Changes in Management Practice and the Post‐Acquisition Performance Achieved by Direct Investors in the UK[Note 1. Grateful acknowledgement is made to the Economic and Social ...]

Changes in the competitive performance of 201 UK firms acquired by foreign investors are examined. Performance improvement was found to be associated with the introduction of changes to management practice rather than with contextual factors such as acquirer nationality, size, date of acquisition, profitability of subsidiary at acquisition or sector. The changes having most impact were increased efforts to improve the market image of the acquired company, the development of new products and services, and moves towards involving and developing staff. There appears to be more than one path towards post‐acquisition performance improvement, with distinctions emerging between Anglo‐American, Japanese and, to a lesser extent, French approaches. The successful Anglo‐American approach involves a product innovation strategy, increased decentralization and improved training. High‐performing Japanese acquisitions tend to emphasize a price‐competitive strategy, to increase centralization and to adopt a longer‐term HRM policy. The French path towards good post‐acquisition performance includes increased cost control, more open communication and decentralization. The general conclusion of the investigation is that foreign acquisition can harness the assets and competencies of UK companies to good effect, but that there is more than one way of achieving this result.