Acquiring Managers’ Intent and Actions in Acquisition Implementation

Abstract:     
Based on researchers’ observations of the degree of relatedness or interdependence in a business combination, most past corporate strategy literature has assumed that managers try to achieve certain goals, i.e. the pursuit of economic synergies. Based on that assumption, theory predicts that certain designs and implementation actions should ensue. In this paper, we directly address and measure managers’ goals in the context of acquisitions. We theorize and empirically test the effect of different acquisition goals (efficiency and knowledge) on two distinct dimensions of acquisition implementation, namely, the acquirer’s effort at involving target employees and at cross-fertilization. We offer alternative hypotheses about the impact of efficiency intent on acquisition implementation: whereas past literature argues that the pursuit of efficiency should lead acquiring managers to consolidate operations while not involving target employees, we claim instead that efficiency may require certain effort at involving target employees and might benefit from cross-fertilization. Further, we claim that knowledge intent requires substantial and even greater effort at target involvement and cross-fertilization than the pursuit of efficiency. We test our model in a sample of 85 U.S. Midwest acquisitions. We find mixed support for our hypotheses. Counter to existing acquisition research, we find that efficiency pursuit prompts acquiring managers to exert substantial effort to involve target personnel and to cross-fertilize. However, we do not find support that knowledge intent has a significant impact on implementation actions. Our paper contributes to the acquisition, implementation and knowledge literatures, as well as to corporate strategy and design research broadly.

Number of Pages in PDF File: 43

Keywords: acquisition, intent, goals, efficiency, knowledge, implementation, integration, participation, design

working papers series