The impact of mergers and acquisitions' on product innovations: a case study of SG - SSB Ltd
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Date
2008-08-15
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Abstract
Mergers and Acquisitions (M&A) are changing the structure of many banking sectors in today's world. They are not a force of change in themselves but rather a response to the forces of change and to changes in market structures. And the impact of M&A on the global national economy has been remarkable as many organizations have been using it as a strategy for growth. Some organizations have also been using it as a means to foster innovations within the organization and to ensure the growth of the entire firm. Countless companies in all industries have grown very fast in part due to aggressive mergers and acquisitions and this is as a result of the impact of technology. Globalisation has also forced many banks to explore M&A as a means to develop an international presence and expanded market share. Concurrent with the heavy M&A-activities, innovation has become increasingly important as a way for companies to achieve and maintain a competitive advantage. With both M&A and innovation central in today's competitive development, it is important to understand the consequences of M&A transactions on the innovative activities of the firm.
The effects of M&A on the innovative activities of the firm, in the specific context of product innovation and branch development have been investigated at SG-SSB. This is because researchers have been challenged to balance both the detrimental and beneficial effects of M&A on the innovativeness of the firm. The case study approach was used to analyse this effect.
The case study design employed for collecting this data allowed for the uncovering of how M&A impacts innovation by interviewing key managers and customers and scrutinizing the dynamic reorganization process of SG-SSB and their M&A deal. The study revealed that an M&A could impart positively or negatively on a bank depending on how the deal is handled, area of concentration by the company, motive behind the deal and the effort put into research and development after the deal. The results revealed that M&A activities can enhance the level of innovativeness of a company increasing their level of products new for the firm. This increase of innovation levels, however, seems to takes place only in relation to the company. When concentration is done on the degree of firm's innovativeness, considering the products new for the market, the situation is different. In this case, M&A activities do not seem to
be relevant in increasing products new to the market. This results seems to suggest that
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M&As enhance the internal renewing of a firm, strengthening its capabilities to introduce products that were already present in the market, but not produce by the firm. In a certain sense, M&As seems to increase the competitiveness of the firm in the market, making it able to imitate products that before were not produce internally. However, M&As do not seem to improve the firms capabilities and competences necessary to introduce into the market a completely new product.
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A Thesis submitted to the School of Business, Kwame Nkrumah University of Science and Technology, Kumasi -Ghana In partial fulfillment of the requirement for the Degree of Master of Business administration (2008)