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limitations of research methods used can be one of the reasons why the literature provides little
convincing empirical evidence about the advantages of M&A strategy.
The failure of M&A can often be attributed to HR factors such as culture and
management differences, poor motivation, leaving of personnel, and uncertain
long-term goals. Organizational and HR researchers have pointed out that the benefits of acquisition
strategy are not automatically realized, and that the synergy created depends on the
post-acquisition integration
Two different views coexist in the literature regarding whether M&A is a viable
growth strategy. On the one hand, the agency theory and managerial capitalism claim
that M&A can be detrimental to shareholders, customers, and employees. In this view,
it is possible that only top managers benefit from M&A. On the other hand, industrial
economists and the resource-based view suggest that M&A can be an effective tool for
firms to tap into the advantage of scale and scope economies, and to keep
complementary assets under ownership control.
The agency theory perspective is very popular in explaining why firms engage in
ineffective M&A. The agency logic predicts that manager-controlled industrial firms
will pursue conglomerate diversification. A firms managers may benefit from the
increase in firm size in that these firms are less likely to fail and executive pay is often
linked to firm size.
The firm has an incentive to merge or acquire other firms that own complementary resources.
Hagedoorn and Dysters (2002) suggest thatM&A can be one of the alternatives that firms have to
exploit external sources of innovative competencies to protect their core businesses. Hagedoorn and
Dysters (2002) suggest thatM&A can be one of the alternatives that firms have to exploit
external sources of innovative competencies to protect their core businesses.
M&A has been a frequently adapted strategy to improve geographic coverage of
markets, to acquire promising technologies, to reduce costs, and to seek greater scale
By acquiring an existing firm in a market where the acquirer has
little presence, the acquiring firm can expand to new markets and pursue new business
opportunities.
An important factor affecting the success of acquisitions is the top managements
ability to gain employee trust and support for HR investments, while the existing
quality of employee relations seems to be the most important facilitator for
post-acquisition integration.
Since the majority of mergers and acquisitions do not meet expected results, it is
imperative to assess the usefulness of M&A concept as a strategy tool. Our findings
strongly suggest that the usefulness of M&A as a strategy tools depends on the focal
firms human resource capability. Human resource capability serves as the engine for
firms to assimilate effectively acquired firms. That is, M&A strategy can be effective
when the firm has high HR capability and can manage the post-acquisition integration
effectively.
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Mergers and acquisitions (M&As) have attracted researchers for over 40 years. The
interest in this particular means of the strategic repertoire can be attributed to two
characteristics: first, the considerably increasing monetary volumes and the rising
frequency of dealsmakeM&As a risky and highly complex strategic every day challenge,
Second, the influence this way
of achieving external corporate growth has on economies, industries, organizations, as
well as on individuals makes it interesting from a wide variety of academic perspectives.
M&A-related issues have created various and sometimes contradicting points of view.
Manifold criteria for evaluating M&A deals have been created, and numerous factors
apparently influencing the success of anM&A project have been identified,
M&As is considered to prevent a more comprehensive approach,
especially when it comes to the issues of the post-merger integration phase following the
successful closing of a deal.
M&As are a frequently used means in the strategic repertoire of major industrial
corporations and financial institutions. On an aggregated level, the M&A market has
exhibited strongly cyclical behavior with an underlying positive trend (Gaughan, 1999).
At the peaks of the most recent of M&A waves, the value of the worldwide M&A
transactions amounted to about $3.2 trillion in 2000, and about $4.2 trillion in 2007.
M&As affect economies, industries, organizations, as well as individuals
substantially. On a macro level, M&A deals alter markets, industries or even whole econemies.
M&As often trigger dramatic change within individual firms, affecting
organizational structures, individual job environments, and personal circumstances.
The different backgrounds of researchers addressing M&A-related issues have led
to the development of a broad knowledge base with sometimes contradicting
individual findings (Haspeslagh and Jemison, 1991; Cooper, 2001). Manifold criteria for
evaluation have been presented, and numerous factors apparently influencing the
success of an M&A project identified, The terms M&As are used in this paper to
describe differences in the distribution of power between the two formerly independent
organizational entities which are to be combined: mergers shall describe a situation in
which both partners are more or less equal in power, whereas acquisitions are
characterized by one dominant and one subordinated unit.
Reference{Merger dynamics
Using system dynamics for the conceptual
integration of a fragmented knowledge base and authors Switbert Miczka ,
Andreas Groler}