Contribution of Governance Theories of the Firm to the Analysis of M&A and Post-Merger Integration of the Information Systems

We study the potential contribution of governance theories to analysing the post-merger integration of the IS. We provide a clarifying overview of neoclassical theory of the firm, the nexus of contracts perspective, agency theory, early incomplete contracting literature, transaction cost economics and property rights theory, and discuss their contributions to the existence, boundaries and internal organization of M&A, as well as their contribution to the analysis of post-merger integration of the IS. The key findings of this paper are firstly that the governance theories of the firm discuss amply a number of issues that are of essential importance in the analysis of M&A as well as the post-merger IS integration, and secondly that there are clear shortcomings in the way they try to define, explain and help in the governance of M&A. What this means is that the governance theories of the firm can and should be used in discussing M&A and the IS integration, and they have vast potential for the development of an integrative theory in this field. The study shows that the key contributions of the various governance theories of firm have direct applications to understanding and managing the post-merger information systems integration.