The primary purpose of this chapter is to offer a conceptual/theoretical understanding of post-M&A integration rationales and/or actions which pose a challenge to acquired firm…
Abstract
The primary purpose of this chapter is to offer a conceptual/theoretical understanding of post-M&A integration rationales and/or actions which pose a challenge to acquired firm customers in acquisitions of knowledge-intensive firms, and thus trigger M&A value destruction. The approach takes the form of a literature overview and conceptual development. As a step toward developing a more elaborate understanding of a customer-centered perspective, this conceptual study identifies five key factors that may lead to value leakage/destruction for acquirers’ of knowledge-intensive firms. Specifically, it identifies acquisition motive, specific acquired firm employees other than the engineers and scientists, size of the acquired firm customer-base, M&A customer compatibility, and the acquirer’s own customers’ behavior as integration rationales and/or actions which pose a challenge to acquired firm customers. In addition, the chapter offers a theoretical framework that serves as an analytical tool, and can thus be used as a foundation for future empirical work on analyzing acquirers’ destruction of value in knowledge-intensive acquisitions through the neglect of acquired firm’s customers. This study does not claim to have provided exhaustive list of all factors regarding acquirer’s integration rationales and/or actions that influence acquired firm customers. Nonetheless, for researchers seeking to build a more comprehensive framework relating to the impact of acquirer’s integration rationales and/or actions on acquired firm’s customers, this framework may serve as a solid foundation for achieving that goal. For practitioners, this study points to the importance of knowledge held by acquired firm customers and the need to maintain such customer relationships in order to avert acquirer’s post-M&A value destruction. In addition, acquirers may also recognize that post-M&A integration changes required following M&A should not be restricted to only the firm’s internal activities and resource deployment but should extend to how the firm interacts or relates with other external value creation actors. This chapter contributes by highlighting and stimulating a discussion on the important role of acquired firm customers in acquisitions of knowledge-intensive firms in informing our understanding of the sources of M&A value leakage/destruction.
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William Y. Degbey, Shlomo Tarba, Baniyelme D. Zoogah and Cary Cooper
Ahmad Arslan, Ismail Golgeci, Lauri Haapanen, Shlomo Tarba, Cary Cooper and William Y. Degbey
The purpose of this paper is to address the role of legitimacy in internationalization to Africa of a Finnish professional service microfirm, which uses cause-related marketing…
Abstract
Purpose
The purpose of this paper is to address the role of legitimacy in internationalization to Africa of a Finnish professional service microfirm, which uses cause-related marketing (CRM) as the business model.
Design/methodology/approach
The paper consists of a single case study of a microfirm (two employees) originating from Finland, which has successfully internationalized to many African countries. Due to the uniqueness of the context, the authors use semi-structured interviews to collect founders’ insights to the issue being addressed. Moreover, along with interviews, secondary sources related to football talent scouting in Africa are also utilized in the paper.
Findings
The authors found that the case company was established with the aim of helping and uplifting poor African footballers, so the business model is CRM. It has scouted many of them for professional football clubs in Europe. The authors further found that sociopolitical legitimacy plays a major role in dealing with African footballers and local stakeholders, while cognitive legitimacy helped the case firm gain the trust of European football clubs.
Originality/value
Internationalization of microfirms operating in the service sector is a rather under-researched area compared to the internationalization of SMEs and large MNEs. The paper is one of the first to study internationalization of a professional service microfirm involved in scouting football talent in Africa and matchmaking them with European football clubs. It contributes to extant CRM and internationalization literature by being one of the first to analyze a firm whose business model revolves around CRM and discussing specific roles of different kinds of legitimacies needed for internationalization to Africa in this specific service sector.
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William Y. Degbey and Elina Pelto
The purpose of this paper is to illustrate the forms of change that horizontal and vertical mergers and acquisitions (M & As) may evoke in acquired firms’ customer…
Abstract
Purpose
The purpose of this paper is to illustrate the forms of change that horizontal and vertical mergers and acquisitions (M & As) may evoke in acquired firms’ customer networks. M & As have increasingly become a dominant mechanistic growth path,pursued relentlessly by companies with varying attributes. However,acquiring a firm does not automatically imply that the market position of the acquired firm and its networks can be taken over,as conventionally held.
Design/methodology/approach
The approach takes the form of two qualitative interview-based case illustrations.
Findings
The illustrative empirical cases within the context of this study suggest that customer network changes may be rapid and/or radical,and gradual,depending on the specific acquisition type,context and managerial actions following the acquisition. Moreover,the visual simplicity of the network drawing in the post-acquisition network environment of a vertical acquisition type is not equivalent to lesser complexity of managing within the network. Rather,it shows a greater complexity as the M & A induces more direct customer relationships to manage and be managed. The study also shows that connected network changes may cause a revision of a specific industry’s business rules,and the management of these changes is critical for acquisition success.
Research limitations/implications
While the two illustrative M & A cases are deemed practically significant in strategic and social terms within their industry and country settings,further research is required to establish the generalizability of the findings to wider industry and geographical contexts.
Originality/value
This paper contributes to the discussion on the important role of the business network approach in elaborating the understanding of a strategic management event,particularly M & A.
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Joni Salminen and William Y. Degbey
The changing communication environment transforms social media as a source for obtaining competitive intelligence on rival firms through “social espionage.” This conceptual…
Abstract
The changing communication environment transforms social media as a source for obtaining competitive intelligence on rival firms through “social espionage.” This conceptual chapter discusses how the competitive information in the Web, along with the trend of corporate transparency, has created both opportunity and risk for firms in social media. Among the opportunities, we discuss (1) tactical marketing campaigns, (2) encouraging switching behavior, (3) identifying and targeting competitors’ weak points, and (4) learning from their success and failure. On the other hand, we discuss how engaging in social media results in a loss of total control in the dialogue between a firm and its customers and, ultimately, leaves a firm vulnerable to the same opportunistic tactics it may leverage in order to draw benefit from a competitor’s social media presence. Finally, we provide some recommendations aimed at reacting to social espionage in the form of a strategic grid.