Financial Strategy, Second Edition

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Mergers, MNEs and Innovation

The Need for New Research Approaches

Christian Berggren

1. INTRODUCTION

Since the mid-1990s, a wave of merger has been sweeping through Europe and North America, affecting a wide range of sectors: banking, telecommunications, cars, pulp and paper, oil, and so on. Increasingly, these mergers are of the cross-border kind. According to UN estimates, cross-border mergers and acquisitions rose from the level of $86 billion a year in 1991 to $1.1 trillion in 1999 (United Nations, 2000). The record figure for 1999 represented a doubling of the previous year's figure, itself a record. Many of these deals have brought together firms of comparable size, with the result that the entity as a whole has roots in at least two countries. Examples include BP–Amoco, Astra–Zeneca, Daimler–Chrysler, Hoechst–Rhone Poulenc and Vodafone–Mannesmann. Recurrent merger waves have been part of economic life in Western economies since the end of the 19th century, and a rich literature of merger studies has emerged. In the financially oriented studies the focus is on economic outcomes, defined in various ways. In the management and organisation science field, the emphasis tends to be on post-merger implementation processes and problems such as culture clashes, competitive position games, communication challenges or learning potentials. In much of this management literature, the basic financial rationale and economic imperative justifying the merger is more or less taken for granted ...