How Achieving the Dual Goal of Customer Satisfaction and Efficiency in Mergers Affects a Firm's Long-Term Financial Performance

Swaminathan, Vanitha, Christopher Groening, Vikas Mittal and Felipe Thomaz (2013). "How Achieving the Dual Goal of Customer Satisfaction and Efficiency in Mergers Affects a Firm's Long-Term Financial Performance", Forthcoming

14 Pages Posted: 12 Nov 2013

See all articles by Vanitha Swaminathan

Vanitha Swaminathan

University of Pittsburgh

Christopher Groening

University of Missouri at Columbia - Department of Marketing

Vikas Mittal

Rice University

Felipe Thomaz

University of Oxford - Said Business School

Date Written: 2013

Abstract

This article investigates how engaging in a merger moderates the joint impact of a firm’s achievement of dual goals of customer satisfaction and firm efficiency on a firm’s long-term financial performance. Many prominent firms grow through mergers. Recent examples in the services context include the merger between Toronto-Dominion Bank and Canada Trust, and the merger between Continental and United Airlines. Our results show that joint achievement of customer satisfaction and efficiency is beneficial in merger contexts, but not in nonmerger contexts. We investigate the moderating role of mergers using a longitudinal panel of 429 observations across multiple firms and industries. These results suggest that merging firms should not take a myopic perspective of only wresting efficiencies (as the finance literature suggests). Rather, merging firms should focus on simultaneously improving customer satisfaction and improving efficiency to maximize long-term firm value.

Keywords: merger, dual emphasis, customer satisfaction, efficiency, financial performance, firm performance

Suggested Citation

Swaminathan, Vanitha and Groening, Christopher and Mittal, Vikas and Thomaz, Felipe, How Achieving the Dual Goal of Customer Satisfaction and Efficiency in Mergers Affects a Firm's Long-Term Financial Performance (2013). Swaminathan, Vanitha, Christopher Groening, Vikas Mittal and Felipe Thomaz (2013). "How Achieving the Dual Goal of Customer Satisfaction and Efficiency in Mergers Affects a Firm's Long-Term Financial Performance", Forthcoming, Available at SSRN: https://ssrn.com/abstract=2352946

Vanitha Swaminathan

University of Pittsburgh ( email )

135 N Bellefield Ave
Pittsburgh, PA 15260
United States

Christopher Groening

University of Missouri at Columbia - Department of Marketing ( email )

College of Business
Columbia, MO 65211
United States

Vikas Mittal (Contact Author)

Rice University ( email )

6100 South Main Street
250 McNair
Houston, TX 77005-1892
United States

Felipe Thomaz

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain
07850514010 (Phone)
OX2 7QG (Fax)

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