Product innovation, a crucial source of competitive advantage, is a company’s lifeblood to thrive in global, dynamic markets. M&A enable firms to access new markets faster and acquire complementary technologies, knowledge, and resources to facilitate product innovation. Despite global disruptions such as the COVID-19 pandemic, supply chain shortages, and M&A failure rates of 70% to 90%, firms continue to invest in M&A. Scholars seek to shed light on the conditions that create and destroy value in M&A, specifically the post-acquisition integration phase. While the effects of acquisitions on customers are an underexplored field today, customer relationships are engines for insights into changing expectations that drive product innovation. Today’s economy enables customers to switch to the competition faster than ever, and on top of that, firms see changes in customer networks after acquisitions. Research discusses the antecedents and outcomes of customer orientation but overlooks the role of customers in M&A. The post-M&A integration stage is the M&A phase where the ultimate value is destroyed or created. This study focuses on customer orientation and organizational complexity and their moderating effect on the post-M&A integration and product innovation performance relationship, concentrating on 188 innovation-centered majority acquisitions. It addresses the research question: How and to what extent do (1) customer orientation and (2) organizational complexity impact the relationship between post-M&A integration and product innovation performance? With that, this research uniquely connects the well-defined constructs of product innovation performance, post-M&A integration, customer orientation, and organizational complexity, and uses a mixed-method approach to investigate the research questions and conceptual model.Quantitative study one provides evidence that post-M&A integration had a significant positive effect on product innovation performance, especially for firms with high customer orientation, which positively moderated the main effect. Organizational complexity negatively moderated the post-M&A integration-product innovation performance relationship. When organizational complexity was relatively high with mean customer orientation, the effect of post-M&A integration on product innovation performance flipped from positive to negative. Under the conditions of relatively high customer orientation with mean organizational complexity, the effect of post-M&A integration on product innovation performance flipped from negative to positive. The results indicate that post-M&A integration was positively related to product innovation performance only for organizations with low organizational complexity. To a certain extent, customer orientation helped alleviate this negative impact of organizational complexity. Overall, study one has shown that a balanced approach of customer orientation and organizational complexity would be recommended. Study one also suggests combining the, in the literature separately considered, efficiency (synergy) and stakeholder theories. The inductive, qualitative study two, conducted with 25 semi-structured interviews, provides insights into how complexity resulting from acquisitions and the relationship with customers should be effectively managed during acquisition integrations to enable product innovation. The findings suggest that acquisitions are inflection points for customers, and customer trust is a crucial influencer of customer decisions. The themes drawn from this study reveal several areas acquirers can proactively manage to impact customer trust: the acquirer’s brand, and reputation, early customer involvement, communication, familiarity with and proximity to the customer, and the responsiveness and reliability to customer inquiries. The confidence in the business partner, that their interactions are based on integrity and reliability is critical and affects the customer-acquirer relationship; even more so when the acquirer is not known to the customer of the acquired firm. While customers should have a seat at the table, the timing of their involvement is critical. Leading innovation-driven acquisition integrations with a customer-centric mindset entails change initiatives that target employees, customers, and partners of the involved firms. The effective interplay of people, agile business processes, and connected, compatible technology between organizations is the foundation for achieving the anticipated value and synergies from integrating the acquired firm into the acquirer’s business. All of that cannot be done without evaluating the impact on the external business environment. Unfavorable decisions taken earlier in the acquisition cycle contribute to challenges later, requiring mitigation plans to be able to achieve the anticipated acquisition goals. The developed management framework guides practitioners to drive product innovation with a well-orchestrated post-acquisition integration process that balances customer orientation and organizational complexity. / Business Administration/Strategic Management

This study develops an original theoretical model of critical managerially controllable factors that have high potential for achieving significant improvements in the (intermediate and ultimate) outcome(s) of product innovation efforts. To this end, the author draws on the relevant empirical literature and integrates four complementary theoretical perspectives, namely; the critical success factors (CSFs) approach, the resource-based view (RBV), the input-process-output (IPO) model, and the system(s) approach. The model (hereafter CFEMOs) aims to explicate the simultaneous direct and indirect/mediated interrelationships among the product innovation’s critical firm-based enablers (new-product fit-to-firm’s skills and resources, internal cross-functional integration, and top-management support), process execution proficiency, and performance outcomes (operation-level performance, product-level performance, and firm-level performance). Additionally, it aims to predict the variations of the process execution proficiency and the performance outcomes. The CFEMOs model was empirically tested using an online survey that was completed by 386 U.S. restaurants owners/senior executives on their recently innovated new menu-items. By utilising a partial least squares structural equation modelling, the statistical analysis substantiated that, compared to the models of the extant relevant empirical studies, the CFEMOs model has a broader scope and a superior predictive power. It simultaneously explains 72% of the process execution proficiency, 67% of the new menu-item superiority (quality, speed-to-market, and cost-efficiency), 76% of new menu-item performance (customer satisfaction, sales, and profits), and 75% of the new menu-item contribution to the overall restaurant performance (sales, profits, and market share). Furthermore, this study established that those restaurateurs who concurrently succeed in enhancing their internal cross-functional integration, top-management support, and new-product fit-to-firm’s skills and resources, descendingly ranked, would achieve high process execution proficiency, which subsequently would grant them superior operation-level performance, product-level performance, and firm-level performance. This thesis concludes by providing several key original contributions and crucial implications to product innovation research and practice, as well as offering several promising avenues for future research.

Changing trends in customer preference, competitors’ offerings, new technologies and development techniques may disrupt a firm from its current leading market position and may favor other firms that prioritize innovation. Once a market opportunity is identified (i.e., find an answer to the ‘what to do’ question), firms need to engage in a series of activities and information processing to determine an appropriate way to monetize that opportunity – that is, firms need to find an answer to the ‘how to do’ question. Alternately, a firm may first identify a technological opportunity (i.e. find an answer to the ‘how to do’) and then find a market opportunity (i.e. find an answer to the ‘what to do’ question) to make use of the technological opportunity. Two scales that measure the capabilities of firms to address the following two questions – ‘what to do’ and ‘how to do’ - were reported; these were labelled as market-scanning capability (MktScan) and technology-scanning capability (TechScan); and these two scales were also tested in a broader research model. In turbulent environments, marketing and R&D become more challenging, since they face an uncertain future. Firms need to learn systemic scanning and decoding of apparently random changes in their business environment and imagine a pattern that makes sense. One cannot plan for uncertainty. A better strategy is to be prepared for it. One way to prepare is to develop the capabilities that would help the firm to become more adaptive. Drucker (1992) also argued that instead of planning for the long term that is uncertain, firms needed to become adaptive to tackle uncertainty. The ability of a firm to adapt to the changes depends on its ability to sense the nature of the changes in its business environment and respond to those. Sense-and-respond framework (Haeckel 1999; Haeckel 2000; Day and Schoemaker 2006) was proposed to emphasize the identification of weak signals (Ansoff 1975) to tackle increased uncertainty in business environment. In current days, effectiveness of firm’s activities often depends on the richness of its sources of information and its capability to process the collected information to identify the patterns of change happening in its business environments. Information processing may happen in two dimensions: in market dimension and in technology dimension. Firms’ capabilities for information collecting and processing in these two dimensions were measured using two firm-level constructs. These are market-scanning capability and technology-scanning capability. Resource-based theory helped to understand how firms use their tangible and intangible resources to compete in the market. Specific problem-solving aspects of the processes, activities, and cultural norms enable firms to make decisions about engaging the available resources and capabilities in ways that maximize customer value, by realizing the identified opportunities into product and service offerings. This research identified the characteristic strength of this problem-solving approach of firms – collecting information both internally and externally about possible market opportunities and technological options, organization-wide processing of that information, and taking actions to respond using insights gained – as two latent constructs called ‘market-scanning capability’ and ‘technology-scanning capability’. The concepts of ‘market-scanning capability’ and ‘technology-scanning capability’ were first defined and then, scales were developed to enable researchers and managers to measure these firm-level constructs. Next, the predictive roles of these capabilities on firm performance were examined. Empirical analysis for scale development and validation of the research model were performed with data collected through a web-based survey of Canadian manufacturing firms. Firm performance was captured in two stages – first, by product innovation performance, and second, by overall firm performance. Product innovation performance was used as an intermediate performance measure to examine the direct influence on it of market-scanning capability and technology-scanning capability, and then, to relate product innovation performance to final business outcome measured using ‘overall firm performance’ scale. The study validated the notion of resource-based theory by supporting the belief that higher levels of market-scanning capability and technology-scanning capability would lead to improved product innovation performance. The role of environmental turbulence was also examined for its possible moderating effect. Two measures of environmental turbulence, namely, technology and market turbulence were used to test the moderation effect. The technology turbulence construct was found to have a moderating effect on the relationship between technology-scanning capability and product innovation performance, indicating that firms needed to focus more attention on the changes in the technology landscape when turbulence in the technological field was perceived to be higher, in order to keep the same level of product innovation performance. Insight gained from the study contributed to a knowledge-base that might be useful to both practitioners and researchers. The combination of TechScan and MktScan scales could be used as a benchmark tool by managers to assess firms’ readiness to take advantage of the opportunities that existed. On the theoretical side, the study contributed to the understanding by showing that both market-scanning capability and technology-scanning capability had direct and indirect influences on firm performance. Also, it was found that the indirect influence of a certain scanning capability became important when firms were pre-disposed to emphasize the other scanning capability.

Changing trends in customer preference, competitors’ offerings, new technologies and development techniques may disrupt a firm from its current leading market position and may favor other firms that prioritize innovation. Once a market opportunity is identified (i.e., find an answer to the ‘what to do’ question), firms need to engage in a series of activities and information processing to determine an appropriate way to monetize that opportunity – that is, firms need to find an answer to the ‘how to do’ question. Alternately, a firm may first identify a technological opportunity (i.e. find an answer to the ‘how to do’) and then find a market opportunity (i.e. find an answer to the ‘what to do’ question) to make use of the technological opportunity. Two scales that measure the capabilities of firms to address the following two questions – ‘what to do’ and ‘how to do’ - were reported; these were labelled as market-scanning capability (MktScan) and technology-scanning capability (TechScan); and these two scales were also tested in a broader research model. In turbulent environments, marketing and R&D become more challenging, since they face an uncertain future. Firms need to learn systemic scanning and decoding of apparently random changes in their business environment and imagine a pattern that makes sense. One cannot plan for uncertainty. A better strategy is to be prepared for it. One way to prepare is to develop the capabilities that would help the firm to become more adaptive. Drucker (1992) also argued that instead of planning for the long term that is uncertain, firms needed to become adaptive to tackle uncertainty. The ability of a firm to adapt to the changes depends on its ability to sense the nature of the changes in its business environment and respond to those. Sense-and-respond framework (Haeckel 1999; Haeckel 2000; Day and Schoemaker 2006) was proposed to emphasize the identification of weak signals (Ansoff 1975) to tackle increased uncertainty in business environment. In current days, effectiveness of firm’s activities often depends on the richness of its sources of information and its capability to process the collected information to identify the patterns of change happening in its business environments. Information processing may happen in two dimensions: in market dimension and in technology dimension. Firms’ capabilities for information collecting and processing in these two dimensions were measured using two firm-level constructs. These are market-scanning capability and technology-scanning capability. Resource-based theory helped to understand how firms use their tangible and intangible resources to compete in the market. Specific problem-solving aspects of the processes, activities, and cultural norms enable firms to make decisions about engaging the available resources and capabilities in ways that maximize customer value, by realizing the identified opportunities into product and service offerings. This research identified the characteristic strength of this problem-solving approach of firms – collecting information both internally and externally about possible market opportunities and technological options, organization-wide processing of that information, and taking actions to respond using insights gained – as two latent constructs called ‘market-scanning capability’ and ‘technology-scanning capability’. The concepts of ‘market-scanning capability’ and ‘technology-scanning capability’ were first defined and then, scales were developed to enable researchers and managers to measure these firm-level constructs. Next, the predictive roles of these capabilities on firm performance were examined. Empirical analysis for scale development and validation of the research model were performed with data collected through a web-based survey of Canadian manufacturing firms. Firm performance was captured in two stages – first, by product innovation performance, and second, by overall firm performance. Product innovation performance was used as an intermediate performance measure to examine the direct influence on it of market-scanning capability and technology-scanning capability, and then, to relate product innovation performance to final business outcome measured using ‘overall firm performance’ scale. The study validated the notion of resource-based theory by supporting the belief that higher levels of market-scanning capability and technology-scanning capability would lead to improved product innovation performance. The role of environmental turbulence was also examined for its possible moderating effect. Two measures of environmental turbulence, namely, technology and market turbulence were used to test the moderation effect. The technology turbulence construct was found to have a moderating effect on the relationship between technology-scanning capability and product innovation performance, indicating that firms needed to focus more attention on the changes in the technology landscape when turbulence in the technological field was perceived to be higher, in order to keep the same level of product innovation performance. Insight gained from the study contributed to a knowledge-base that might be useful to both practitioners and researchers. The combination of TechScan and MktScan scales could be used as a benchmark tool by managers to assess firms’ readiness to take advantage of the opportunities that existed. On the theoretical side, the study contributed to the understanding by showing that both market-scanning capability and technology-scanning capability had direct and indirect influences on firm performance. Also, it was found that the indirect influence of a certain scanning capability became important when firms were pre-disposed to emphasize the other scanning capability.