Acquisition performance: The effect of the extent and speed of integration, and the contribution of the acquired units' top management
Tajul, Arus Bin Noh
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https://hdl.handle.net/2142/20932
Description
Title
Acquisition performance: The effect of the extent and speed of integration, and the contribution of the acquired units' top management
Author(s)
Tajul, Arus Bin Noh
Issue Date
1990
Doctoral Committee Chair(s)
Duhaime, Irene M.
Department of Study
Business Administration
Discipline
Business Administration
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Business Administration, Management
Language
eng
Abstract
The integration of acquisitions has not received a great deal of research attention, although the level of acquisition activity in the U.S. has been at a fairly high level for many years. The way that an acquiring company integrates the acquired unit after the acquisition is one factor that has been claimed by many writers to be important to acquisition performance. In this study, five main research questions relating to acquisition integration were addressed. They dealt with the part played by the integration process in acquisition performance, in particular, the effects of the extent and speed of integration, and of the level of acquired unit top management retention. The study also investigated the characteristics and contributions of the retained acquired unit top managers.
A conceptual general model of acquisition performance was developed to show how the acquisition integration process relates to the other variables that contribute to acquisition performance. Several hypotheses were tested using data collected through a mail survey of senior executives from 140 acquisitions made by U.S. public companies between January 1982 and June 1986 in five U.S. manufacturing industries--chemical and allied products, fabricated metal products, nonelectrical machinery, electrical and electronic machinery and measuring instruments, photographic, medical and optical goods. It was found that acquired units with low preacquisition performance which were rapidly integrated into the acquiring company had higher postacquisition performance than those which were not integrated rapidly. It was also found that units with low preacquisition performance which were extensively integrated into the acquiring company had higher postacquisition performance than those which were not extensively integrated.
Other findings showed that a higher proportion of acquired units top managers were retained, and they were for longer periods in units with high preacquisition performance than in units with low preacquisition performance. It was also found that retained top managers in units with high preacquisition performance were perceived to have greater knowledge, relationships, leadership ability and managerial ability than those in units with low preacquisition performance. In units with high preacquisition performance the retained top managers' relationships, leadership ability and managerial ability were perceived to make greater contribution to the units' performance than in units with low preacquisition performance.
This study makes several contributions to knowledge on acquisition integration. It shows that, under certain conditions, the rate with which acquired units are integrated is correlated with the unit's postacquisition performance. It indicates certain characteristics which acquiring companies apparently look for in the managers of the units that they acquire. The findings have implications for both managers and researchers.
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