Measuring dynamic capabilities-based synergies using real options in M&A deals: Amazon's acquisition of Whole Foods

Abstract

Dynamic capabilities have become well established as a new imperative for organising M&A processes. However, understanding the full benefits and possible limits of real options applications to measure a dynamic capability-based (managerial) synergies remains a challenge. The author developed three propositions and justified them by application of dynamic capabilities framework and real options theory to highly strategic and not standard M&A deal: Amazon's acquisition of Whole Foods in 2017. The illustrative case study made it possible to bridge together two streams of research on dynamic capabilities and real options. While the empirical application of the dynamic capabilities' framework makes them more visible, the application of the real options is making dynamic capabilities measurable in the M&A deals. In the end, the author discusses theoretical and managerial contributions, limitations, and future work.