Diagnostico social del área:

The dominant barrier that Villinger (1996) found in his study can be confirmed by the case study at FIRM Y, the language barrier is seriously preventing successful learning in this case. FIRM Y tries to work on this by offering English classes and making the assessments within these classes part of the bonus system. Unfortunately the English language level is still too low to enable clear communication between FIRM Y and FIRM X. The relatedness of the acquired company during the acquisition was relatively low, because at that time the company was merely an engineering office. In the post- acquisition phase more disciplines were added in order to increase the fit within FIRM Y’s strategy. The use of capabilities is more effective than in the pre-acquisition Tegema period.

The leadership style at FIRM X was found to be emphasized on the control perspective and focused more on individuals than on the organization as a whole. The coordinator, monitor and director role are represented the most in FIRM X’s leadership style, whilst the innovator, broker and producer role were not represented very strong. This implies focus on stability and continuity by the organization’s management. This leadership style falls noticeably in another quadrant as the organizational culture at FIRM X, which is more located in the flexibility oriented quadrants of Quinn’s (2003) competing values framework. This implies that FIRM X requires a leader that stimulates innovation by clearly defining and communicating a vision for the future that includes stimulation of creativity and risk- taking behavior in order to take advantage of the adhocracy oriented culture that employees claim to possess according to the results of the VOKIPO questionnaire. The global mindset that was proposed by Shimizu et al. (2004) was not found at FIRM Y’s management. The value of the different cultures is not recognized, it’s merely seen as something that has to be dealt with, there is no desire to combine the different cultures and get the best out of this combination.

The analysis of the used systems in the organization showed that there are still boundaries between FIRM Y and FIRM X. The subsidiary is not integrated in the PDM software of FIRM Y that could serve as a central knowledge repository for all users (including engineering, sales, procurement, project management and quality teams) regarding project and product history. This is complicating the collaboration between engineering departments, because e-mails are required when small modifications have been made to product designs. Someone at FIRM Y has to put information in the system manually. This process is sensitive for mistakes and can in some cases result in double work

or assembly errors. The adopted control system from FIRM Y to FIRM X is situated within the ERP system, this includes financial information that the financial controller of FIRM Y can monitor. Furthermore FIRM X has to deliver reports on a regularly basis to different departments of FIRM Y. The business processes regarding the jig departments were found to be nearly identical, which also implies that human resources are exchangeable between the jig department of FIRM Y and FIRM X. In order to stimulate employees at FIRM X a bonus system has been set up, which is based on a twice a year evaluation by FIRM X’s management and an English teacher. The bonus is related to a “best practice” employee who has a score of 100 percent. In the masculine culture of the Czech Republic this can have an undesired effect of too much competition amongst employees, but it does stimulate people to get the best out of themselves. With the used bonus system a lot of trust is laid in the hands of the local English teacher at FIRM X, this person is responsible for 40 percent of the bonuses that are paid. This system seems overly sensitive for corruption.

In order to create value in the post-acquisition process it is essential to transfer capabilities between the two companies. Sharing of resources is applied in the case of FIRM X, especially human resources, but also use of information systems and the (limited) sharing of financial resources. Functional skills are transferred by training Czech people at FIRM Y headquarters in the Netherlands and through the sharing of information, knowledge and know-how. It is also clear from the case study that FIRM Y tries to transfer general management capabilities by involving in management decisions, implementing information systems and budgets. In order to maximize synergy creation it is advised to recognize only one type of capability transfer as dominant source of value creation (Haspeslagh & Jemison, 1991), the dominant source in the case study is the transfer of functional skills from the acquirer to the acquired company. Combination benefits where limited to purchasing terms and an improved image for FIRM Y to customers, mainly because FIRM Y acquired a relatively small and underdeveloped organization in the Czech Republic. The formalization of strategic interdependence needs of the acquisition is not found in the case of FIRM X, which results in an unclear focus regarding organizational tasks that are essential to bring out expected benefits of the acquisition. A clear formalization of the strategic interdependence needs could help managers to develop a more unbiased, objective view of the strategic intent. Strategic capability transfer was regarded as the vital value creating point by Haspeslagh and Jemison (1991), but in the case of FIRM Y strategic capabilities are transferred only from the acquirer to the acquired company. Capabilities that were available at FIRM X before and during the acquisition did not require preservation, because they did not serve the strategic intent of the acquisition. This entails that boundaries between the companies don’t need to be preserved and the acquired company does not need autonomy in order to preserve capabilities and/or organizational culture. FIRM Y concluded that preservation of the Tegema CZ company culture was not useful on the long term and radically changed the strategic intent from engineering towards assembling and later to assembling in combination with selling own projects.

Although FIRM Y acquired an engineering company in the Czech Republic, the innovativeness of the acquiring firm is not increased afterwards. This is partly because the subsidiary was quickly transformed into an assembly-oriented firm, due to limited engineering capabilities. The possible decrease in innovativeness that Cloodt et al. (2006) found was not found in the case study at FIRM Y, the acquiring company stayed on the same level of innovation after the acquisition.

6. Managerial Implications