Information systems integration after merger and acquisition
| Published date | 28 January 2014 |
| DOI | https://doi.org/10.1108/IMDS-03-2013-0157 |
| Pages | 37-52 |
| Date | 28 January 2014 |
| Author | She-I Chang,I-Cheng Chang,Tawei Wang |
| Subject Matter | Information & knowledge management,Information systems,Data management systems |
Information systems integration
after merger and acquisition
She-I Chang
Department of Accounting and Information Technology,
National Chung Cheng University, Chia-Yi, Taiwan
I-Cheng Chang
Department of Accounting, National Dong Hwa University,
Hualien, Taiwan, and
Tawei Wang
School of Accountancy, University of Hawaii at Manoa, Honolulu, Hawaii, USA
Abstract
Purpose – The main aim of this study is to perform a case study to understand the information
systems (IS) integration strategy of two high-tech companies after merger and acquisition.
Design/methodology/approach – The authors perform a case study on the mergers and acquisitions
(M&A) of two high-tech companies to illustrate the IS integration activities in the M&A processes.
Findings – This study summarizes 26 fields from the IS integration process in the post-M&A period.
These 26 fields highlight the challenges when standardizing the integrated system and the impacts on
work routines as well as cultural resistance.
Originality/value – This study shows that the success of IS integration in the M&A context is
determined by identifying critical functions and leveraging the pre-M&A know-hows of both
companies. Furthermore, standardization may not be the first priority during the integration process. It
is also beneficial to keep the uniqueness of the systems of both companies which reduces the concerns of
potential resistance of the IT personnel. This study also has managerial implications. The findings
suggest that identifying and prioritizing relevant fields in the context of a cross-business IS integration
would improve the resource allocation decision and the effectiveness of post-integration evaluation.
Keywords Mergers and acquisitions, Informationsystems integration, Post-M&A integration
Paper type Research paper
1. Introduction
Mergers and acquisitions (M&A) are popular strategic activities and are expected to
continue to grow (Bloomberg, 2012). According to Bloomberg’s (2012) 2012 Global
M&A Outlook, over 24,700 deals were announced with more than $2.11 trillion in total
volume by the end of November 2011. One of the challenges companies face during the
M&A processes is integration (Eccles et al., 1999; Schweiger and Goulet, 2000;
Schweizer, 2005), which often determines the success of M&A (Weber and Pliskin,
1996; Giacomazzi et al., 1997; Schweizer, 2005; Garrie and Griver, 2009). Among the
integration activities, information systems (IS) or information technology (IT)
integration is the most complex area to manage (PricewaterhouseCoopers, 2009) and
The current issue and full text archive of this journal is available at
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The authors are grateful to the review team’s comments/suggestions that have improved the
paper. The authors also would like to thank the financial support from National Chung Cheng
University, National Dong Hwa University, and the University of Hawaii at Manoa.
Received 30 March 2013
Revised 16 June 2013
Accepted 28 June 2013
Industrial Management & Data
Systems
Vol. 114 No. 1, 2014
pp. 37-52
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/IMDS-03-2013-0157
Information
systems
integration
37
has been a critical issue in M&A success (Johnsto n and Yetton, 1996; Brown et al.,
2003). For example, IT integration can enable the coordination of cross-business
knowledge resources (Capron and Pistre, 2002; Tanriverdi, 2005) and reduce the
potential delays or disruptions of major business operations (Zollo and Singh , 2004;
Homburg and Bucerius, 2006).
Despite the relevant role played by IS integration in the M&A processes, its
importance has been overlooked and underestimated (Aponovich, 2002; Tanriverdi
and Uysal, 2011). For example, only 24 percent of the acquirers involve their IT
executives in the pre-M&A planning (Curtis and Chanmugam, 2005), and most of the
IT executives learn about the M&A of their firms from the press (Vielba and Vielba,
2006). In addition, limited academic attention is drawn to providing insights into IS
integration in the M&A processes ( Johnston and Yetton, 1996; Giacomazzi et al., 1997;
Hasselbring, 2000; Aladwani, 2001; Roth et al., 2002; Granlund, 2003; Madapusi and
D’Souza, 2005; Mehta and Hirschheim, 2007; Henningsson and Carlsson, 2011;
Tanriverdi and Uysal, 2011). Although IS integration is apparently associated with
higher long-term business value (Tanriverdi and Uysal, 2011), given the complicated
nature of the M&A processes, the role of IS integration in the post-M&A integration
process and how M&A affects the IT integration still remain unclear.
In this paper, we perform a case study to understand the IS integration strategy of two
high-tech companies after merger and acquisition. The two high-tech companies are:
(1) a local leading internet equipment company; and
(2) one of the largest PC OEM manufacturers in the world.
These two companies provide an important research context because the product lines
of the two companies are perfectly complementary to each other. This context allows
us to show how the IS integration strategy during the M&A process is affected by such
particular context. Our key findings demonstrate that the uniqueness of both systems,
potential add-ons, and modifications need to be taken into account when integrating
the two systems. Otherwise, delays or disruptions of major operations may occur. The
nearly complementary product lines also result in additional challenges as it seems
that both firms do not need to integrate IT vendors in the short run. However, in the
long run, standardizing the system will be increasingly difficult and will affec t work
routines and cause cultural resistance.
The remainder of the paper is organized as follows. In Section 2, we review relevant
literature on post-M&A integration and M&A IS integration. We present our
methodology in Section 3. In Section 4, our case and the case findings are discussed.
We conclude with potential contributions in Section 5.
2. Literature review
A huge body of literature has investigated different perspectives of M&A activities
such as values created by M&A (Jensen and Ruback, 1983), factors affect the success of
M&A (Marks and Mirvis, 1998; Appelbaum et al., 2000; Nguyen and Kleiner, 2003;
Lipponen et al., 2004), and M&A motives and performance (Goldberg, 1983; Morrison
and Floyd, 2000; Kee, 2003). Other researchers have focused on post-M&A integration
(Haspeslagh and Jemison, 1991; Birkinshaw et al., 2000; Larsson and Lubatkin, 2001).
Some studies in this stream of literature analyze the challenges of post-M&A
integration, such as organizational fit (Chatterjee et al., 1992), top employee turnover
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