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This paper aims to theorize how tacit knowledge influences implementation success in mergers and acquisitions (M & As), and contrasts this with explicit knowledge. Tacit knowledge can be a source of sustained competitive advantage because its lack of codifiability precludes easy appropriation by competitors. However, such non-codifiability also makes it difficult to transfer knowledge within a firm. M & As exemplify this challenge because they are often motivated by opportunities for transferring knowledge. With differing demands for tacit and explicit knowledge across departments (Sales and Operations), the empirical results demonstrate how tacit routine compatibility affects implementation outcomes in different functions.

This research draws from a survey of 86 M & A implementation processes between 1996 and 2002, using seemingly unrelated regression to analyze the predictions.

There is strong empirical support that tacit routine compatibility leads to success in sales but not operations and further support for the differential moderating roles of trustworthiness and integration.

Managers should make implementation choices based on the type of knowledge being transferred and where that knowledge will reside post-integration. Routine compatibility, trustworthiness and integration facilitate knowledge transfer in M & As – but only if applied in the right combinations for the context.

The type of knowledge is a critical distinction for the value of M & A implementation. Furthermore, despite integration receiving significant attention in this literature, trustworthiness, not integration, facilitates successful tacit knowledge transfer in M & As.