Post Merger and Acquisition Innovation and Performance: Implications from Structural Choices and Knowledge-Based Theory

Abstract

This study addresses the research question of how the post-acquisition structures of structural integration and autonomy affect Merger and Acquisition (M&A) performance and New Product Development (NPD) performance within knowledge-based theory. Achieving the following research objectives: (1) to provide explanations about the roles of exploitation innovation and exploration innovation in the relationships between structural integration and autonomy and M&A and NPD performance; and (2) to examine the roles of knowledge transfer and knowledge sharing in the relationships between structural integration and exploitation innovation and between autonomy and exploration innovation, this study provides innovation-based explanations about a post-acquisition mechanism of M&A success and knowledge-based explanations about post-acquisition innovation. Therefore, this study contributes to existing literature on post-acquisition innovation and cross-border M&As within knowledge-based theory.
This study adopted quantitative methodology and a survey method to make generalisation about findings from samples to a population and achieve primary data on acquiring firms’ behaviour and attitudes towards their most recent cross-border M&A, which would not be available as secondary data. Designing a survey in an online-format, a cross-sectional form, and a closed-question format, this study conducted rigorous data analysis and enhanced the variation and generalisability of research findings.
In order to confirm the accuracy of survey measures and statements, the survey was pilot tested in April 2015 by six academics whose work was cited in the survey questions and an academic at Durham University Business School who had reviewed my progression of PhD study. Sending a pre-notification one week before sending a survey link, a data-collection process started in June 2015. Subsequently, sending two reminders at two intervals of two weeks, the data collection finished in December 2015. Therefore, the whole data-collection process from conducting the pilot study to sending the survey link and two survey reminders occurred between April 2015 and December 2015.
The survey targeted those UK acquiring firms who purchased a non-UK acquired firm between January 2012 and July 2015 with a 100% full equity stake. Moreover, the survey was sent to the senior-level managers of the UK acquiring firms, who were the most knowledgeable informants about post-acquisition implementation and M&A outcomes. While data collection started in late June 2015, I added into the full survey any company that had completed a cross-border M&A by the end of June 2015 (i.e., the start of July 2015). They were added into the data collection effort in July 2015 as part of the final sample. Therefore, as a result of survey invitations to 593 firms, I received total 143 responses, which represented a response rate of 24.1%. The survey data collected was tested using regression and with the PROCESS macro in SPSS for further examining indirect (mediation) effects.
It was observed that structural integration affected M&A and NPD performance via exploitation innovation and affected exploitation innovation via knowledge transfer from an acquiring firm to an acquired firm and knowledge sharing. On the other hand, there was no evidence of autonomy as a determinant of M&A and NPD performance. Specifically, it was found that autonomy affected neither M&A performance nor NPD performance via the mediating variable of exploration innovation. Moreover, autonomy affected exploration innovation via neither knowledge transfer nor knowledge sharing. No direct effects of autonomy on M&A and NPD performance were discovered either.