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To integrate or not to integrate ? complementarity, similarity, and acquisition value creation


  • Zaheer, Akbar
  • Castaner, Xavier


  • Souder, David


In this paper, the authors explain that relatedness is often associated with acquisition value creation without distinguishing between three underlying sources of synergy: business similarity, product complementarity and geographic complementarity. The authors argue that realizing value in acquisitions requires maching the type of relatedness with the appropriate degree of integration; specifically high integration for business similarity, medium integration for product complementarity and low integration for geographic complementarity. Empirical validation, broadly supporting their hypotheses comes from 88 M&As

Suggested Citation

  • Zaheer, Akbar & Castaner, Xavier & Souder, David, 2006. "To integrate or not to integrate ? complementarity, similarity, and acquisition value creation," Les Cahiers de Recherche 814, HEC Paris.
  • Handle: RePEc:ebg:heccah:0814

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    References listed on IDEAS

    1. Hitt, Michael A. & Harrison, Jeffrey S. & Ireland, R. Duane, 2001. "Mergers and Acquisitions: A Guide to Creating Value for Stakeholders," OUP Catalogue, Oxford University Press, number 9780195112856.
    2. Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April.
    3. Milgrom, Paul & Roberts, John, 1995. "The Economics of Modern Manufacturing: Reply," American Economic Review, American Economic Association, vol. 85(4), pages 997-999, September.
    4. JS Armstrong & Terry Overton, 2005. "Estimating Nonresponse Bias in Mail Surveys," General Economics and Teaching 0502044, EconWPA.
    5. Milgrom, Paul & Roberts, John, 1995. "Complementarities and fit strategy, structure, and organizational change in manufacturing," Journal of Accounting and Economics, Elsevier, vol. 19(2-3), pages 179-208, April.
    6. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    7. Teece, David J., 1980. "Economies of scope and the scope of the enterprise," Journal of Economic Behavior & Organization, Elsevier, vol. 1(3), pages 223-247, September.
    8. Nicolaj Siggelkow, 2002. "Misperceiving Interactions Among Complements and Substitutes: Organizational Consequences," Management Science, INFORMS, vol. 48(7), pages 900-916, July.
    9. Healy, Paul M. & Palepu, Krishna G. & Ruback, Richard S., 1992. "Does corporate performance improve after mergers?," Journal of Financial Economics, Elsevier, vol. 31(2), pages 135-175, April.
    10. Armstrong, J. Scott & Overton, Terry S., 1977. "Estimating Nonresponse Bias in Mail Surveys," MPRA Paper 81694, University Library of Munich, Germany.
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    More about this item


    mergers and acquisitions; value creation; integration;

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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