The impact of integration strategy on organisational innovation and growth in the global automotive industry

Abstract

The aim of horizontal integration strategies, which often require a mix of Mergers and Acquisitions (M&As), and strategic alliances is ultimately to maximise corporate long-term profits. In recent times, the global automotive industry has developed the use of M&As and alliances far more intensively. Another trend allied to this is the development and adoption of new technologies. This investigation will provide an overview of the major automakers' technological and strategic trends and will examine the impact of integration strategy on organisational innovation and growth. Longitudinal data were collected over the 2002 to 2006 period. Regression analyses revealed that horizontal M&As were negatively related to both innovation and growth. Strategic alliances were negatively related to innovation, but positively related to growth. Furthermore, Multidimensional Scaling (MDS) analyses indicated that M&As in the auto industry also increased the degree of industrial consolidation in the global market.