Reducing Causal Ambiguity In Acquisition Integration: Intermediate Goals As Mediators OfIntegration Decisions and Acquisition Performance

What is it about?

Integration is a difficult process, but one that is vital to acquisition performance. One reason acquirers encounter difficulties is that the integration process exhibits high levels of intrafirm linkage ambiguity – a lack of clarity of the causal link between integration decisions and their performance outcomes. We introduce the construct of intermediate goal achievement as a mechanism that reduces intrafirm linkage ambiguity. Our structural model results, based on a sample of 129 horizontal acquisitions, indicate that the achievement of two intermediate goals (internal reorganization and market expansion) fully mediates the relationships between four integration decisions and acquisition performance.

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Why is it important?

Intermediate goal achievement to reduce costs and/or market expansion from integration needs to be met before acquisition performance improves.