Academic journal article Management International Review

Learning through International Acquisitions: The Process of Knowledge Acquisition in China

Academic journal article Management International Review

Learning through International Acquisitions: The Process of Knowledge Acquisition in China

Article excerpt

Abstract and Key Results

* Research on the process of knowledge learning and absorption in acquisition context has emerged recently. Yet relatively less attention has been paid to the process of knowledge transfer and learning and its impact on successful acquisitions.

* This paper adopts a process perspective' to investigate this issue. Based on four international acquisitions in China, it generates new theoretical propositions as well as practical managerial implications.

* Results reveal the types of knowledge acquired and how it is transferred and learnt to contribute to the success of international acquisitions. The knowledge acquisition and learning process in international context involve three stages: knowledge assessment, knowledge sharing and knowledge assimilation.

* Foreign acquirers tend to acquire complementary knowledge from local targets, adopt dual management structure and facilitate communications with local personnel in order to achieve the success of acquisitions and future operations.

Key Words

Knowledge Acquisition * Learning Process * International Acquisitions * Network Capacity * Case Study Research * China

Introduction

The growing importance and popularity of cross-border mergers and acquisitions (M&As) and a number of failures in such M&As have led to an increased interest in this topic. Post-acquisition issues such as integration processes, post-acquisition performance of the combined firm, the knowledge transfer and organizational learning have been investigated in recent years. Research on the knowledge transfer has revealed some critical factors, such as; articulability of knowledge, communication, retention of key talents, size and timing of the acquisition, the success/failure of knowledge transfer and the overall performance. Yet relatively less attention has been paid to the impact of knowledge transfer and learning on the acquisition success. International acquisitions, as a distinct and easily identifiable phenomenon, provide us a suitable context to study how the variation in the amount and type of knowledge transfer among merging firms affects the outcome of acquisitions.

In light of the growing prevalence of international acquisition and the rather high rate of foreign entry failure, academics and managers have become extremely interested in understanding the factors that explain how to make international acquisitions work and succeed. Earlier work has suggested that the integration process is highly critical for the success of most acquisitions, both domestic and international (Child/Faulkner/Pitkethly 2001). The degree of cultural differences was found to negatively affect shareholder value (Chatterjee et al. 1992, Weber/Shenkar 1996), However, later work showed that crossborder M&As with greater cultural and institutional differences may facilitate the learning and cooperation and provide enhanced opportunities for acquiring firms to obtain new information and capabilities from acquired firms (Bresman/Birkinshaw/Nobel 1999, Harrison et al. 1991, 2001, Morosini/Shane/Singh 1998, Vermeulen/Barkema 2001). These studies are greatly influenced by the research in the knowledge transfer process across alliances and joint ventures which highlights that the ability to learn is the key to success (Anh et al. 2006, Doz 1996, Inkpen/Crossan 1996, Uhlenbruck/Meyer/Hitt 2003). Yet researchers have suggested that we need to understand further how firms learn and apply knowledge in an effective manner to make acquisitions successful (Finkelstein/ Haleblian 2002, Shimizu et al. 2004). These concerns raise important research questions:

How do firms acquire and learn knowledge through international acquisitions? What are the types of knowledge acquired and applied in international acquisitions, and do these processes achieve the objectives of acquiring firms' international acquisition strategies? …

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