Successful Partnerships: A Matter of Experience?

Abstract

IntroductionPartnerships and Success RatesIn order to survive in the long run, most organizations look for collaboration with other organizations. The types of partnerships may vary from open networks to mergers. In open networks the aim is often at co-innovation projects. In merger situations both organizations become integrated and loose their autonomy to a large extent. In between many other options can be chosen, such as alliances or joint ventures. As a result of changing motives partnerships can evolve over time (Ulrich et al., 2005; Grotenhuis and Kamminga, 2008).Just like in marriage, expectations are often very high, however, success rates prove to be disappointing. In case of mergers and acquisitions, less than 50% of the partnerships are referred to as a success (Lajoux, 1998). Nevertheless we witnessed an increase of the number of mergers and acquisitions, as well as an increasing value of the transactions over the past decades. Unfortunately, mergers and acquisitions often appear to be non-rational transactions.Reasons for success or failure can be divided to the pre-merger phase and the post-merger phase. During the pre-merger phase, financial or legal issues often make that parties do not come together. Sometimes personal issues, related to trust (Boersma, 1999), play a role. During the post-merger phase, most scientists indicate personal, cultural differences as the bottlenecks for a successful relationship (Tihanyi et al., 2005). Differences as such, however, do not necessarily play a huge role. The impact of differences depends on the degree of integration versus autonomy, and on the way the merger is being managed (Grotenhuis, 2001).Concluding, many partnerships are not very successful. Most studies aim at the pre-merger phase where legal and financial issues play a major role to explain reasons for success and failure. This paper provides insights in the post-merger integration phase. The focus is on different factors that influence the learning process in order to prevent similar mistakes and thus increase changes for success.From Courtmaking to Divorce?The metaphor of a marriage is being used on a frequent basis as people prepare everything for the wedding day itself and the ceremony. Parallel, organizations prepare a merger very careful during the due diligence stage. However, the moment the merger agreements have been signed, management often seems to think that business will continue as usual, although a new merger combination needs a lot of management attention to become a success (Haspeslagh and Jemison, 1991).Cartwright and Cooper (1992) identified different stages for M&A that are directly derived from marriage. The different stages are briefly characterized in the figure below.The parallel is evident: it is about people who have to find each other and to work together. Further, similar to mergers, many marriages are not successful either. It is about building trust, managing cultural differences, about managing expectations, and clear communication about the motives and desires for both partners. Success is not a single result or point in time, but it is a process that's needs management attention.The Impact of ExperienceAs in marriages, mergers need to be managed and monitored carefully in order to become a success. Especially during the post-merger phase, management attention is crucial. Most scholars agree about the need for active management when it comes to integrating the different organizations (Bakker and Helmink, 2000). Further, some scholars stress the relevance of making use of insights from the due diligence process for the integration stage (Nolop, 2007). However, hardly any study investigated the way (integration) managers can learn from previous merger experiences. Often, integration managers only deal with one or two mergers during their career. This is a pity as their field experiences are very valuable for following integration processes. …