Acquiring and developing new technology has been fraught with uncertainty and risk in mergers and acquisitions (M&As).
M&As have increased globally as brands seek new technologies and know-how to expand capabilities and gain a competitive advantage. A recent study by the University of Aberdeen's Business School and the University of Macau assessed M&As carried out by American companies between 2014 and 2019.
The report revealed that while technological similarities boost the relevance of the acquired firm's technology to a certain point, power imbalances reduce over time, while the firms remain mutually dependent. For example, Oracle's $7.4 billion acquisition of Sun Microsystems, was subjected to intense pressure to remove discrepancies in organisational culture, incentive mechanisms, and other areas.
Senior executives involved in technological M&As should be aware of the significance of inter-firm relationships, particularly power imbalances and mutual dependence. Leaders should improve interdependence relationships to build trust, as mutual dependency improves the quality and quantity of interactions. To enable collaborative working within and among teams, brands should reduce the power imbalance between the two parties.
[3 minute read]
