Information Technology Implications in Corporate Mergers, Acquisitions, and Demergers Público
Fontaine, Astrid (2012)
Abstract
Mergers, acquisition, and demergers are common elements of
corporate restructuring and renewal. During this dynamic process,
companies alter themselves by realigning resources. Corporate
change requires changes in information technology (IT), like the
set-up of new IT operating environments. Prior research has
investigated IT integration following mergers or acquisitions.
Little is known about the process of IT dis-integration in the
context of corporate demergers. This initial study develops a
process model of IT dis-integration centered on a representative
in-depth case study, identifying three phases and the impediments
that threaten successful outcomes. The initiation phase involves
secrecy and limited experience; the closing phase involves time
pressure, tension, and fear among employees; and the transition
phase involves lack of urgency, loss of knowledge, and unforeseen
uncertainties.
Corporate restructuring and renewal depend on access to external
competitive resources, which commonly motivate mergers and
acquisitions. This is especially true in the IT industry, where
speed of innovation leads to rapid knowledge depreciation and
successful acquisition of external knowledge is important.
Knowledge within acquired firms can be codified and easily
transferred; however, competitive advantage often lies in
individual-level knowledge residing within employees from the
acquired firms. Academic research has identified the importance of
retaining these employees;nevertheless, it remains unclear what
level of retention is associated with technology acquisition
success. This study applies a computational simulation to identify
the steepest increase in acquiring firms' knowledge within the
first forty percent of retained employees from acquired firms,
suggesting a decrease in marginal utility.
Retention level is, however, not only a decision for the acquiring
firm. Employees can choose whether to stay or seek employment
elsewhere. This study attempts to understand if and why employees
from acquired firms stay after technology acquisitions. Analysis of
archival data indicates that less than twenty-five percent of
patent inventors from acquired firms remain with the acquiring
firm. Using job embeddedness as a theoretical framework identifies
that inventors are more likely to stay when the acquired and
acquiring firms are similar in regard to ownership structure.
However, hypothesized success due to prior relationships between
firms and geographical proximity is not supported.
Table of Contents
Table of Contents
Overview...1
Essay 1: Corporate Demerger: A Process Perspective on
Information Technology Dis-
integration...11
Introduction...11
Background: Demerger, IT Dis-integration, Process
Theory...15
Demerger...15
IT Dis-integration in Demerger...17
Process Theory...19
Research Methodology...22
Research Context and Site Selection...23
Data Collection...24
Data Analysis...28
Case Analysis...31
Antecedents...34
Phase 1...35
Phase 2...43
Phase 3...49
Completion of IT Dis-integration in Three Waves...58
A Process Model of IT Dis-integration...62
Antecedent: Demerger Decision and Information Technology
Environment...66
Phase 1 - Initiation...68
Phase 2 - Closing...72
Phase 3 - Transition...75
Completion of IT Dis-integration in Waves...80
Discussion...82
Implications...84
Limitations and Future Research...86
Conclusion...87
Essay 2: A Computational Modeling Approach to Understanding the
Dynamics of
Knowledge Gain in Technology Acquisitions...89
Introduction...89
Theory...93
Knowledge...93
Organizational Learning...95
Technology Acquisitions...98
Model...103
March's Model of Organizational Learning...104
Knowledge-Acquisition-Model (KAM)...109
Computational Simulation and Results...115
Discussion...123
Limitations...125
Implications...126
Future Research...128
Conclusion...129
Essay 3: Knowledge as the Motive of Technology Acquisitions: Can
Firms Retain the
Acquired Knowledge?...132
Introduction...132
Theory and Hypotheses...137
Technology Acquisitions...137
Knowledge and Knowledge-based View of the Firm...139
Human Resources in Mergers and Acquisitions...141
Innovators from Acquired Firms...143
Voluntary Turnover...144
Job Embeddedness - Links...145
Job Embeddedness - Fit...146
Job Embeddedness - Sacrifice...147
Methods and Data...149
Empirical Context...149
Sample Data...150
Measures...151
Model Specification..158
Results...160
Descriptive Statistics...160
Hypothesis Testing...163
Robustness...167
Discussion...168
Implications for Theory...172
Implications for Practice...173
Limitations and Future Research...174
Conclusion...175
Appendix...176
References...178
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