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How resource information backgrounds trigger post-merger integration and technology innovation? A dynamic analysis of resource similarity and complementarity

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Feiqiong Chen
Feiqiong Chen
Feiqiong Chen
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Qiaoshuang Meng at Dalian University of Technology
Qiaoshuang Meng
Fei Li
Fei Li
Fei Li
  • This person is not on ResearchGate, or hasn't claimed this research yet.
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Abstract and Figures

Overseas mergers and acquisitions (M&A) proposed by companies from emerging economies have been aiming to secure outward technology sourcing from developed countries in order to improve their technology innovation abilities in recent years. This paper proposes a comprehensive analytical framework of post-merger integration’s influence on technology innovation by global game modeling. We show how different resource similarity and resource complementarity backgrounds of the acquirer and target companies can affect post-merger strategies and technology innovation output through multi-stage analysis with an asymmetrical payoff structure. We focus on two main dimensions of post-merger integration, which are integration degree and target autonomy. Equilibrium analysis that is based on potential innovation output signals show that resource similarity has a positive relation with integration and a negative relation with target autonomy in overseas M&A; however, resource complementarity has the opposite effects compared with resource similarity. The positive interaction between resource similarity and complementarity will trigger more M&A and increase the degrees of integration and autonomy; M&A integration has a positive impact on technology innovation output. The innovation growth of the acquiring company is affected by the effectiveness of the post-merger process and the interaction of substitution elasticity with resource potential difference. Our study provides insight into the factors driving post-merger decisions and contributes to a multi-stage resource-based understanding of technology innovation induced by overseas post-merger integration.
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MANUSCRIPT
How resource information backgrounds trigger
post-merger integration and technology innovation?
A dynamic analysis of resource similarity
and complementarity
Feiqiong Chen
1
•Qiaoshuang Meng
1
•
Fei Li
1
Published online: 18 May 2016
Springer Science+Business Media New York 2016
Abstract Overseas mergers and acquisitions (M&A) proposed by companies from
emerging economies have been aiming to secure outward technology sourcing from
developed countries in order to improve their technology innovation abilities in
recent years. This paper proposes a comprehensive analytical framework of post-
merger integration’s influence on technology innovation by global game modeling.
We show how different resource similarity and resource complementarity back-
grounds of the acquirer and target companies can affect post-merger strategies and
technology innovation output through multi-stage analysis with an asymmetrical
payoff structure. We focus on two main dimensions of post-merger integration,
which are integration degree and target autonomy. Equilibrium analysis that is
based on potential innovation output signals show that resource similarity has a
positive relation with integration and a negative relation with target autonomy in
overseas M&A; however, resource complementarity has the opposite effects com-
pared with resource similarity. The positive interaction between resource similarity
and complementarity will trigger more M&A and increase the degrees of integration
and autonomy; M&A integration has a positive impact on technology innovation
output. The innovation growth of the acquiring company is affected by the effec-
tiveness of the post-merger process and the interaction of substitution elasticity with
resource potential difference. Our study provides insight into the factors driving
post-merger decisions and contributes to a multi-stage resource-based understanding
of technology innovation induced by overseas post-merger integration.
Keywords Post-merger integration Technology innovation Resource similarity
Resource complementarity
&Feiqiong Chen
ecchenfq@zju.edu.cn
1
School of Economics, Zhejiang University, 38 Zheda Road, Xihu District, Hangzhou 310027,
China
123
Comput Math Organ Theory (2017) 23:167–198
DOI 10.1007/s10588-016-9222-4
Content courtesy of Springer Nature, terms of use apply. Rights reserved.
... Prior static-view studies articulated that pre-merger resource similarity or complementary leads to different integration degrees and targets' autonomy levels (F. Chen et al., 2017); given that, integration degree should not be constant but could change with bilateral resource relatedness varying when PMI is unfolding with time elapsing. Arguably, the understanding of dynamic resource interactions during the post-merger period remains an under-appreciated topic with a necessity for further theory exploration. ...
... Typically, when two sides' products are highly similar, acquirers should remove as much suppliers' duplication as possible to reduce production costs and realize economies of scale; when market network resource is complimentary, acquirers should choose lower integration to maximize market shares (F. Chen et al., 2017). However, CMNEs ignoring targets' threats made the thing go to another way. ...
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... On the other hand, acquisition innovation capability is one of the main motives of M&As, and there is a positive relationship between task integration and innovation output after mergers (Bauer et al. 2016). The positive interaction between complementarity and resource similarity will trigger more M&As and increase the degrees of autonomy and integration, thus affecting the innovation performance of the acquiring company (Chen et al. 2017). However, these studies are based on the assumption that the acquiring company had made M&A decisions and did not detail M&As according to the target countries. ...
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... Resource complementarity: Cooperation to achieve relatively complementary resource demand is the most stable state of cooperation. Once this demand is weakened, the partnership will no longer be stable [5]. Game theory: The essence of cooperation in the game process: the stability of the alliance between multiple agents depends on the equivalence of the information obtained. ...
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