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Title: An exploration of the importance of trust in the post-acquisition integration context in high-technology industry
Author: Derbyshire, Edmund
Awarding Body: University of Portsmouth
Current Institution: University of Portsmouth
Date of Award: 2010
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Abstract:
The acquisition and successful integration strategies of companies is of particular interest given the significant numbers of acquisition failures: over 65% of acquired companies are either sold or divested within the first two years of new ownership (Dooley & Zimmerman, 2003). The cost of a failed acquisition can run into tens of millions of euros. If acquisition is important as a means of growth than are there means available to increase the chances of success? Acquisition as primary source of inorganic growth is important within the high-tech sector as this allows the acquiring company to obtain critical new technologies and products as well as access new or adjacent markets (Marks & Mirvis, 2001). In acquiring a high-technology company the acquirer is, in essence, buying the extrinsic and intrinsic knowledge resident with the acquired staff (Chaudhuri & Tabrizi, 1999). Whilst the extrinsic knowledge may be captured in documentation and drawings it is the intrinsic knowledge that may well be critical for realisation of the full value of the acquisition. This key knowledge is normally held by a small number of the acquired staff (Wooldridge, 2006). If these key staff members then, as a result of either the acquisition itself, or the ensuing integration, become unsettled or unwilling to remain in employment with the acquiring company then this knowledge is at risk. The exodus of thesekey staff members could well significantly devalue the purchase and, in extreme cases, could render the acquisition a failure (Hacker, 2003). At the point of acquisition the only initial legal safeguard to retaining the critical staff members is their contracts of employment. The uncertainty caused by the acquisition and subsequent integration could cause the staff member to reassess his or her role in the new organisation and decide to leave the company (Krug, 2003). If sufficient key staff leave the company the damage may be significant. The challenge of retaining these key staff members at acquisition and, subsequently, through and beyond the integration process is thus critical, particularly for hightech' companies (Chaudhuri & Tabrizi, 1999). Given the terms of employment are initially deemed to be satisfactory by the acquirer, what other measures can be put in place to ensure the retention of these key people in the new organisation? This research explores aspects of trust, its definition, development and role in the postacquisition integration context of the high-tech electronics area and whether trust could be one of the factors that influenced key staff to remain with the acquired company in two different geographic locations. The practical outcome was the development and production of a number of trust measurement tools that were first utilised and then supplied to the case study companies for ongoing use for both post-acquisition integration and also general monitoring The research was undertaken, consequently, driven by the need to explore conditions and contingencies of trust that may provide important new knowledge that can be utilised to assist with attempting to understand the role of trust in the context of high-tech company acquisitions. Two case studies at two separate geographical locations (in two countries) within a leading edge technology company have been completed. These studies were both designed to be longitudinaland multilevel in nature, encompassing both the relationship from staff to management and from management to staff. A further aspect that has been explored is the relationship between `head office' senior management and the geographically remote acquired company management. Full access has been granted to all staff and management constituting an excellent data gathering opportunity. A numbero f trust measurementto ols haveb eenr evieweda nd severals electedf or use (Gillespie, 2003, Spreitzer & Mishra, 1999). However, examination of the literature concerning trust measurement has indicated there is some absence of suitable tools that can measure trust spanning from a belief trust base (where the trustor believes he/she can trust the trustee) through to trust informed actions (Dietz & Den Hartog, 2006). This lack of appropriate means of measurement has led to development of two further trust measurement tools that will span this range of trust. To add to the value of the studies, as mentioned above, several points of trust measurement were carried out. Longitudinal trust measurement was selected on the basis of seeking to establish trust trends and possibly related management actions. Data has been collected over three years. Data has been gathered through surveys and semi-structured interviews to afford a mixed method quantitative/qualitative approach. The thesis contains an extensive review of the trust literature, describes the reasons for choice of the above mentioned methodology and reports results of analysis on the data collected to-date. The study concludes with discussion of the potential contingencies that can be undertaken by management in order to both monitor and maintain trust levels, the limitations of the research and areas for further study
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.534463  DOI: Not available
Keywords: Business and Management
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