Mergers & Acquisitions as an Innovation Strategy: What are the critical integration challenges when pursuing innovation benefits from an acquisition?

Details

Supervisors

Gailly, Benoît

Faculty

Louvain School of Management

Degree label

Master [120] : ingénieur de gestion, à finalité spécialisée

Abstract

This thesis examines what makes post-acquisition integration difficult when a firm is specifically pursuing innovation benefits, taking the acquisition as given and asking which of the integration challenges that follow it are critical. It focuses on the target's knowledge, what it knows and can do, as the channel through which the acquirer pursues the innovation benefit. Drawing on the post-merger integration review of Graebner et al. (2017) and on the tacit and codified knowledge of Kogut and Zander (1992), it builds a two-by-two matrix. The matrix crosses two within-deal integration processes, strategic and sociocultural, with the type of knowledge pursued, tacit or codified. Two conditions of the acquisition set the context in which these challenges arise, the relatedness of the two firms and the acquirer's prior acquisition experience. The four cells of the matrix are then populated from the reviewed literature. The framework is confronted with eight semi-structured interviews with practitioners who have led or advised on acquisitions. These were conducted under an earlier research question and are re-analysed as supplementary secondary analysis. Each condition and each cell is reported in the same terms: what the interviews confirm, partially confirm, contradict, do not mention, and add. The confrontation is mainly one of confirmation. The accounts in which respondents describe the innovation benefit as being lost or threatened revolve around integration challenges where knowledge lives in people, resulting in the loss of the people who possess the acquired capability due to lack of preserved autonomy or culture. The respondents give two explanations for this. First, the innovation depends on those people's continued capacity, which integration threatens. Second, the acquirer lacks the very capability it is buying, and is therefore poorly equipped to absorb that capability once the deal is done. Challenges specific to integrating knowledge that can be written down and transferred drew almost no practitioner material, with only one account touching them, which is reported as a limit of the evidence rather than as a finding. The thesis contributes a framework assembled from published work and a systematic confrontation of it with practitioner accounts, indicating where the difficulty concentrates when innovation is pursued. The contribution is deliberately bounded, and the pattern it identifies invites testing against a wider body of cases with an instrument that addresses the type of knowledge pursued directly.