Exploring the Impact of Context on Acquisition Integration Issues and Outcomes: Toward a Global Perspective

Improving merger and acquisition (M&A) integration represents a compelling problem with global M&A activity. In this chapter, we contribute to research on global M&A activity by examining three aspects of the institutional context that affect the integration between the acquiring and target firm, namely physical distance, within-country diversity, and type of legal system. Moreover, we look at how each of these aspects affects social integration and task integration separately. Subsequently, we show how each type of integration affects revenue and cost synergies, influencing value creation after deal completion. Using SEM, we test our hypotheses in a sample of domestic and cross-border acquisitions comprising acquiring firms located in 15 different countries and target firms located in 22 countries. Our findings suggest that future M&A research, independently from analyzing domestic or cross-border deals, should consider aspects of the institutional environment of the target firm, as it likely has implications for acquisition integration and outcomes.