Kyunghee Lee accepted for publication in Management Information Systems Quarterly
Mike Ilitch School of Business Assistant Professor of Information Systems Management Kyunghee Lee has been accepted for publication in Management Information Systems Quarterly, which focuses on knowledge concerning development of IT-based services, management of IT resources and the use, impact and economics of IT with managerial, organizational and societal implications.
The article, “Does IT Matter to Acquisitions? The Impacts of IT Distance on Post-Acquisition Performance,” was co-authored by Animesh Animesh, Kunsoo Han and Alain Pinsonneault, all of McGill University.
Although researchers have examined the role of dyadic dynamics (i.e., interactions between the acquirer and the target firm) in the success of acquisitions, little attention has been paid to the role of information technology (IT). In this study, we extend this stream of literature by examining how the pre-acquisition IT distance (i.e., the difference between the enterprise IT systems of the two firms that reflects the system incompatibility and resulting costs of system integration) affects the acquirer’s post-acquisition performance. To measure IT distance, we use a word embedding technique to map each firm’s IT systems portfolio to a low-dimensional embedding space and calculate the distance between firms in that space. Using data on U.S. firms’ acquisition activities over seven years, we find that IT distance is negatively associated with the acquirer’s post-acquisition performance. Also, the adverse effect of IT distance is stronger for acquisitions motivated by operational synergies, compared to those seeking non-operational synergies. This finding supports our theory that IT distance disrupts post-acquisition synergy creation, and more so when the combined firm has a greater need for tight integration to create acquisition synergies. This research contributes to the merger and acquisition (M&A) literature in management and IS by introducing a novel concept of IT distance and by theorizing and empirically examining its performance implications in acquisitions. The findings of this study can inform practitioners on how to devise IT strategies in corporate acquisitions to mitigate IT risks and achieve greater post-acquisition performance.