Title: The long-term value of M&A activity that enhances learning organisations

Authors: Daniel Arturo Heller, Glenn Mercer, Takahiro Fujimoto

Addresses: International Graduate School of Social Sciences, Yokohama National University, 79–4 Tokiwadai, Hodogaya-ku, Yokohama 240–8501, Japan. ' McKinsey and Company, Cleveland Office, BP Tower 200 Public Square, Suite 3900, Cleveland, OH 44114, USA. ' Graduate School of Economics, The University of Tokyo, 7–3–1 Hongo, Bunkyo-ku, Tokyo 113–0033, Japan

Abstract: Viewing the automobile industry as being made up of independent learning-organisations may reveal some tie-ups that can generate value not easily revealed by traditional financial metrics. The key question to be answered when considering M&A activity between automakers from this perspective is how the formation of such a relationship (or its dissolution) may affect an automaker|s organisational learning (e.g., the development of increasingly higher-performing organisational routines to shorten development lead times, improve a vehicle|s overall customer satisfaction, improve the ease with which a vehicle can be assembled). We analyse three case studies to obtain insights into how M&A activity may be used to enhance the learning organisations of automakers. The first two cases, Renault-Nissan and Ford-Mazda, involve very significant but still minority equity stakes between Western and Japanese automakers. The third case, Chrysler-AMC, was a full acquisition involving two US firms.

Keywords: organisational learning; equity alliance; mergers; acquisitions; automobile industry; inter-firm cooperation; R&D centre; automotive assemblers; product architecture; organisational routines; organisational capabilities; learning organisations; capability-building competition; research and development; customer satisfaction; lead time reduction.

DOI: 10.1504/IJATM.2006.009525

International Journal of Automotive Technology and Management, 2006 Vol.6 No.2, pp.157 - 176

Published online: 18 Apr 2006 *

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