Acquisitions and network identity change

Abstract

Purpose The purpose of the paper is to discuss whether or not an acquisition changes the network identity of an acquired firm and, if so, how. This study aims to bring new insights to the corporate marketing field, as it examines corporate identity in the context of how a company is perceived because of its relationships with other firms. The focus of this research is acquired innovative firms. Design/methodology/approach This paper adopts a multiple case study approach. Data on four acquisitions of innovative firms were collected using 41 interviews, which were supplemented with secondary data. Findings Based on the case studies, it can be concluded that the network identity of the acquired firms does change following an acquisition. The acquired firms inherited the acquirers' identity, regardless of whether or not the companies were integrated. Previous, present and potential business partners regarded the innovative firms as being more solvent, but distanced themselves. In addition, some of them regarded the innovative firms as competitors. Practical implications Changes in the way a firm is perceived by its business partners, following an acquisition, will influence the future business operations of the firm. Expected changes to business relationships should ideally be considered part of due diligence. Acquirers need to consider how they can minimise the risks associated with business partners' changed perceptions of acquired firms. Originality/value This paper contributes to the research on identity, through discussion of the consequences of an acquisition for the identity and relationships of a firm. It also contributes to the existing corporate marketing literature, through consideration of perceptions at a network level. Furthermore, this paper contributes to merger and acquisition literature, by highlighting the influence of ownership on relationships with external parties.

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