The complexity of post‐mergers and acquisitions reorganization: Integration and differentiation

Abstract

Research SummaryThis article applies a mixed‐method approach to explore the complexities of post‐mergers and acquisitions (M&A) integration processes. Extant literature provides significant insights regarding the impact of task and human integration and their influence on post‐integration processes. However, the literature often fails to differentiate between subelements of these two dimensions. This article investigates task and human integration in a cross‐border M&A aimed at efficiency and innovativeness. We highlight the importance of a clear distinction between two subelements of task integration (product harmonization and structural integration) and show that different interorganizational contexts matter. Consequently, we propose a conceptual framework based on two contextual characteristics—source of synergy and choice of location—suggesting that different integration approaches should be applied simultaneously in different contexts of the same post‐M&A organization.Managerial SummaryDue to the complexity of the post‐M&A integration process, organizing and managing such a process is a challenge to most practitioners. Understanding how to manage different integration dimensions increases the need for prioritization in order to bypass a one‐size‐fits‐all initiative. We suggest that managers should apply a differentiated postintegration approach, depending on specific organizational contexts. A product‐focused approach seems to fit best in a context where target and acquirer remain working in separate locations, but on similar products. A structure‐focused approach is recommended when target and acquirer remain separated, but work on complementary products. Finally, a people‐focused approach is proposed when target and acquirer are colocated.

Hyper-project portfolio management: post-merger project portfolios

“…Structural integration and synergy play a critical role in a post-merger. Besides, the literature emphasizes the gap between the desired and unpleasant levels of integration and synergy in post-mergers (Bodner and Capron, 2018;DePamphilis, 2019;Garzella et al, 2017;Jeong, 2021;van Oorschot et al, 2022;Tarba et al, 2017;Teerikangas and Thanos, 2018). This study accentuates strategic fit, knowledge transfer, economic performance, integration costs, resource complementarity and performance orientations for structural integration.…”

“…Besides, the literature emphasizes the gap between the desired and unpleasant levels of integration and synergy in post-mergers (Bodner and Capron, 2018; DePamphilis, 2019; Garzella et al. , 2017; Jeong, 2021; van Oorschot et al. , 2022; Tarba et al.…”

Complexity and multinationals

“…Dzikowska et al (2023) point out that this can often be observed in the form of greater internal differentiation through the proliferation of heterogenous subsidiary units. International expansion is often done through cross‐border mergers and acquisitions, which, as shown by van Oorschot et al (2022), imply intricate post‐acquisition integration processes. Of course, MNCs develop capabilities to cope with the added challenges and explore strategies that suitably match their resources and distinct advantages.…”

“…Internal structural complexity relates to complexities such as the interdependencies and coordination requirements between organizational tasks and activities within and across countries. In this respect, van Oorschot et al (2022) investigate the complexity of post-merger and acquisition (M&A) reorganization. Using a mixed-methods approach to a large acquisition in the shipping industry, the authors emphasize the distinction and challenge of task and human integration and propose a conceptual framework to understand post-M&A integration based on the primary source of synergy (complementary vs. similarity) and location of target and acquirer (separated vs. collocated).…”

“…For example, the literature on subsidiary evolution highlights how subsidiaries may evolve along many trajectories that may or may not be aligned with their original mandates (Birkinshaw, 1996; Birkinshaw & Hood, 1998). The integration of mergers and acquisitions is also notoriously characterized as a complex process (Birkinshaw et al, 2000; Colman & Grøgaard, 2013; Cording et al, 2008; see also van Oorschot et al, 2022).…”