Value creation and the challenge of joining forces: Evidence from open innovation and mergers and acquisitions

Abstract: Value creation is pivotal for organizational survival, growth, and competitiveness. The topic has attracted a growing interest from scholars looking for new ways to analyze how firms create value for themselves and their stakeholders. The means of value creation involve a wide array of strategies, tools, and forms of interaction. Focusing on the challenges of joining forces, this thesis explores two commonly used practices in collaboration with others to create value: mergers and acquisitions (M&A) and open innovation (OI). Both practices are highly complex. Despite the common use, they often fail to deliver the intended outcome, for example, in terms of synergies, complementarities, and increased efficiency. This thesis consists of two empirical papers and an introductory chapter. The themes discussed in each of the enclosed papers investigates value creation and the challenges of joining forces with other organizations. Paper 1 introduces a novel business model lens to study post-merger integration in M&As. This study combines firm-level case study research (in the European material handling industry) on business models and M&A to explore how differences in business models affect value creation and synergy realization during postmerger integration. The case evidence suggests that business model congruence – the fit between merging business models, achieved through the careful stitching of business model components into a value-creating system – is a critical factor impacting post-merger integration. Paper 2 focuses on OI and explores the challenges to successful value creation in partnerships between large and small firms. Based on field studies and interview data, I uncover distinct challenges that large and small firms experience and what tactics can be used to address such challenges. This thesis contributes to the understanding of what impacts value creation when organizations join forces through M&A and OI. Emphasizing two common collaborative strategies with a novel theoretical approach allowed me to investigate the mechanisms for value creation at a more granular level than previously examined. The combined theme of the thesis adds to M&A, OI and strategic management literature by providing relevant insights on the impact of interorganizational relations and organizational differences on collaborative strategies. By integrating business models into the M&A literature, I expand the concept of strategic fit, offering an opportunity to rethink how synergies are created. My approach of focusing on OI partnerships between large and small firms contributes to the understanding of how value is created in a collaborative context by identifying how large and small firms engage in collaboration with very different perspectives and capabilities. Factors that, if not mitigated, hamper the relationship and intended value creation, respectively. Having identified these relational challenges, I present remedies that seek to establish mutual trust from the start of the partnership. By contributing to a new understanding of common strategies for creating value in collaboration with others, I derive implications for strategic similarity, synergy realization, and OI.