Untangling micro-behavioral sources of failure in mergers and acquisitions: a theoretical integration and extension

Abstract

Research in the field of mergers and acquisitions (M&A) has extensively examined potential sources of failure and success. However, despite increasing attention from scholars, only a handful of studies have actually investigated M&A processes. Adopting a process perspective is crucial to unraveling the underlying micro-behavioral foundations of M&A. This paper focuses on why M&As rarely reach their full potential. Specifically, we address these issues by providing an in-depth review of mechanisms contributing to M&A failure and developing a processual framework. We argue that behavioral factors at the individual and organizational levels impede rational and effective decision-making before, during and after an acquisition and suggest that communication climate plays a vital role in facilitating effective integration and may serve as a platform to improve M&A performance.

Keywords::

• communication climate
• decision making
• mergers and acquisitions
• micro-behavioral
• process perspectives

Acknowledgements

We would like to thank the editor and two anonymous reviewers for their constructive and helpful feedbacks. We wish to thank John Haleblian and David King for their useful comments and suggestions on earlier drafts of this paper. This work also benefitted from remarks by the ‘Art of Reviewing’ program participants at Tel Aviv University under the helpful guidance of Peter Bamberger and Amit Gal. We would especially like to note the inspirational contribution of the late Avi Fiegenbaum. We thank Esther Singer and Gerda Kessler for their helpful editorial comments. All remaining errors are entirely our own.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

^1. Recent estimates indicate that worldwide M&A deals reached a staggering US$ 3.5 trillion during 2014, a 47% increase from comparable 2013 levels and the strongest annual period for worldwide deal making since 2007 (Thomson Financial, 2014).

^2. We wish to thank an anonymous reviewer for raising this issue.