Mergers and Acquisitions: Creating Integrative Knowledge (Strategic Management Society)

288 Pages·2004·1.18 MB·English

by  Amy L. Pablo

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MERGERS AND ACQUISITIONS
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Strategic Management Society Book Series
The Strategic Management Society Book Series is a cooperative effort between the
Strategic Management Society and Blackwell Publishing. The purpose of the series is to
present information on cutting-edge concepts and topics in strategic management
theory and practice. The books emphasize building and maintaining bridges between
strategic management theory and practice. The work published in these books generates
and tests new theories of strategic management. Additionally, work published in this
series demonstrates how to learn, understand, and apply these theories in practice. The
content of the series represents the newest critical thinking in the field of strategic man-
agement. As a result, these books provide valuable knowledge for strategic management
scholars, consultants, and executives.
Published
Strategic Entrepreneurship: Creating a New Mindset
Edited by Michael A. Hitt, R. Duane Ireland, S. Michael Camp, and Donald L. Sexton
Creating Value: Winners in the New Business Environment
Edited by Michael A. Hitt, Raphael Amit, Charles E. Lucier, and Robert D. Nixon
Strategy Process: Shaping the Contours of the Field
Edited by Bala Chakravarthy, Peter Lorange, Günter Müller-Stewens, and Christoph
Lechner
The SMS Blackwell Handbook of Organizational Capabilities: Emergence, Development
and Change
Edited by Constance E. Helfat
Mergers and Acquisitions: Creating Integrative Knowledge
Edited by Amy L. Pablo and Mansour Javidan
Forthcoming
Strategy in Transition
Edited by Richard Bettis
Restructuring Strategy: New Networks and Industry Challenges
Edited by Rene Abate, Karel Cool, and James Henderson
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Mergers and Acquisitions
Creating Integrative Knowledge
Edited by
Amy L. Pablo
Mansour Javidan
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© 2004 by Blackwell Publishing Ltd
except for editorial material and organization © 2004 by Amy L. Pablo and Mansour Javidan
350 Main Street, Malden, MA 02148-5020, USA
108 Cowley Road, Oxford OX4 1JF, UK
550 Swanston Street, Carlton, Victoria 3053, Australia
The right of Amy L. Pablo and Mansour Javidan to be identified as the Authors of the
Editorial Material in this Work has been asserted in accordance with the UK Copyright,
Designs, and Patents Act 1988.
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical, photocopying,
recording or otherwise, except as permitted by the UK Copyright, Designs, and Patents Act
1988, without the prior permission of the publisher.
First published 2004 by Blackwell Publishing Ltd
Library of Congress Cataloging-in-Publication Data
Mergers and acquisitions : creating integrative knowledge/edited by
Amy L. Pablo and Mansour Javidan.
p. cm. – (Strategic Management Society book series)
Includes bibliographical references and index.
ISBN 1-4051-1623-4 (cloth : alk. paper)
1. Consolidation and merger of corporations. I. Pablo, Amy L.
II. Javidan, Mansour. III. Strategic Management Society. IV. Series.
HD2746.5.M456 2004
658.1(cid:2)62–dc22 2003020736
A catalogue record for this title is available from the British Library.
Set in Galliard 10/12
by Newgen Imaging Systems (P) Ltd, Chennai, India
Printed and bound in the United Kingdom
by TJ International, Padstow, Cornwall
For further information on
Blackwell Publishing, visit our website:
http://www.blackwellpublishing.com
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Contents
List of Figures ix
List of Tables x
List of Contributors xi
Introduction xiv
Amy L. Pablo and Mansour Javidan
Part I M&A Performance
1 The Secrets of Merger and Acquisition Success:
A Co-Competence and Motivational Approach
to Synergy Realization 3
Rikard Larsson, Kenneth R. Brousseau, Michael J. Driver,
Patrick L. Sweet
Introduction 3
Synergy Factors that Transcend the Performance Controversy 5
A Co-Competence and Motivational Approach to Acculturation
in M&A 11
A Co-Competence and Motivational Approach to
Communication in M&A 11
A Co-Competence and Motivational Approach to Career
Development in M&A 14
Conclusion 16
2 Mind the Gap: Key Success Factors in Cross-Border
Acquisitions 20
Noa Erez-Rein, Miriam Erez, Shlomo Maital
Introduction 20
Review of the Literature 22
Method 26
Findings 29
Discussion 37
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vi Contents
Part II M&A Strategy
3 Cross-Border Mergers and Acquisitions:
Challenges and Opportunities 45
Michael Hitt, Vincenzo Pisano
Introduction 45
Opportunities 46
Challenges in Cross-Border Acquisitions 49
Making Cross-Border Mergers and Acquisitions Work 52
Conclusions and Future Research 55
4 Firm Competitiveness and Acquisition: The Role
of Competitive Strategy and Operational Effectiveness
in M&A 60
Paul A. Mudde, Thomas Brush
Introduction 60
Previous Empirical Research 62
Theory and Hypotheses Development 65
Model and Sample Description 69
Results 71
Discussion and Conclusions 75
5 Acquisition of Entrepreneurial Firms: How Private
and Public Targets Differ 82
Jung-Chin Shen, Jeffrey J. Reuer
Introduction 82
Background Literature 84
Theory and Hypotheses 86
Methods 90
Results 95
Discussion 97
Part III Merger Implementation and Integration
6 The Role of the Corporate Academy in Mergers
and Acquisitions 105
L. Todd Thomas, Shlomo Ben-Hur
Introduction 105
Corporate Academies in M&A 106
Conclusion 111
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Contents vii
7 Managing the Acquisition Process: Do Differences
Actually Exist Across Integration Approaches? 113
Kimberly M. Ellis
Introduction 113
Integration Approaches 115
Purpose of Study 119
Methodology 120
Results 123
Discussion 126
Conclusion 129
Part IV M&A Knowledge Transfer and Learning
8 Mergers and Acquisitions in Technology-
Intensive Industries: The Emergent Process of
Knowledge Transfer 135
Danna Greenberg, P.J. Guinan
Introduction 135
Literature Review 136
Methodology 140
Results 142
Discussion 151
9 Does It Pay to Capture Intangible Assets Through
Mergers and Acquisitions? 156
Asli Musaoglu Arikan
Theoretical Background and Hypotheses 157
Methodology 160
Results 169
Discussion 174
Part V Culture and Leadership in M&As
10 Leadership and the M&A Process 181
Sim B. Sitkin, Amy L. Pablo
Introduction 181
Attention to Leadership in the M&A Literature 182
A Leadership Framework Applied to the M&A Process 186
Discussion 191
Conclusion 191
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viii Contents
11 The Role of CEO Charismatic Leadership in the
Effective Implementation of Mergers and Acquisitions 194
David A. Waldman
Introduction 194
CEO Charismatic Leadership in an M&A Implementation 196
Organizational and Cultural Integration 199
Conclusions 209
12 The Impact of Perceived Uncertainty on Culture
Differences in the Post-Acquisition Process to
Strategy Realization 212
Vera Hartog
Introduction 212
Impact of Culture on the Post-Acquisition Integration Process 213
Hypotheses 219
Methodology 219
Results 224
Discussion and Implications 226
Part VI Research in M&As
13 When We Study M&A, What Are We Learning? 235
Joseph L. Bower
Introduction 235
Research on M&A 238
Conclusion 241
14 Where We’ve Been and Where We’re Going 245
Mansour Javidan, Amy L. Pablo, Harbir Singh,
Michael Hitt, David Jemison
Where We’ve Been… 245
Where We’re Going… 252
Index 262
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Figures
1.1 A study of synergy realization in 61 M&As 4
1.2 Different sources of employee resistance 10
1.3 Decision style matrix 13
1.4 Co-competence and motivational division of integration work 15
1.5 A framework for synergy realization through a co-competence
andmotivational approach 17
2.1 Frequencies of gap category: differences across the three cases 32
2.2 Comparison of companies by gap categories 33
2.3 Frequency of gap categories 33
2.4 Key success factors by gap category 34
2.5 The generated model: relationship between KSFs, integration,
andIM&Asuccess 38
7.1 Integration approaches 116
8.1 Conceptual framework 143
9.1 Average monthly abnormal returns to the acquirers with
announcementyearof 1988 170
9.2 Average monthly abnormal returns to the acquirers with
announcementyearof 1989 170
9.3 Average monthly abnormal returns to the acquirers with
announcementyearof 1990 170
9.4 Average monthly abnormal returns to the acquirers with
announcementyearof 1991 171
9.5 Average monthly abnormal returns to the pooled acquirers
withannouncement years in 1988–1991 171
10.1 Application of leadership to the M&A process 185
10.2 Six-dimension integrative model of leadership 186
11.1 A model of CEO charismatic leadership and M&A
implementationeffectiveness 198
12.1 Specific framework for investigation 218
12.2 Radar graphs depicting the bandwidth of the culture dimensions
alongtheintegration approaches (n(cid:3)802) 225
14.1 M&A process framework 253
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Tables
4.1 Hypothesized relationships between competitiveness and
acquisitionsynergies 71
4.2 Descriptive statistics and Pearson correlation coefficients 72
4.3 Results for OLS regression models 1, 2, and 3 73
5.1 Sectoral distribution of public and private targets 91
5.2 Descriptive statistics and correlation matrix 94
5.3 Logistic regression estimates 96
7.1 Critical process dimensions of each integration approach 119
7.2 Profile of integration approaches used for content analysis 123
7.3 ANOVA results of differences in process dimensions across
integrationapproaches 125
8.1 Descriptive information regarding case studies 141
8.2 Data description 141
8.3 Case comparison 147
9.1 Variables 166
9.2 Descriptive statistics 167
9.3 Correlation matrix for target variables 167
9.4 Correlation matrix 168
9.5 Test of median equality for the 60-month average buy-and-
holdabnormalreturns 171
9.6 Descriptive statistics for the average monthly buy-and-hold
abnormalreturns(BHAR ) 172
j,t
10.1 Two samples of M&A key issues 182
10.2 Key M&A process issues and related leadership dimensions 187
12.1 Culture differences in the Wegener acquisition of VNU
Newspapers 216
12.2 Matrix of integration approaches and subsequent levels
of uncertainty 217
12.3 Demographic characteristics of the sample 220
12.4 Integration approaches and vignettes 221
12.5 Dimensions of culture, content and questions 223