and acquisitions (M&A), a primary objective of acquirer is to integrate IT resources of the target with its own. IT M&A integration is assumed to create synergies, which in turn increase shareholder wealth by making the value of the merged firm greater than the sum of the standalone values of the two firms. In this study, we challenge this assumption and argue that IT M&A integration does not always lead to greater value creation. Prior research on IT M&A integrations indicates that IT resources are often not scale-free in M&A: that is, they do not transfer easily and costlessly from an acquirer to its target or vice versa. In fact, IT M&A integration can destroy value rather than create it when IT resources are not scale-free. We theorize about the contingencies under which IT M&A integration can create value for shareholders of acquirers. We test our hypotheses in a sample of 549 M&A transactions between 1998 and 2007. We find that, on average, capital markets react negatively with M&A announcements of acquirers whose IT capabilities are superior relative to those of the targets. The superiority of the acquirer's IT capabilities signals that the acquirer is likely to rip and replace IT resources of the target. This IT M&A integration approach increases risks of disruption to target's operations and revenue growth. Capital markets take such risks into account and reduce the stock price of the acquirer. One contingency that reduces the negative reactions of capital markets is industry relatedness of target. In a same-industry acquisition, an acquirer and its target have similar operating models, competitive dynamics, and regulatory context. Thus, ripping and replacing weaker IT resources of the target with superior IT resources of the acquirer creates expectations of more efficient operation, engenders positive stock price reactions, and increases shareholder wealth. Another contingency that reduces the negative reactions of capital markets is the acquirer's track record in profitable growth. A profitably growing acquirer that has superior IT capabilities increases the confidence of capital markets that it can minimize potential disruption risks of IT integration, continue its profitable growth pattern with newly acquired target, engender positive stock price reactions, and create shareholder wealth. These findings indicate that IT M&A integration does not always lead to greater value creation in M&A. The study makes a contribution by identifying the contingencies under which IT M&A integration creates wealth for acquirer's shareholders.

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“…There is a body of work that has started to explore IS integration in the context of corporate M&A. Some of the findings relevant to the IS discipline include the recognition of the importance of IS integration during mergers (Buck-Lew et al, 1992;McKiernan & Merali, 1995), factors that contribute to the likelihood of successful integration (Stylianou et al, 1996;Robbins & Stylianou, 1999), such as IS integration strategy (Henningsson & Yetton, 2013), the importance of learning and experience (Haleblian & Finkelstein, 1999;, the need for integration methods and tools (Alaranta & Henningsson, 2008;Henningsson & Carlsson, 2011), and the need for alignment between IS strategy and the M&A strategy (Wijnhoven et al, 2006;Mehta & Hirschheim, 2007;Baker & Niederman, 2014). This literature served as the backdrop for this issue.…”

mentioning

confidence: 99%