Marketing Integration Decisions, Intermediate Goals and Market Expansion in Horizontal Acquisitions: How Marketing Fit Moderates the Relationships on Intermediate Goals

DOIhttp://doi.org/10.1111/1467-8551.12364
Published date01 October 2020
Date01 October 2020
British Journal of Management, Vol. 31, 896–917 (2020)
DOI: 10.1111/1467-8551.12364
Marketing Integration Decisions,
Intermediate Goals and Market Expansion
in Horizontal Acquisitions: How Marketing
Fit Moderates the Relationships on
Intermediate Goals
Florian Bauer, Marcella Rothermel,1Shlomo Y. Tarba,2Ahmad Arslan3
and Borislav Uzelac4
Department of Entrepreneurship and Strategy, Lancaster University Management School, Lancaster, LA1
4YX, UK, 1Department of Strategic Management, Marketing and Tourism, University of Innsbruck, 6020,
Innsbruck, Austria, 2Birmingham Business School, University of Birmingham, Birmingham, B15 2TY, UK,
3Department of Marketing, Management and International Business, Oulu Business School, Universityof
Oulu, Finland, and 4Department of Marketing, Copenhagen Business School, 2000, Fredriksberg, Denmark
Corresponding author email: s.tarba@bham.ac.uk
Despite their enormous importance for value creation, marketing topics are broadly ig-
nored in merger and acquisitions (M&A) research. Even though the internal aspects of
M&A processes receivemuch research attention, marketing-related integration decisions
play an important role in customer retention and market expansion. In this paper, we
develop a model that integrates core marketingintegration decisions, intermediate goals
and market expansion by considering the contingency of marketing fit. The theoretical
framework was tested empirically through a sample of 82 horizontal acquisitions made
by acquirers from German-speaking countries. Our results show that there are no uni-
versally pertinent integration decisions; rather,there are important trade-os that, when
aggregated, may explainthe insignificant results achieved by commonly accepted success
factors. Furthermore, intermediate goals mediate the relationship between integration
decisions and market expansion. Implications for management researchand practice are
also discussed.
Introduction
Mergers and acquisitions (M&As) have been an
important source of non-organic growth for more
than 100 years (Bazel-Shoham et al., 2017). Next
to the development of new businessmodels, M&As
commonly serve the improvement of current firm
performance through the acquisition of resources
and capabilities to achieve either premium prices
or lower costs (Christensen et al., 2011). Despite
their popularity, their average success rates range
between 40 and 60%, while non-value-creating
acquisitions account for up to 70–90% (Chris-
tensen et al., 2011). Consequently, M&As have re-
ceived notable research attention since the 1960s
(Cartwright, 2005). Among the most commonly
analysed factors are either pre-merger character-
istics of the organizations involved, which serve
as synergy indicators, or factors aecting their re-
alization during integration (Bauer and Matzler,
2014; Gomes et al., 2013). Notwithstanding all
the eorts, researchers still acknowledge substan-
tial gaps in M&A research (Haleblian et al., 2009).
Weber, Tarba and Bachar (2011), for instance,
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Marketing Integration, Goals and Expansion 897
stress the importance of non-financial aspects in
unlocking the puzzle of M&A performance. In
line with Christofi, Leonidou and Vrontis (2017),
we argue that marketing is such an aspect where
M&As can disrupt customer relationships (Rogan,
2014; Rogan and Greve, 2015), impact customers’
buying decisions (Katoand Schoenberg, 2014) and
commonly lead to losses in market shares (Hard-
ing and Rouse, 2007).
There is growing interest in integration pro-
cesses and practices taking place after deal clos-
ing (Graebner et al., 2017; Homburg and Bucerius,
2006; Kling et al., 2014; Sarala, Vaara and Junni,
2017). Here, a number of studies concentrate
on the level of integration necessary for the
transfer of capabilities, the elimination of redun-
dant resources and the exploitation of synergies
(e.g. Birkinshaw, Bresman and H˚
akanson, 2000;
Weber, Tarba and Bachar, 2011; Weber, Tarba
and Reichel, 2009), while others focus on the
speed at which integration should take place (e.g.
Bauer et al., 2018b; Garcia-Canal, Rialp Criado
and Rialp Criado, 2013; Uzelac et al., 2016).
Speed is of critical importance given that orga-
nizations need to maintain an ability to react to
their changing business environments (Teece, Pe-
teraf and Leih, 2016), to reinvent and reposition
themselves (Shafer et al., 2001), which is particu-
larly salient in the case of M&As (Brueller,Carmeli
and Drori, 2014; Brueller, Carmeli and Markman,
2018). However, the findings of – and recommen-
dations in – extant studies diverge. While some
authors stress that integration should proceed as
swiftly as possible (Gadiesh, Ormiston and Rovit,
2003; Inkpen, Sundaram and Rockwood, 2000),
others caution that rapid integration can destroy
value as organizational members may develop re-
luctance to changes (Galpin and Herndon, 2008;
Marks and Mirvis, 2000). It is therefore unsurpris-
ing that several studies foundno significant perfor-
mance eects for integration speed (e.g. Bauer and
Matzler, 2014), which in turn indicates that our
understanding of the value-creating mechanisms
in M&As still remains opaque (Wei and Clegg,
2017b).
Consequently, researchers call for contingency
approaches, suggesting a typology of integration
strategies that varywith integration speed (Garcia-
Canal, Rialp Criado and Rialp Criado, 2013) as
the pre-deal context and earlier decisions need
to be considered (Meglio, King and Risberg,
2017). Similarly, some dierentiate the eects of
integration speed with regard to dierent goals,
leadership styles or decision-making preferences.
Schweizer and Patzelt (2012), for example, found
that relational, contextual, inspirational, support-
ive and stewardship-based leadership styles have
positive eects in the case of fast integration on
employee motivation to remain in the firm. By in-
vestigating dierent layers of integration, Uzelac
et al. (2016) found that fast human integration is
beneficial to M&A performance, while fast task
integration has the opposite eect, moderated
by decision-making preferences. Notwithstanding
such insights, a call for a more holistic approach
remains (Meglio, King and Risberg, 2017) and, for
example, Wei and Clegg (2017a) argue for a broad-
ening of the focus to include the interaction be-
tween integration speed and three broad groupsof
strategic resources(managerial, customer-oriented
and supplier-oriented resources).
Here,itissurprisingthatmarketing–adis-
cipline deeply concerned with value-creating
mechanisms (Madden, 2006; Pahud de Mortanges
and van Riel, 2003) – has not yet given M&As their
due research attention (Homburg and Bucerius,
2005; Christofi, Leonidou and Vrontis, 2017). This
is all the more surprising knowing that M&As not
only disrupt the relationships between internal
stakeholders – such as employees – but also
customer relationships (Kato and Schoenberg,
2014); as the latter have attitudes towards, and
perceptions of, firms and their products (Bekier
and Shelton, 2002). It has been shown that M&As
can increase customer turnaway (Bommaraju
et al., 2017; Heinberg, Ozkaya and Taube, 2016;
¨
Oberg, 2014; Thorbjørnsen and Dahl´
en, 2011),
and Harding and Rouse (2007) suggest that about
two-thirds of all acquiring firms lose market share
following an M&A. This highlights the impor-
tance of downstream activities such as branding,
marketing or sales forces, especially in horizontal
M&As (Capron and Hulland, 1999; Vermeulen
and Barkema, 2001). However, to date, only a
few studies have investigated marketing-related
decisions in M&As (Bahadir, Bharadwaj and
Srivastava, 2008; Capron and Hulland, 1999;
Homburg and Bucerius, 2005; Jaju, Joiner and
Reddy, 2006; Kato and Schoenberg, 2014; Lusch,
Brown and O’Brien, 2011; Rahmanand Lambkin,
2015; Swaminathan, Murshed and Hulland, 2008).
In their review of marketing research in M&As,
Christofi, Leonidou and Vrontis (2017) stress
the need for more empirical studies focusing on
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