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Post-acquisition implementation of small high-tech firms: Looking beyond the surface
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.), Entrepreneurship and innovation.
Department of Management, Economics and Industrial Engineering, Politecnico di Milano.
Department of Management, Economics and Industrial Engineering, Politecnico di Milano.
(English)Manuscript (preprint) (Other academic)
Abstract [en]

In post-acquisition, the main challenge for the acquirer is choosing the right coordination mechanism with respect to the required level of coordination and associated costs of implementation of the mechanism. In acquisition of small high-tech firms, the challenge is exacerbated as technology and knowledge transfer requires high level of coordination while the costs related such as loss of autonomy and organizational disruptions are also higher. In this paper, we showed that acquirer’s choice of coordination mechanisms is determined by the cost-benefit trade-off. In particular, we found that, component technology as a form of task interdependency necessitates higher level of coordination and justifies choosing mechanisms to provide high level of coordination at higher cost. On the contrary, technological relatedness and prior alliance between acquirer and target provide coordination capacity, which in turn reduce the benefits of choosing mechanisms to provide high level of coordination with respect to the associated costs. This study is based on empirical analysis of 403 acquisitions of small high-tech firms between 2001 and 2005. 

National Category
Business Administration
Identifiers
URN: urn:nbn:se:kth:diva-176413OAI: oai:DiVA.org:kth-176413DiVA: diva2:866813
Note

QS 2015

Available from: 2015-11-03 Created: 2015-11-03 Last updated: 2015-11-12Bibliographically approved
In thesis
1. Predicting who stays or leaves after the acquisition:: Target’s top manager turnover
Open this publication in new window or tab >>Predicting who stays or leaves after the acquisition:: Target’s top manager turnover
2015 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

In acquisition of high-tech and knowledge intensive firms, scholars have paid special attention to top managers’ status after the deal. Literature suggests that these managers in particular CEOs if kept in post-acquisition provide coordination capacity for the acquirer to transfer the knowledge and technology from the target to the acquirer while minimizing the disruptive effect of post-acquisition integration process. In addition, the acquirer benefits from human capital embedded in target’s managerial resources; especially in high-tech and knowledge intensive firms where top managers are founders or patent holders. Although the above mentioned argument have been validated by empirical studies showing that top manager’s turnover reduces the post-acquisition performance for the acquirers, multiple empirical studies have reported abnormal managerial turnover shortly after the acquisition. This thesis made an attempt to explain this puzzling phenomenon by investigating on the determinants of the top manager’s turnover of the target in the post-acquisition period. The study finds that in case of CEOs, acquirers do not rely always on coordinating capacity provided by them in post-acquisition. Indeed, the acquirer’s choice of provision of coordination is beyond the target’s CEO retention. The choice of coordination depends on the existing level of coordination capacities and the acquisition’s motivation. In addition, founder-CEOs are more likely to stay after the acquisition because of their valuable firm-specific human capital for the acquirer. However, this value diminishes by the maturity of the target. In addition, similarity in demographic characteristics of the two CEOs (of the acquirer and target) causes social attraction, collaboration and cooperation which ultimately increases the chance that the target’s CEO retention. Finally, diversity within the target’s top management team (TMT) directly increases their chance of departure after the deal. The diversity engenders social frictions, conflicts and coordination inefficiencies.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2015. 62 p.
Series
TRITA-IEO, ISSN 1100-7982 ; 2015:11
Keyword
Acquisition, CEO turnover, TMT turnover, coordination, Founder-CEO, Similarity attraction, Diversity
National Category
Business Administration
Identifiers
urn:nbn:se:kth:diva-176417 (URN)978-91-7595-767-8 (ISBN)
Public defence
2015-12-14, Kollegiesalen, Brinellvägen 8, KTH, Stockholm, 10:00 (English)
Opponent
Supervisors
Note

The Doctoral Degrees issued upon completion of the programme are issued by KTH Royal Institute of Technology, Stockholm, Sweden, Politecnico de Milano, POLIMI, Milan, Italy and Universidad Politécnicade Madrid, UPM, Madrid, Spain respectively.

QC 20151112

Available from: 2015-11-12 Created: 2015-11-03 Last updated: 2015-11-12Bibliographically approved

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