+7 925 966 4690, 9am6pm (GMT+3), Monday – Friday
ИД «Финансы и кредит»

JOURNALS

  

FOR AUTHORS

  

SUBSCRIBE

    
Economic Analysis: Theory and Practice
 

Complementary and Resource-Based Approaches to Justifying the Synergistic Effect of Mergers and Acquisitions

Vol. 16, Iss. 9, SEPTEMBER 2017

PDF  Article PDF Version

Received: 14 August 2017

Received in revised form: 22 August 2017

Accepted: 5 September 2017

Available online: 29 September 2017

Subject Heading: BUSINESS PERFORMANCE

JEL Classification: G32, G34, L25

Pages: 1678–1695

https://doi.org/10.24891/ea.16.9.1678

Ivanov A.E. South Ural State University (National Research University), Chelyabinsk, Russian Federation
ivanov.chel@list.ru

Importance The article reviews the genesis of studies on synergetic effects of mergers and acquisitions in the modern strategic management.
Objectives The purpose is to develop theoretical tenets in the area of M&A management to the extent of synergistic effect research.
Methods I apply scientific methods of research, such as analysis, synthesis, deduction, induction, etc. Articles and monographs of domestic and foreign scholars dedicated to mergers and acquisitions serve as theoretical and information basis of the study.
Results The analysis of relevant literature sources enabled to identify two conceptual approaches to determining the nature of synergistic effect of mergers and acquisitions, namely, complementary and resource-based. However, the economic practice proves that it is possible to obtain a synergistic effect from simultaneous use of unique and complementary resources of merged companies.
Conclusions and Relevance The revealed conceptual approaches are not mutually exclusive, since targeting only one of them when planning a deal may lead to incomplete potential synergistic effect. Hence, the mechanism of M&A synergistic effect formation needs to be justified based on the synthesis of complementary and resource-based approaches.

Keywords: mergers and acquisitions, M&A, integration, synergistic effect, synergy

References:

  1. Mandelker G. Risk and Return: The Case of Merging Firms. Journal of Financial Economics, 1974, vol. 1, iss. 4, pp. 303–335. doi: 10.1016/0304-405X(74)90012-9
  2. Ellert J.C. Mergers, Antitrust Law Enforcement and Stockholder Returns. The Journal of Finance, 1976, vol. 31, iss. 2, pp. 715–732. doi: 10.1111/j.1540-6261.1976.tb01916.x
  3. Dodd P., Ruback R. Tender Offers and Stockholder Returns: An Empirical Analysis. Journal of Financial Economics, 1977, vol. 5, no. 3, pp. 351–373.
  4. Kummer D.R., Hoffmeister J.R. Valuation Consequences of Cash Tender Offers. Journal of Finance, 1978, vol. 33, no. 2, pp. 505–516.
  5. Bradley M. Interfirm Tender Offers and the Market for Corporate Control. The Journal of Business, 1980, vol. 53, no. 4, pp. 345–376. doi: 10.1086/296114
  6. Bradley M., Desai A., Kim E.H. The Rationale Behind Interfirm Tender Offers: Information or Synergy? Journal of Financial Economics, 1983, vol. 11, iss. 1-4, pp. 183–206. doi: 10.1016/0304-405X(83)90010-7
  7. Singh H., Montgomery C. Corporate Acquisition Strategies and Economic Performance. Strategic Management Journal, 1987, vol. 8, iss. 4, pp. 377–386. doi: 10.1002/smj.4250080407
  8. Lubatkin M. Mergers and the Performance of the Acquiring Firm. The Academy of Management Review, 1983, vol. 8, no. 2, pp. 218–225. doi: 10.2307/257748
  9. Lubatkin M. Merger Strategies and Stockholder Value. Strategic Management Journal, 1987, vol. 8, iss. 1, pp. 39–53. doi: 10.1002/smj.4250080105
  10. Seth A. Value Creation in Acquisitions: A Re-examination of Performance Issues. Strategic Management Journal, 1990, vol. 11, iss. 2, pp. 99–115. doi: 10.1002/smj.4250110203
  11. Trautwein F. Merger Motives and Merger Prescriptions. Strategic Management Journal, 1990, vol. 11, no. 4, pp. 283–295.
  12. Farrell J., Shapiro C. Horizontal Mergers: An Equilibrium Analysis. The American Economic Review, 1990, vol. 80, no. 1, pp. 107–126.
  13. Farrell J., Shapiro C. Scale Economies and Synergies in Horizontal Merger Analysis. Antitrust Law Journal, 2001, vol. 68, pp. 685–710.
  14. Ivanov A.E. [The genesis of the synergistic approach in mergers and acquisition studies: the dismantling of the main myth of Synergy]. Finansy i kredit = Finance and Credit, 2013, no. 42, pp. 69–78. (In Russ.)
  15. Evans F.C. et al. Otsenka kompanii pri sliyaniyakh i pogloshcheniyakh: cozdanie stoimosti v chastnykh kompaniyakh [Valuation for M&A: Building Value in Private Companies]. Moscow, Al'pina Biznes Buks Publ., 2004, 332 p.
  16. Edgeworth F.Y. Mathematical Psychics: An Essay on the Application of Mathematics to the Moral Sciences. London, C. Kegan Paul & Co., 1881, 150 p.
  17. Teece D.J. Profiting from Technological Innovation: Implications for Integration, Collaboration, Licensing and Public Policy. Research Policy, 1986, vol. 15, iss. 6, pp. 285–305. doi: 10.1016/0048-7333(86)90027-2
  18. Milgrom P., Roberts J. The Economics of Modern Manufacturing: Technology, Strategy and Organization. The American Economic Review, 1990, vol. 80, no. 3, pp. 511–528.
  19. Milgrom P., Roberts J. Complementarities and Fit Strategy, Structure, and Organizational Change in Manufacturing. Journal of Accounting and Economics, 1995, vol. 19, iss. 2-3, pp. 179–208.
  20. Ansoff I. Corporate Strategy. New York, McGraw-Hill, 1965, 241 p.
  21. Campbell A., Luchs K. Strategicheskii sinergizm [Strategic Synergy]. St. Petersburg, Piter Publ., 2004, 416 p.
  22. Maslow A.H. Synergy in the Society and in the Individual. Journal of Individual Psychology, 1964, vol. 20, no. 2, pp. 153–164.
  23. Porter M.E. Konkurentnoe preimushchestvo: kak dostich' vysokogo rezul'tata i obespechit' ego ustoichivost' [Competitive Advantage: Creating and Sustaining Superior Performance]. Moscow, Al'pina Biznes Buks Publ., 2005, 714 p.
  24. Kanter R.M. When Giants Learn to Dance: Mastering the Challenges of Strategy, Management and Careers in the 1990s. New York, Simon & Schuster, 1989, 416 p.
  25. Ackoff R. Planirovanie budushchego korporatsii [Creating the Corporate Future: Plan or Be Planned for]. Moscow, Progress Publ., 1985, 327 p.
  26. Linn S., Rozeff M. The Effect of Voluntary Spin-offs on Stock Prices: The Anergy Hypothesis. Advances in Financial Planning and Forecasting, 1985, vol. 1(1), pp. 265–291.
  27. Ennen E., Richter A. The Whole is More than the Sum of its Parts – or is It? A Review of the Empirical Literature on Complementarities in Organizations. Journal of Management, 2010, vol. 36, no. 1. doi: 10.1177/0149206309350083
  28. Chatterjee S. Types of Synergy and Economic Value: The Impact of Acquisitions on Merging and Rival Firms. Strategic Management Journal, 1986, vol. 7, iss. 2, pp. 119–139. doi: 10.1002/smj.4250070203
  29. Andrews K.R. The Concept of Corporate Strategy. Homewood, Dow-Jones-Irwin, 1971, 245 p.
  30. Penrose E.T. The Theory of the Growth of the Firm. Oxford, Basil Blackwell, 1959, 272 p.
  31. Kleiner G.B. [Resource Theory of the System Organization of the Economy]. Rossiiskii zhurnal menedzhmenta = Russian Management Journal, 2011, no. 3, pp. 3–28. (In Russ.)
  32. Wernerfelt B. A Resource-based View of the Firm. Strategic Management Journal, 1984, vol. 5, iss. 2, pp. 171–180.
  33. Itami H., Roehl T. Mobilizing Invisible Assets. Cambridge, MA, Harvard University Press, 1987, 200 p.
  34. Prahalad C.K., Hamel G. The Core Competence of the Corporation. Harvard Business Review, 1990, vol. 68, no. 3, pp. 79–91.
  35. Prahalad C.K., Bettis R.A. The Dominant Logic: A New Linkage Between Diversity and Performance. Strategic Management Journal, 1986, vol. 7, iss. 6, pp. 485–501. doi: 10.1002/smj.4250070602
  36. Kim W. Chan, Mauborgne R. Strategiya golubogo okeana. Kak naiti ili sozdat' rynok, svobodnyi ot drugikh igrokov [Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant]. Moscow, Mann, Ivanov i Ferber Publ., 2017, 336 p.
  37. Barney J.B. Returns to Bidding Firms in Mergers and Acquisitions: Reconsidering the Relatedness Hypothesis. Strategic Management Journal, 1988, vol. 9, iss. S1, pp. 71–78. doi: 10.1002/smj.4250090708
  38. Barney J.B. Firm Resources and Sustained Competitive Advantage. Journal of Management, 1991, vol. 17, iss. 1, pp. 99–120. doi: 10.1177/014920639101700108
  39. Barney J.B. Gaining and Sustaining Competitive Advantage. Pearson, 2010, 512 p.
  40. Foss N.J., Iversen M. Promoting Synergies in Multiproduct Firms: Toward a Resource-based View. Copenhagen Business School IVS/CBS Working Papers, 1997, no. 97-12.
  41. Iversen M. Competitive Advantage through Intrafirm Synergies. URL: Link
  42. Iversen M. Synergies and Sustainable Competitive Advantage. URL: Link
  43. Markides C.C., Williamson P.J. Related Diversification, Core Competences and Corporate Performance. Strategic Management Journal, 1994, vol. 15, iss. S2, pp. 149–165. doi: 10.1002/smj.4250151010
  44. Endovitskii D.A., Lyubushin N.P., Babicheva N.E. [Resource-based economic analysis: Theory, methodology, practice]. Ekonomicheskii analiz: teoriya i praktika = Economic Analysis: Theory and Practice, 2013, no. 38, pp. 2–8. (In Russ.)

View all articles of issue

 

ISSN 2311-8725 (Online)
ISSN 2073-039X (Print)

Journal current issue

Vol. 23, Iss. 3
March 2024

Archive