Projects Gerarda Westerhuis
Success in bank mergers. An application of Necessary Condition Analysis (NCA) in business history
Collaborators: Gerarda Westerhuis, Jan Dul, Abe de Jong and Tony Hak
This paper investigates the necessary conditions for successful performance in mergers and acquisitions in banking. In mergers and large acquisitions the success of the restructuring may depend on a set of conditions that must be present or, in other words, of which the presence is «necessary». This paper specifies a set of hypotheses about such necessary conditions and performs tests on a set of Dutch mergers and acquisitions in the Dutch financial sector in the period 1960-1991. The mergers in our sample include both domestic and cross-border transactions. This allows us to relate to the conference theme as we will discuss the additional tension that arises in international acquisitions, when compared to domestic takeovers. This paper has two contributions to the literature. First, the paper describes and applies necessary condition analysis (NCA), a new method of theory-building and theory-testing that requires only a small number of cases (Dul et al., 2010). Second, the paper describes the conditions that were necessary for the success of mergers and acquisitions in the Dutch financial sector in the period 1960-1991. The business history literature currently contains many case studies of companies or industries. These studies are eclectic in their view on the companies and therefore present broad perspectives. Several review studies have been written, which generalize based on sets of case studies. Business history researchers struggle with a Catch 22 situation where the historical approach requires in depth analysis of individual cases, while generalizations require larger sets of cases (Coleman, 1987; Wilson, 1995). In their recent review Jones and Zeitlin (2007) conclude that the core of business history research is case study research, while increasingly comparative studies are published. Necessary Condition Analysis is a form of analysis in which generalization can be achieved based on an in-depth analysis of a small number of cases. We study mergers and focus on the performance during the trajectory of integration immediately following the merger decision. Integration of the companies is our measure of performance of the merger process. Successful integration occurs when the goals set at the time of the merger are reached. We study mergers in which the leading company is Dutch in the period 1960-1991. We study mergers in the financial industry, including commercial and investment banking and insurance. Our sources are secondary sources, including company histories, newspaper/magazine articles, and biographies.
Westerhuis, G., Dul, J., De Jong, A., & Hak, T. (2012). Success in bank mergers. An application of Necessary Condition Analysis (NCA) in business history [Abstract]. Book of Abstracts, p.31. 16th Annual conference of the European Business History Association congress, Paris, Aug-1 Sep 2012.