The Challenge of Integration: A Review of the M&A Integration Literature

• DOI: http://doi.org/10.1111/ijmr.12099
• Author: Norbert Steigenberger
• Date: 01 October 2017
• Published date: 01 October 2017

International Journal of Management Reviews, Vol. 19, 408–431 (2017)

DOI: 10.1111/ijmr.12099

The Challenge of Integration: A Review

of the M&A Integration Literature

Norbert Steigenberger

Seminar for Business Administration, Corporate Development and Organization, University of Cologne,

Albertus-Magnus-Platz, D-50923 Cologne, Germany

Corresponding author email: steigenberger@wiso.uni-koeln.de

The integration of acquired or merging firms is a key driver of the success or failure

of mergers and acquisitions (M&As). Over the last 30 years, a substantial body of re-

search has addressed M&A integration, offering rich butwidely dispersed insights into

this phenomenon. This paper takes stock of the current knowledge, based on a review

of articles published in scholarly journals. The review advances the conceptual un-

derstanding of the phenomenon by inductively developing an overarching framework

for the M&A integration literature, where integration success is a function of con-

text, structural and communication-based interventions, which interactwith collective

sensemaking processes and negotiations among integration stakeholders. Based on this

framework, a research agenda is suggested. I proposes that, in particular, the interac-

tion between structural interventionsand leadership warrants further study. Also, little

is known about integration project management and integration team composition or

the interaction between integration context and collective sensemaking processes. Fi-

nally, thereis a shortage of research on temporal dynamics within integration projects.

The review demonstrates that M&A scholars made substantial progress regarding our

understanding of the M&A integration process, yet much remainsto be done .

Introduction

Mergers and acquisitions (M&As) are one of the

prime tools for firm growth (Bauer and Matzler

2014), but strategic and operational goals associated

with M&A deals are often not met (Cartwright and

Schoenberg 2006; Haleblian et al. 2009; Tuch and

O’Sullivan 2007). King et al. (2004) found that con-

tingency conditions such as firm (dis-)similarities or

deal characteristics explain only a small fraction of

the observed variance in M&A outcomes. In 1986,

Jemison and Sitkin published an influential article in

the Academy of Management Review, complement-

ing this traditional decision perspective with a pro-

cess view, asking ‘how should acquirers select and

integrate a target’ instead of ‘under what (pre-) con-

ditions should one buy a target’ (Jemison and Sitkin

1986). Jemison and Sitkin conceptualized M&As as

processes ranging from pre-deal screening to the con-

clusion of M&A integration some years after closing.

This perspective forcefully put the topic of M&A

integration on the agenda of M&A scholars, and a

substantial body of research strengthened the notion

that, in particular, the integration stage is an important

driver of M&A success (e.g. Angwin and Meadows

2015; Graebner 2004; Heimeriks et al. 2012; Larsson

and Finkelstein 1999).

Research on M&A integration, encompassing both

post-merger and post-acquisition integration,1devel-

oped in strength in the late 1980s and has attracted

broad research interest ever since (Teerikangas et al.

2012). High-profile M&A failures attributed to poor

integration management have kept interest in the phe-

nomenon high. The merger of Daimler and Chrysler

1Most research on post-merger and post-acquisition integra-

tion does not differentiate between mergers (of equals) and

acquisitions, where one firm dominates the relationship. To

account for this, we follow Schweiger and Goulet (2000)

and apply the neutral term M&A integration. Distinctions

between mergers and acquisitions are discussed in the dis-

cussion section.

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The Challenge of Integration 409

in 1998 is an exemplary case where the pre-merger

success of both companies turned into disaster in the

integration stage (Monin et al. 2013). Underestimated

social and cultural issues, incompatible management

styles and questionable communication led to dissat-

isfaction and resistance at Chrysler, a sharp decline

in performance and corresponding dissatisfaction

at Daimler (Weber and Camerer 2003). Ultimately,

Daimler sold Chrysler, with a direct financial loss of

US$37bn (Isidore 2007). Many of the issues that sur-

faced in the Daimler–Chrysler integration serve to il-

lustrate how structural and social phenomena interact

to affect M&A integration processes and outcomes.

In 2000, Schweiger and Goulet issued a call to

develop a consistent understanding of the M&A inte-

gration phenomenon (Schweiger and Goulet 2000).

Since then, we haveseen a variety of reviews touching

different aspects of M&A integration, but none has

sufficiently addressed the concern that the field needs

a comprehensive understanding of M&A integration.

Reviews on M&A in general (e.g. Gomes et al. 2013;

Tuch and O’Sullivan 2007) and specific sub-topics of

M&A integration such as culture (Schoenberg 2000;

Stahl and Voigt 2008), social identity (Ullrich and van

Dick 2007), leadership (Junni and Sarala 2014), inter-

national acquisitions (Ghauri and Buckley 2003), or

methodology (Cartwright et al. 2012; Meglio and Ris-

berg 2011), were published, as well as reviews that do

not develop a synthesizing framework (Teerikangas

and Joseph 2012). Complementing and extending

this previous work and taking up the call issued

by Schweiger and Goulet (2000) 16 years ago,

this paper presents a systematic review (Tranfield

et al. 2003) of the scholarly literature on M&A

integration, following three distinct aims: First,

it suggest an overarching framework for M&A

integration research, which is inductively developed.

Such a framework is now as necessary as it was in

2000, maybe even more so, as the stock of knowledge

has increased substantially over these past years

and integrating the dispersed sub-themes into a

consistent framework has become evenmore difficult

(Teerikangas et al. 2012). Second, the review aims

to provide a broad perspective on M&A integration

research that links the heterogeneous sub-topics of

the integration phenomenon and offers an overview

of developments in the last 30 years. This approach

complements specialized reviews and suggests a

perspective on how the dispersed themes and topics

interrelate. Third, this encompassing perspective

helps to develop a concurrent research agenda, which

can guide future work in the field. In doing so, the

following research synthesis takes the academic

discussion on M&A integration one step further on

the journey towards a comprehensive understanding

of the M&A integration phenomenon.

Delineating M&A integration

To define the field of interest, this study follows

Larsson and Finkelstein’s delineation of M&A

integration as ‘the degree of interaction and coor-

dination of the two firms involved in a merger or

acquisition’ (Larsson and Finkelstein 1999, p. 6).

Merger and acquisition integration begins with the

closure of an M&A deal and typically takes years to

complete, with integration planning often beginning

well before deal closure (Ellis et al. 2011; Ranft

and Lord 2002; Schweiger and Goulet 2000). The

integration of one firm into another has many facets,

and the conditions driving success or failure are

complex. To minimize this complexity and derive

a blueprint for an appropriate integration strategy,

a variety of models have been suggested to either

categorize the integration attempts into a manageable

number of integration archetypes or capture the

key drivers of integration performance. The most

influential of these categorization models is a 2×2

matrix with strategic interdependence and need for

organizational autonomy as dimensions, resulting in

the archetypical integration approaches of absorption

(low need for autonomy, high strategic interde-

pendence), preservation (high need for autonomy,

low strategic interdependence) and symbiosis (high

strategic interdependence, high need for autonomy)

put forward by Haspeslagh and Jemison (1991). Var-

ious other categorizations have also been suggested

(e.g. Ellis and Lamont 2004; Liu and Woywode

2013; Nahavandi and Malekzadeh 1988; Wei and

Clegg 2014). Of the integrated models of key drivers

of integration success, Larsson and Finkelstein’s

(1999) is the most influential. In this model, the

combination potential of the acquisition influences

synergy realization (high, if the synergy potential is

high), organizational integration (deep integration,

if the combination potential is high) and employee

resistance (high, if the combination potential is

high). Organizational integration increases employee

resistance as well as synergy realization, while

employee resistance relates negatively to synergy

realization. Several contingencies (management

style similarity, cross-border M&A, relative size)

complement this approach. Bauer and Matzler (2014)

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