Mergers between size-unequal partners: Strategic risks and hurdles

Purpose: This article aims to explore how and why the creation of technological innovation during a merger can end in failure. The objective is to propose new analytical elements to improve the formulation and execution of the integration process between an SME (small and medium enterprise) and a large enterprise. Design/methodology/approach: The authors develop a theoretical framework based on the main research results from several fields, including technology transfer, innovation dissemination, and management. This case study then focuses on a merger in the IT sector in real time. Findings: This study allowed the authors to test theoretical elements, especially the choice of the integration method, which may favour the creation of technological innovation during the integration period. The authors present new reasons for the failure of co-created innovation between an SME and a large enterprise in the IT sector. This case study allowed them to test theoretical elements such as the choice of an integration method which could favour the creation of technological innovation during the integration period while enriching scientific knowledge by proposing a dynamic approach to the integration process. Originality/value: Before managers can envisage symbiosis between two merging firms, they first need to go through a period of exploration, which may entail costly mistakes. Yet this exploration period may be necessary to enable them to discover the limitations of a strictly rational approach to the integration process and to broaden their normal frame of reference. For this in-depth study, the authors benefited from free access to a substantial amount of information that is generally unavailable for scientific research, which greatly contributed to their work. The authors' theoretical framework is not exhaustive, but they tried to incorporate the most significant research results.