Information technology and corporate acquisitions
Du, Kui, active 2013
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This dissertation examines how information technology can help acquirers to improve the performance of their acquisition targets. An acquisition creates value when the acquirer can generate more returns from the acquired business than its former owner can, a condition we call the acquirer's parenting advantage. Then, we introduce two IT-related sources of parenting advantage. Acquirers with more extensive process digitization can provide richer digitized resource to serve their newly acquired businesses, and acquirers with more related process digitization can unlock more synergies between the newly acquired and existing business units. So, as we argue, digitization extensiveness enables a digitization-revitalization mechanism for acquisition value creation, and digitization relatedness enables an integration-synergy-creation mechanism. Both mechanisms can be carried out through digital accommodation activities after acquisitions. Furthermore, the digitization gap between acquirers and targets is a major contingency for digital accommodation, with the second mechanism functioning mostly when the target has already had advanced digitization achievements. We empirically validated these hypothesized relationships by tracking the IT and performance changes in 109 U.S. hospitals before and after they were acquired, using a 7 year study timeframe.