Upgrading without formal integration in M&A : the role of social integration

Rui Torres de Oliveira, Sreevas Sahasranamam, Sandra Figueira, Justin Paul

Research output: Contribution to journalArticle

Abstract

Research summary: By adopting a phenomenon-based research approach, we examine the case of an emerging market (EM) supplier upgrading its position in the automotive global value chain (GVC) through the acquisition of a technologically advanced firm from a developed market (DM). Drawing on GVC and social integration literature, we explore the role of social integration adopted by the EM acquirer to achieve upgrading through acquisition. We develop a conceptual framework where we explain the different social integration mechanisms that EM multinationals employ before and after acquisitions to achieve upgrading. Managerial summary: When analyzing an EM firm acquiring a DM firm we found that social integration is a key factor that enables knowledge transfer, particularly if no formal or structural integration occurs. This suggests that the development of mechanisms to facilitate strong socially integrated relationships with acquired firms is central for such type of acquisitions. Our research shows that EM firm managers need to put in place combinations of social integration mechanisms during different phases of the acquisition. Environmental and cognitive social integration mechanisms are crucial for gaining initial legitimacy. Furthermore, affective social integration is important for initiating process and functional upgrading, while cognitive social integration mechanisms become important for initiating intersectorial upgrading.

LanguageEnglish
Number of pages57
JournalGlobal Strategy Journal
Early online date30 Sep 2019
DOIs
Publication statusE-pub ahead of print - 30 Sep 2019

Fingerprint

Social integration
Upgrading
Emerging market firms
Global value chains
Emerging markets
Knowledge transfer
Managers
Legitimacy
Factors
Emerging market multinationals
Integrated
Conceptual framework
Suppliers

Keywords

  • mergers and acquisitions (M&A)
  • global value chains
  • China
  • emerging market multinationals
  • social integration
  • emerging market
  • upgrading

Cite this

Torres de Oliveira, Rui ; Sahasranamam, Sreevas ; Figueira, Sandra ; Paul, Justin. / Upgrading without formal integration in M&A  : the role of social integration. 2019.
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Upgrading without formal integration in M&A  : the role of social integration. / Torres de Oliveira, Rui; Sahasranamam, Sreevas; Figueira, Sandra; Paul, Justin.

30.09.2019.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Upgrading without formal integration in M&A 

T2 - the role of social integration

AU - Torres de Oliveira, Rui

AU - Sahasranamam, Sreevas

AU - Figueira, Sandra

AU - Paul, Justin

PY - 2019/9/30

Y1 - 2019/9/30

N2 - Research summary: By adopting a phenomenon-based research approach, we examine the case of an emerging market (EM) supplier upgrading its position in the automotive global value chain (GVC) through the acquisition of a technologically advanced firm from a developed market (DM). Drawing on GVC and social integration literature, we explore the role of social integration adopted by the EM acquirer to achieve upgrading through acquisition. We develop a conceptual framework where we explain the different social integration mechanisms that EM multinationals employ before and after acquisitions to achieve upgrading. Managerial summary: When analyzing an EM firm acquiring a DM firm we found that social integration is a key factor that enables knowledge transfer, particularly if no formal or structural integration occurs. This suggests that the development of mechanisms to facilitate strong socially integrated relationships with acquired firms is central for such type of acquisitions. Our research shows that EM firm managers need to put in place combinations of social integration mechanisms during different phases of the acquisition. Environmental and cognitive social integration mechanisms are crucial for gaining initial legitimacy. Furthermore, affective social integration is important for initiating process and functional upgrading, while cognitive social integration mechanisms become important for initiating intersectorial upgrading.

AB - Research summary: By adopting a phenomenon-based research approach, we examine the case of an emerging market (EM) supplier upgrading its position in the automotive global value chain (GVC) through the acquisition of a technologically advanced firm from a developed market (DM). Drawing on GVC and social integration literature, we explore the role of social integration adopted by the EM acquirer to achieve upgrading through acquisition. We develop a conceptual framework where we explain the different social integration mechanisms that EM multinationals employ before and after acquisitions to achieve upgrading. Managerial summary: When analyzing an EM firm acquiring a DM firm we found that social integration is a key factor that enables knowledge transfer, particularly if no formal or structural integration occurs. This suggests that the development of mechanisms to facilitate strong socially integrated relationships with acquired firms is central for such type of acquisitions. Our research shows that EM firm managers need to put in place combinations of social integration mechanisms during different phases of the acquisition. Environmental and cognitive social integration mechanisms are crucial for gaining initial legitimacy. Furthermore, affective social integration is important for initiating process and functional upgrading, while cognitive social integration mechanisms become important for initiating intersectorial upgrading.

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KW - global value chains

KW - China

KW - emerging market multinationals

KW - social integration

KW - emerging market

KW - upgrading

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