Exploring AI-ESG-Driven Synergies in M&A Transactions: Open Innovation and Real Options Approaches

This study aims to explore the intersection of Artificial Intelligence (AI), Environmental, Social, and Governance (ESG) factors, and Open Innovation (OI) within the context of mergers and acquisitions (M&A). As ESG considerations increasingly influence corporate strategy and valuation, integrating AI offers powerful tools for enhancing due diligence, reducing risks, and creating long-term value. Building on the ARCTIC framework, an extension of the VRIO framework and real options theory, this paper introduces a new method for measuring AI-ESG-OI-driven synergies in mergers and acquisitions. It highlights the crucial role of Open Innovation in facilitating cross-boundary knowledge exchange, federated learning, and collaborative ESG data analysis. Based on recent advances in AI-ESG-enabled OI practices, such as multi-agent systems, synthetic data, and decentralized innovation, this paper shows how companies can address ESG complexity and cultural integration challenges. The findings indicate that incorporating OI principles into AI-ESG strategies not only enhances decision-making but also aligns M&A activities with evolving investor expectations and sustainability goals. The study concludes with practical insights and directions for future research in AI-driven, ESG-aligned corporate innovation.