Content area
Full Text
Introduction
Despite the growing merger and acquisition (M&A) activity (Weber et al., 2012), the existing literature does not provide clear answers regarding the high failure rate of the M&A strategy (King et al., 2004; Kummer and Steger, 2008; Rossi et al., 2013; Rozen-Bakher, 2018; Tichy, 2001). Traditionally, the literature focused on strategic and financial factors (Stahl et al., 2013); recently, more studies have explored the sociocultural (Weber and Tarba, 2013) and human resource factors (Ahammad et al., 2012; Krishnan and Park, 2002). Besides, there are studies that focus on the challenges of the integration process (Weber et al., 2011; Weber and Drori, 2011), while others try to explain which types of M&A (King et al., 2004; Tremblay and Tremblay, 2012) lead to failure or success.
However, due to the high failure rate of the M&A strategy, this study raises the question of whether the nature of the M&A strategy per se, which is reflected throughout the M&A process, may lead to a potential trade-off between the two main objectives of M&As – synergy success and efficiency gains, as shown in paragraph 1. On the one hand, the combined companies during the integration stage, eliminate duplicate jobs and overlapping activities and consolidate functions to remove redundancies (Krishnan and Park, 2002; Lehto and Böckerman, 2008), which are supposed to improve efficiency through cost cutting (Rhoades, 1998) and workforce reduction (O’Shaughnessy and Flanagan, 1998). Therefore, if the integration process succeeds, then the M&A results in efficiency gains along with the ability to seize the synergy potential. On the other hand, the nature of the M&A strategy leads to challenges and stresses during the M&A process, which may influence the ability, both or either, to improve efficiency and realize the synergy potential, resulting in a potential trade-off between synergy success and efficiency gains. First, there are two main rationales for following the M&A strategy – the synergy potential and the disciplining of inefficient targets (O’Shaughnessy and Flanagan, 1998) – which influence the implementation of the M&A process. Therefore, an imbalance between these two goals during the M&A process may result in a potential trade-off between synergy success and efficiency gains. In other words, the main reason for M&As is to achieve...