Although mergers and acquisitions (M&A) are a common strategy to reduce costs and pursue growth, the variance in returns from M&A is very high. This research examines how information technology (IT) infrastructure flexibility affects M&A. We use a combination of secondary as well as matched-pair survey data from 100 midsize firms in Spain to investigate this relationship. The empirical analysis suggests that IT infrastructure flexibility affects M&A through two key pathways: (1) a flexible IT infrastructure facilitates the development of business flexibility that provides the responsiveness to seize M&A opportunities and make acquisitions, and (2) a flexible IT infrastructure facilitates the development of post-M&A IT integration capability that provides the control to integrate the IT and business resources of the acquired firm and realize the economic benefits from M&A.
Bibliographical noteFunding Information:
We thank Arun Rai (Senior Editor), the anonymous associate editor, and three anonymous reviewers for their helpful comments to improve this work. Jose Benitez would like to acknowledge that this research was sponsored by the European Regional Development Fund (European Union) and the Government of Spain (ECO2013-47027-P), the Regional Government of Andalusia (Research Project P11-SEJ-7294), and the COVIRAN-Prodware Chair of Digital Human Resource Strategy at the School of Human Resource Management of the University of Granada, Spain. This research was partially performed while Jose was affiliated with the University of Granada. Jörg Henseler acknowledges a financial interest in ADANCO and its distributor, Composite Modeling.
- Business flexibility
- Business value of IT
- Dynamic capability
- IT infrastructure flexibility
- M&A activities
- Post-M&A IT integration capability
- Post-M&A performance