How do firms upgrade innovation capabilities through the coevolution of post-merger integration and network reconstruction? A multiple-case study of Chinese companies

Abstract

Purpose Post-merger integration (PMI) is driven by coevolving processes. This paper examines the coevolution of dynamic integration strategy and network reconstruction and explores how these processes systematically enable emerging market acquirers to upgrade innovation capabilities.Design/methodology/approach This paper conducts a multi-case study based on four Chinese overseas acquisitions of manufacturing firms. The data were collected from interviews and archival documentation.Findings This study develops a coevolutionary framework of dynamic integration strategy and network reconstruction to explain processes and mechanisms of an acquirer’s innovation capability upgrading. This framework identifies three network motivations, namely, network access, network connection and network synergy. Under different network motivations, dynamic transitions of the acquirer’s integration strategy coevolve with multi-level reconstruction of its networks. Collectively, they are important mechanisms driving innovation capability moves from imitation innovation to asportation and reimitation innovation and then to independent innovation.Originality/valueThis paper responds to a recent call for more insights into the dynamics of PMI and contributes to the research on emerging market multinational corporations’ post-acquisition integration. By integrating the M&A and networks literature, the paper provides evidence of unexplored mechanism of network changes during PMI. It reveals that how acquirers manage the dynamics of PMI to gradually achieve multi-level reconstruction of their networks. Based on a coevolutionary framework, the paper provides a process perspective on how the coevolution of PMI and network reconstruction promotes the upgrading of innovation capabilities.