Abstract
Organisations are challenged with executing innovation for sustainable development within the context of their operations and value networks—networks which are increasingly fuelled by mergers and acquisitions (M&As), and which accounted for USD 4 trillion in global deal value in 2019. While outcomes from M&As may produce mixed results, merger synergies fundamentally change the environmental, social and governance (ESG) footprint of an organisation and its product-supply chain. These compounding challenges of innovation for sustainability and ESG product-supply chain due diligence are not adequately explored in the operations management literature or practically considered during M&As. In this article, we consider those factors that determine “how innovative is the deal?” and explore how environmental supply chain innovation for sustainability might inform M&As. A case study approach is adopted, drawing upon an exemplar deal within the global food product-supply chain for ingredient production, where high M&A deal-interest and ESG sustainability considerations exist. The theoretical lens is the resource-based view (RBV) of the firm. A deal analysis framework, integrating key concepts from strategic environmental supply chain management and the M&A process literature, is defined. These findings suggest that product design and technology selection factors represent sources of M&A value creation when exploring an innovation for sustainability deal thesis. The implication for firms with ambitious environmental agendas or motives is that the M&A process needs to be reconfigured, such that product design and technology selection, currently secondary factors, are considered primary drivers. Together, these drivers form substantive strategic considerations and new merger motives of both theoretical and practical relevance, informing a new perspective of operations sustainability targeted M&A.
Highlights
At the United Nations (UN) Sustainable Development Summit on 25 September 2015, world leaders endorsed the 2030 Agenda for Sustainable Development
We explore the relationship between environmental supply chain innovation for sustainability and mergers and acquisitions (M&As) by considering the factors that determine “how innovative is the deal?” We make the argument that due diligence of environmental supply chain innovation capabilities for sustainability is an under-explored source of M&A value, and a substantive merger motive of both theoretical and practical relevance
While this article builds upon the operations management M&A process perspective, our findings suggest that environmental sustainability considerations can materially inform M&A and that specific considerations should be given to environmental product and technology value as merger motives
Summary
At the United Nations (UN) Sustainable Development Summit on 25 September 2015, world leaders endorsed the 2030 Agenda for Sustainable Development. At the Paris climate conference (COP21), 195 countries adopted the first-ever universal, legally binding global climate agreement. This agreement defines 17 inter-connected Sustainable Development Goals (SDGs) and 169 individual targets; the goals range from climate action to responsible consumption and production. International organisations face the challenge of implementing this transformation to net-zero emissions within the context of their operations and value networks. Networks that are both linked at their most fundamental levels to issues such as water scarcity and air pollution [1], and increasingly fuelled by mergers and acquisitions (M&As), which in 2019 hit a record USD 4 trillion in deal value [2]. Other sectors experiencing high M&A activity in 2018-19 were technology, energy and specialty chemicals
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