Impact of Information Technology Infrastructure Flexibility on Mergers and Acquisitions

Post-M&A IT integration capability is a different construct compared to IT integration capability in the supply chain presented in prior literature (e.g., Rai et al. 2006; Rai and Tang 2010; Ward and Zhou 2006). IT integration capability in the supply chain refers to the firm’s ability to integrate systems, data, and information with the suppliers’ (customers’) systems, data, and information (Rai et al. 2006; Rai and Tang 2010). Post-M&A IT integration capability refers to firm’s ability to integrate the IT technical infrastructure, IT personnel, and IT and business processes of the target with the IT technical infrastructure, IT personnel, and IT and business processes of the acquirer after an M&A. The scope of post-M&A IT integration capability is M&A instead of the supply chain (Suddaby 2010). While IT integration in the supply chain is mainly concerned with exchanging data and information with suppliers (customers) to achieve integration of the supply chain; post-M&A IT integration pursues integration of the technical, human, and business process infrastructures of the acquirer and the target firm to develop one integrated IT infrastructure for the merged firm. In this way, the difference between IT integration capability for supply chain and postM&A IT integration capability is analogous to the difference between arms-length coordination between two separate organizations and internal coordination between two independent business units that are co-owned. Specifically, IT integration in the supply chain involves interconnected processes and standardization in the information that is exchanged between independent firms to achieve coordination in the supply chain (Gosain et al. 2005). However, in post-M&A IT integration, the acquirer and the target strive for standardization in all the data and business processes in the merged firm, not just the supply chain processes, and the integration of the human infrastructure of the target into the human infrastructure of the acquirer. Similarly, the scope of M&A integration is greater than supply chain integration. The maximum level of supply chain integration would be vertical integration. However, an M&A integration can also be horizontal or a conglomerate acquisition (Fan and Lang 2000).