The acquisition of knowledge through mergers and acquisition (M&A) may not create value—usually because the knowledge may not be transferred, or transferred but not integrated. The purpose of this paper to develop and test a theoretical model of knowledge and performance in the M&A process.
Theory, model and case analysis.
The literature review led us to distinguish between three main categories of knowledge along the different stages of the M&A process: acquired knowledge in the pre-merger stage; and transferred knowledge and integrated knowledge in the post-merger stage. The application of the model is illustrated in a case study of technology M&A, which includes data collected from annual reports before and after the merger.
The model recommends acknowledging the differences between the acquired knowledge, transferred knowledge and integrated knowledge when examining the relationship between knowledge and performance in M&As. In addition, the model suggests considering several factors that influence future knowledge integration in the pre-merger stage. Ignoring the three categories and the factors may be the reason for the reports of previous studied stating that the acquisition of knowledge-based resources is associated with negative announcement returns to the acquiring firm.
The paper presents new procedures to measure knowledge, collecting data on R&D employees by using annual reports. In addition, the paper suggests adding “in-process R&D” as an “Acquired Knowledge” measure.
