Implementing Strategy in a Newly Acquired Firm

A failure rate of 50 per cent or more in acquisitions makes postacquisition management a challenging topic for both academicians and practitioners. The topic, however, still calls for creative investigations and analysis of successes and failures. The present contribution follows the direction given by Datta (1991) when suggesting that ‘an interesting area for future research relates to the process of implementation [of acquisitions], and how the process can best be managed’. This chapter deals with strategically motivated acquisitions and explores the following aspect of post-acquisition management: strategy implementation by an acquiring firm in a newly acquired firm. It is argued that traditional models of strategy implementation have some shortcomings as a guide for post-acquisition management; using a field study reported in von Krogh (1990), some elements of an alternative approach to strategy implementation are presented and discussed. In our approach, the degree of autonomy of the acquired unit is dynamic and dependent on post-acquisition performance. There is an emphasis on the management of communication, and synergy is implemented in a self-organising fashion. Finally, some implications for future research and management practice are discussed.