Integration of international mergers and acquisitions: test of a new paradigm

An extensive body of literature has investigated financial and strategic variables as predictors of merger and acquisition (M & A) performance without finding clear relationships. This includes a meta-analytic study that recommends the use of other variables that may help predict M & A performance (King et al. 2004). Despite this vast body of research, the key factors of M & A success and the reasons why so many M & A fail remain poorly understood (Stahl et al. 2005). Studies of the financial and strategic aspects of M & A generally focus on the pre-merger stage, although all the value creation in an M & A takes place after the deal, and it hinges on the ability of the combined firms to effectively integrate their operations (Haspeslagh and Jemison 1991; Weber and Fried 2011a). A central dilemma in managing post-merger integration is the decision about whether to integrate the newly acquired organization by traversing its structural boundaries and changing its culture, and what degree of autonomy should the acquired management be granted. Such intrusion may have a detrimental effect on M & A, including the departure of key talents and executives (Cannella and Hambrick 1993; Lubatkin et al. 1999), productivity losses in the technical core (Paruchuri et al. 2007), innovation disruption in technology acquisition (Puranam et al. 2006; Ranft and Lord 2002), executive behavior (Weber et al. 1996), shareholder values (Chatterjee et al. 1992), integration effectiveness, and return on assets (Weber 1996).