Dynamic Capabilities in Acquisitions : When Acquirer and Target Employees Face Contradictory and Complementary Human Resource Signals

Strobl, Andreas and Bauer, Florian and Shepherd, Neil and Lou, Bowen and Tarba, Shlomo and Dao, Mai Anh (2024) Dynamic Capabilities in Acquisitions : When Acquirer and Target Employees Face Contradictory and Complementary Human Resource Signals. British Journal of Management. ISSN 1045-3172

Text (Manuscript_R2_final)
Manuscript_R2_final.pdf - Accepted Version
Available under License Creative Commons Attribution.
Download (520kB)

Abstract

Dynamic capabilities are crucial for firm survival and success, but to survive and succeed firms must manage multiple higher- and lower-order dynamic capabilities that can be complementary, but also conflicting. Utilizing human resource (HR) signaling theory, we provide new theoretical insights into the conditions, mechanisms, and reasons why Mergers and Acquisitions (M&A) capabilities (a lower-order dynamic capability) and organizational agility (a higher-order dynamic capability) are sometimes complementary, and at other times contradictory during acquisition integration. Our theory disentangles the interaction between these capabilities and explains how they act as a double-edged sword. We test our theory development using survey data from 91 acquisitions taking place in Germany, Austria, Switzerland, and Lichtenstein. Our results show that conflicting HR signals from M&A capabilities and organizational agility cause acquirer-target conflict, complicating post-merger integration and hindering knowledge transfer; while complementary signals enhance knowledge transfer. The findings provide important implications for the M&A, HR management, and dynamic capabilities literature, as well as valuable insights for M&A practitioners.