Nicola Mirc

MERGERS AND ACQUISITIONS: REVISITING THE HUMAN FACTOR IN THE LIGHT OF A KNOWLEDGE-BASED VIEW OF THE FIRM AND COMPLEXITY THEORY

Mergers and Acquisitions: revisiting the human factor in the light of a knowledge-based view of the firm and complexity theory

Nicola Mirc

From the outset, the literature on M&As has concentrated on post-operation performance. An ongoing issue has been the disappointment in observing that most M&As were reducing rather than enhancing the firm value (e.g. Dickerson, Gibson & Tsakalotost, 1997). Over time, estimates on failure to perform have ranged from 50% to 80% [START_REF] Hunt | Managing the successful acquisition : A people question[END_REF][START_REF] Cartwright | Managing mergers, acquisitions and strategic alliances : Integrating people and culture[END_REF][START_REF] Marks | Joining forces -Making one plus one equal three in mergers[END_REF]KPMG, 2001adapted from Erez-Rein & al., 2004). Seeking explanation, scholars have tested hypotheses on the plausible relationships with particular factors such as the size of the operation (higher failure rates in mega-mergers), the strategic fit of the companies, etc.

Alongside the hard data variables, the management of Human Resource (HR) integration has been said to play a major role. In particular, the literature has identified issues that could inhibit post-acquisition performance such as cultural and organizational mismatches, resistance to change, and poor strategic integration planning.

However, if the broad view on the importance of HR management is commonly shared, only few studies have explicitly put the stress on the causal relationships between the human factor and the performance of M&As, notably looking at the interactive dynamics, which shape the new organisation and its efficiency.

The paper aims at exploring ways in dealing with the issue. It visits the human factor in acquisition integration in stressing the scope for contribution of the knowledge-based view of the firm (KBV) and complexity theory, seeking to extending the current academic research framework.

The paper is organised in four sections.

The first section is primarily a review of the existing literature. The focus is on how the human factor has been identified to impact on M&As performance. In broad terms, measuring post-acquisition performance has been a centre of interest in strategy, finance and economics. Academic investigation on HRM issues in M&As has mostly related to the role of the human factor in the integration process and its consequences on success. Therefore, it has approached the impact of the human factor on post-acquisition performance from an indirect angle. However, it is to be recognised that these studies have allowed for identifying different ways by which the human factor may be said to impact on M&A success or failure, i.e. psychological, cultural and managerial factors.

The second section is devoted to the possible insights that might be drawn from considering the human factor in M&A from a knowledge-based view of the firm. The interest in selecting the perspective is its properties to filling the previous gap. The KBV introduces the human factor at the centre of the analysis of organisational dynamics and, from that angle, M&As are primarily about acquiring the knowledge of the firm and her human assets. In a KBV perspective, the contention is that the knowledge transfer process itself is crucial to the firms synergies. In that regard, studying the relationship between the human factor and M&A performance needs considering the role of networks and individual interactions, and also the way they might structure the exchange and combining of knowledge bases within the merged firms.

It is precisely on addressing the issue of interactions and networks, that the third section studies the possible contributions of complexity theory. After providing with the main characteristics of the theory, possible theoretical consequences of the perspective are discussed. In particular, looking at the merging organisations as a complex web of interacting and interdependent entities, the members of the organisation themselves appear to shape the outcomes on performance [START_REF] Ramlogan | Complex Systems and the Merger process[END_REF].

Finally, a last section explores the combined perspective between KBV and complexity theory. It offers insights from three angles: M&A as a continuous process constantly evolving from one equilibrium to another one; an interactive network set; a mechanism stretched between autonomous dynamics and integration planning.

I. Review of the literature: the human factor and impact on M&A performance Studies on post-acquisition performance have primarily been a centre of interest of researchers in strategy, economics and finance (with the notable exception of [START_REF] Larsson | Integrating strategic, organizational and human resource perspectives on mergers and acquisitions : a case of synergy realization[END_REF]. The identified factors of performance variations have usually ranged from the industry match (complementary of assets, similarities of markets and products, synergies in production, strategic orientation, etc.), pricing policy, financing and size of the operation and type of the transaction, bidding conditions, etc. By contrast to quantitative measurements from finance and economics, the research, which has focused on the organisational and human side of M&As, has mostly dealt with identifying factors that might have played a role in the integration process of the merging entities and led to successful outcomes. In that regard, the relationship between the human factor with performance may there be said indirect in that the studies do not usually attempt to measure performance variation in relation to those factors.

However, despite the absence of a direct causal correlation, several dimensions have been identified as having an important impact on M&A performance. They are regrouped into three categories: psychological, cultural and managerial factors, knowing that the human factor covers at the same time employees and managers of the firms.

Psychological factors

A large part of the existing research has looked at the psychological effects of M&A on employees. Scholars such as [START_REF] Buono | Human side of mergers and acquisitions: Managing collisions between people and organisations[END_REF], Marks andMirvis (2001 or Cartwright and[START_REF] Cartwright | Managing mergers, acquisitions and strategic alliances : Integrating people and culture[END_REF] have pointed out the strong impact that the operations could have on employees, in particular the resulting increase in stress and anxiety due to changes in work practices and tasks, managerial routines, colleagues environment, the hierarchy, etc. Furthermore, M&A often introduces an uncertainty climate among employees about job losses and future career development.

Stress and insecurity may lead to employee resistance to change, a high staff turnover, absenteeism and lack of commitment to work and the organisation, which in turn are associated with a negative impact on M&A success. [START_REF] Buono | Human side of mergers and acquisitions: Managing collisions between people and organisations[END_REF][START_REF] Cartwright | Managing mergers, acquisitions and strategic alliances : Integrating people and culture[END_REF][START_REF] Napier | Mergers and acquisitions, human resource issues and outcomes : A review and suggested typology[END_REF]. Employee resistance prevents the building up of a well functioning organisation and constructive cooperative environment. A high staff turnover brings about important losses of knowledge for the firm. Lack and lower work commitments have a negative impact on individual and organisational performance measured in terms of productivity, quality, and service [START_REF] Cartwright | Managing mergers, acquisitions and strategic alliances : Integrating people and culture[END_REF][START_REF] Gutknecht | Mergers, acquisitions and takeovers: Maintaining morale of survivors and protecting employees[END_REF]. Moreover, there seems to be a relationship between organisational and financial performance (return on assets, profitability), which has consequences for the market value of the firm [START_REF] Dyer | Human resource strategies and firm performance: what do we know and where do we need to go?[END_REF].

On the opposite side of the argument, satisfied employees are presumed to work harder, better, and longer with higher productivity records. Even though a direct relationship between job satisfaction and corporate performance remains to be established with certainty [START_REF] Rusu | HRM and firm's performance after a merger : a longitudinal study[END_REF], it appears that lower job satisfaction is a cause of higher absenteeism, which, in turn is shown to have a negative influence on organisational performance (Sousa-Poza & Souza-Poza, 2000).2

Cultural factors

Considering the human factor in relation to the firm culture has been a second significant focus of attention. No clear-cut findings about the impact on performance have yet emerged. Cultural differences look like playing both ways, although distant cultural environments make the integration process harder.

In the studies, the lack of culture-fit or cultural compatibility has often been used to explain M&A failure. Cultural differences have also been considered a source of lower commitment to work, making co-operation more difficult, particularly from employees of the acquired firm [START_REF] Marks | Merger syndrome : stress and uncertainty[END_REF][START_REF] Buono | Human side of mergers and acquisitions: Managing collisions between people and organisations[END_REF]. By the same token, an increase in turnover among acquired executives weighs on performance [START_REF] Hambrick | Relative standing -A framework for understanding departures of acquired executives[END_REF]Lutbakin, Schweiger & Weber, 1999). Furthermore, the lack of culture-fit has been shown reinforcing organisational conflicts (Olie, 1990), which might lower individual and organisational performance as preventing co-operation to materialize. In this regard, scholars have largely given account of the lack of co-operation momentum stemming from a "we" versus "them" attitude, resulting in hostility among employees (e.g. [START_REF] Cartwright | Managing mergers, acquisitions and strategic alliances : Integrating people and culture[END_REF].

Therefore, it is no surprise that strong cultural differences are usually associated with a negative impact on M&A performance, since the integration process is less easy and deals with higher employee resistance, communication problems, and lower interest in co-operation [START_REF] Nahavandi | Acculturation in mergers and acquisitions[END_REF][START_REF] Datta | Organisational fit and acquisition performance : effects of post-acquisition integration[END_REF][START_REF] Haspeslagh | Managing acquisition : creating value through corporate renewal[END_REF][START_REF] Chatterjee | Cultural differences and shareholder value in related mergers : linking equity and human capital[END_REF]. Noticeably, cultural clashes are likely to be more prominent in cross-national than domestic acquisitions [START_REF] Lubatkin | Managing mergers across borders: a twonation exploration of a nationally bound administrative heritage[END_REF], since such mergers bring together not only two firms that have different organisational cultures but also organisational cultures rooted in national diversity. These scholars have identified the building up of a common culture as essential for the success of M&As. In other words, should employees stick to their own organisational culture and do not adhere to a shared vision, then, the performance of the merged firm might be adversely affected.

Notwithstanding, findings on the relationship between culture and performance are inconclusive. Other studies argue that cultural distance might produce beneficial outcomes on performance as organisational heterogeneity is an asset for the firm in terms of complementary and capability [START_REF] Cartwright | Managing mergers, acquisitions and strategic alliances : Integrating people and culture[END_REF].

The approach on human factor and culture also encompasses work from the Social Identity Theory [START_REF] Tajfel | The social identity theory of intergroup behavior[END_REF]. Researchers have found that high levels of employees' social identification with the organisation's identity results in increased work effort, higher performance, reduced staff turnover and more frequent involvement in positive organisational citizenship [START_REF] Ellemers | Motivating individuals and groups at work : a social identity perspective on leadership and group performance[END_REF]Bartels & al., 2006).

Finally, another attribute under scrutiny from a cultural perspective has been "management styles". A management style is viewed as an essential element of the culture of an organisation [START_REF] Sathe | From surface to deep corporate entrepreneurship[END_REF]. Several characteristics are attached to a management style, as for instance a management group's attitude towards risk, their decision-making approach, and preferred control and communication patterns [START_REF] Datta | Organisational fit and acquisition performance : effects of post-acquisition integration[END_REF]. Management styles are unique to organisations and may differ considerably across firms (e.g. [START_REF] Blake | Les deux dimensions du management[END_REF], Differences in management style between the merging firms may have a negative impact on M&A success [START_REF] Datta | Organisational fit and acquisition performance : effects of post-acquisition integration[END_REF][START_REF] Schoenberg | Management style compatibility and cross-border acquisition outcome[END_REF]. As a matter of fact, in an acquisition process, a significant aspect is bringing together distinct management groups. Significant difference may contribute to what [START_REF] Buono | When cultures collide: The anatomy of a merger[END_REF] refer to as "cultural ambiguity", a situation characterised by uncertainties where style or culture are main attributes. Generally, the acquiring firm management ends up imposing its own style on the management at the acquired firm. This may result in a loss of identity among the acquired firm management, and in turn in anxiety, distrust, and conflict, culminating in a "merger standstill", with declining productivity and poor post-acquisition performance [START_REF] Schweiger | Executive actions for managing human resources before and after an acquisition[END_REF].

Managerial factors

So far the human factor has been looked at in relation to an employee perspective (including staff and managers). Of additional significance is the way the management (as human factor) has looked at the M&A process, its implementation and the relationship with performance.

Here are singled out works that have attempted to assess the strategic fit in the management of the M&A, the integration/planning process v. integrative autonomy, the difference in management styles viewed from a different angle than a cultural perspective.

An often used criterion to predict performance is the pre-acquisition planning and identifying of the target firm -i.e. the assessment of the strategic fit between the merging firms. Researchers have argued that the more the similarities, the more the merger would be successful in terms of value creation [START_REF] Singh | Corporate acquisition strategies and economic performance[END_REF][START_REF] Chatterjee | Cultural differences and shareholder value in related mergers : linking equity and human capital[END_REF][START_REF] Ramaswamy | The performance impact of strategic similarity in horizontal Mergers: evidence from the U.S. Banking Industry[END_REF][START_REF] Lubatkin | Managing mergers across borders: a twonation exploration of a nationally bound administrative heritage[END_REF][START_REF] Schoenberg | Management style compatibility and cross-border acquisition outcome[END_REF].

A second frequently identified managerial factor influencing M&A performance is the way the organisational integration is planned and managed. Here, the emphasis is on the role played by the chosen integration path and the design of the acquisition process. The "process perspective" assumes a connection with the way HF integration is planned and controlled, and an effect on the operation's success [START_REF] Jemison | Corporate acquisition : A process perspective[END_REF][START_REF] Haspeslagh | Managing acquisition : creating value through corporate renewal[END_REF].

The main contention rests on the effectiveness of the integration planning, the finding being that if integration is little or poorly planned, post-acquisition performance will be lower (Child, Pitkethy & Faulkner, 1999;Schweiger & Very, 2003).

In particular, scholars have stressed the importance of the degree of autonomy allowed to organisational members of the merging firms in the success of the operation [START_REF] Cartwright | Managing mergers, acquisitions and strategic alliances : Integrating people and culture[END_REF]Larsson & Lubatkin, 2001). According to [START_REF] Cartwright | Managing mergers, acquisitions and strategic alliances : Integrating people and culture[END_REF], a collaborative strategy intended to take advantage of shared knowledge and resources, based on retaining the "best of both worlds" and with a particular focus on increased employee autonomy is a driving force for successful integration.

From the literature review on the human factor and post M&A performance, a number of main findings are brought forward taking into account the psychological, cultural and managerial factors. The limits of the perspectives appear threefold. Where regarded in isolation, findings frequently come to either support common sense views (e.g. differences in culture between companies render co-operation harder) or appears working both ways (e.g. difference in culture may also be a valuable asset). Perhaps, more importantly, what the findings suggest is the need for an integrative perspective enabling to view the role of the human factor in a comprehensive way. The two following sections will question to what extent contributions of a knowledge-based view of the firm and complexity theory might be suitable instruments for filling the gap, notably since they provide insights about organisational dynamics and individuals' and groups' interactions at a micro-level as the shaping forces of post-acquisition performance.

II. Insights from the knowledge based view of the firm

The knowledge-based view of the firm emphasises knowledge as a key resource [START_REF] Grant | Toward a knowledge-based theory of the firm[END_REF]. Accordingly, firms are creative organisations [START_REF] Kogut | What firms do : coordination, identity and learning[END_REF], whose capabilities to generate and transfer knowledge are the most important assets of sustainable competitive advantage [START_REF] Machlup | Knowledge : its creation, distribution and economic significance[END_REF]Kogut & Zander, 1992 ;[START_REF] Grant | Toward a knowledge-based theory of the firm[END_REF].

In M&A cases knowledge transfer may be assumed playing different strategic roles.

In the first place, M&As may be seen as a means of completing and renewing the knowledge base of the firm. A motive is acquiring the specialized knowledge of the target firm (R&D expertise, marketing know-how, clientele base).

In the second place, where the merger aims to create operational or organisational synergies, limited or full resources integration processes are required. For a merger to be successful, the resources need being mutually shared in order to give rise to synergies. A study of 121 acquisitions in Europe illustrates that the sharing and transfer of knowledge between the merged firms has been essential to operational synergies [START_REF] Schoenberg | Knowledge transfer and resource sharing as value creation mechanisms in inbound continental European Acquisitions[END_REF]. In short, knowledge transfer, to which is attached value creation through information and expertise sharing, is crucial to post acquisition performance [START_REF] Haspeslagh | Managing acquisition : creating value through corporate renewal[END_REF][START_REF] Inkpen | Cross-border acquisitions of U.S. technology assets[END_REF][START_REF] Greenberg | Mergers and acquisitions in technology-intensive industries : the emergent process of knowledge transfer[END_REF]. The upshot might occur by different means, either reciprocal interaction from the acquirer to the acquired firm or from the acquired to the acquirer firm [START_REF] Bresman | Knowledge transfer in international acquisitions[END_REF], or as most research indicates from a unilateral transmission from the acquirer to the acquired as the former often seeks to implement its organisation routines, processes and procedures on the acquired firm.

Finally, from a knowledge transfer perspective, the sharing of a common social identity (or culture) appears an important dimension. In particular, where the transferred knowledge is tacit, social relations are supposed being more efficient mechanisms for disseminating knowledge among individuals than formalised mechanisms, such as information systems and formal managerial control (Kogut & Zander, 1992;[START_REF] Nonaka | A dynamic theory of organizational knowledge creation[END_REF][START_REF] Grant | Toward a knowledge-based theory of the firm[END_REF].

In more recent contributions, scholars have introduced the knowledge-based view of the firm to discuss M&A performance issues. They generally point out a positive relationship between post acquisition performance and knowledge transfer. Organisations that succeed in transferring their knowledge bases in the course of a merger have better performance outcomes than those where knowledge transfer had not been achieved [START_REF] Ahuja | Technological acquisitions and the innovation performance of acquiring firms : a longitudinal study[END_REF][START_REF] Gammelgaard | Knowledge-sharing behavior and postacquisition integration failure[END_REF]Zollo & Singh, 2005).

The findings correspond to those underlined by scholars investigating knowledge transfer in firms without the specifics of M&A environment. As a principle, organisations that are able to transfer knowledge effectively between organisational units appear more productive [START_REF] Almeida | Localization of knowledge and the mobility of engineers in regional networks[END_REF]Argote & Ingram, 2000).

The two main knowledge related factors generally identified as influential prerequisites on post-acquisition performance, are the firm's prior acquisition experience, and the ability to keep on board talented people (as key knowledge holders) within the organisation.

With regard to the first prerequisite on acquisition experience the findings are at variance. For instance, Hunt (1998) found that experienced buyers performed no better than first time acquirers. By contrast, scholars such as [START_REF] Zollo | Deliberate learning in corporate acquisitions : post-acquisition strategies and integration capability in U.S. bank mergers[END_REF], [START_REF] Haleblian | The influence of organization acquisition experience on acquisition performance : a behavioural learning theory perspective[END_REF], [START_REF] Hayward | When do firms learn from their acquisition experience? Evidence from 1990 -1995[END_REF] or [START_REF] Schoenberg | Knowledge transfer and resource sharing as value creation mechanisms in inbound continental European Acquisitions[END_REF] have concluded that previous experience is associated with superior performance. The experienced firms are assumed to have learned how to codify and centralise knowledge in their previous operations, which should facilitate inter-organisation knowledge transfer in subsequent takeovers. The findings may be brought in line with studies that have found that a poor relationship prior to the operation shapes up the transfer of knowledge in making it more difficult, creating an ensuing causal ambiguity about the nature of the knowledge to be transferred [START_REF] Schoenberg | Knowledge transfer and resource sharing as value creation mechanisms in inbound continental European Acquisitions[END_REF].

The second decisive prerequisite, the retention of talented people, has been brought forward by researchers like [START_REF] Ranft | Acquiring new knowledge : The role of retaining human capital in acquisitions of high-tech firms[END_REF]. The contention is based on the assumption that knowledge is primarily embedded in individual capabilities. When knowledgeable individuals leave the firm, the firm loses part of its strategic assets. The capabilities cover technical and operational skills and expertise, but also knowledge of the organisation, which are important items in view of maintaining a well-balanced functioning of the firm -i.e. in particular with regard to informal decision making and information dissemination, etc.

Finally, an additional stream has been more normative. Factors as transparent management, continued communication, and the use of integrative instruments -e.g. cross-division integration teams, common meetings, job rotation-appear facilitating the transfer of knowledge (e.g. [START_REF] Bresman | Knowledge transfer in international acquisitions[END_REF].

Thus, the existing work on M&A performance and KBV offers a sound platform to think about extending the analysis. If the relationship between effective knowledge transfer and post-acquisition performance has been a prominent subject in recent M&A research, the process of knowledge transfer in M&A itself seems to have received less focus. Only a few scholars have looked for theorising this issue -i.e. how and by which mechanisms knowledge is transferred between individuals, among the units of the organisations; how knowledge circulates and is subject to exchange; which are the social relations and interpersonal strategies involved in the process; how they may shape the effectiveness of the operation; and why and for which purposes knowledge transfer materialises or not [START_REF] Bresman | Knowledge transfer in international acquisitions[END_REF].

However, on that ground, research carried out by scholars like [START_REF] Empson | Fear of exploitation and fear of contamination : impediments to knowledge transfer in mergers between professional service firms[END_REF] and [START_REF] Greenberg | Mergers and acquisitions in technology-intensive industries : the emergent process of knowledge transfer[END_REF] appears a noticeable exception.

In her thorough study about the merging of professional service firms, Empson has identified several factors at the individual and inter-individual levels being essential for a successful transfer of knowledge. A first factor is the individual's perception of the quality of the merging partner, which influences the willingness to exchange knowledge with other members of the organisation -i.e. fear of contamination. The second one relates more directly to the individual position in the hierarchy. If the individual feels that the sharing of knowledge might translate into losing power in the organisation, the knowledge transfer will be inhibited -i.e. fear of exploitation.

Moreover, [START_REF] Greenberg | Mergers and acquisitions in technology-intensive industries : the emergent process of knowledge transfer[END_REF] have centred the analysis on the importance of emergent social relations among individuals in M&As through the perspective of communities of practice [START_REF] Brown | Organizational Learning and Communities-of-practice : toward a unified view of working, learning and innovation[END_REF]. They have concluded that autonomous regrouping of individuals in such communities of practice facilitates the transfer of knowledge as it helps building up a shared organisational identity endorsed by members.

As the different studies have pointed out, it is the actual process by which knowledge is transferred that determines the ability of the new firm to deploy this resource. Therefore, analysing performance variation from a KBV requires concentrating on the very means by which knowledge exchange and combination take place or not. Further, it entails focusing on the inter-individual dimension of the operation and thinking in terms of network reconfigurations -i.e. through reorganisation, employee turnover, and interactions between organisational members.

An approach to combine the network perspective with the interactive dynamics is to refer to developments occurring in the complexity theory. It would mean looking at the merging firms as organisational entities forming a new web of interactions where knowledge transfer would play a major role.

III. The human factor in M&A in the light of complexity theory

Complexity theory has developed in the natural sciences, and in particular in the field of evolutionary biology. Endorsing Darwin's theory of evolution, scholars have considered the scope for non linear development of natural complex organisms and behaviour (e.g. an example is the formation of bird flocks in the sky).

However, complexity theory has also raised interest in other fields, such as computational science and strategic management and organisation studies. For the latter, it has offered a stimulating framework in viewing organisations as "complex adaptive systems" (CAS), which adapt to their environment. Complex adaptive systems possess several main characteristics (after [START_REF] Anderson | Complexity theory and organizational science[END_REF][START_REF] Andriani | Evolutionary dynamics of industrial clusters[END_REF]Middleton-Kelly, 2003).

Agents and schemata

CAS are shaped by agents, which in an organisation might be individuals, groups or coalitions. The behaviour and decisions of each agent are governed by a schema -i.e. a cognitive structure in relation to a given perception of the environment. Those schemata may differ between agents and evolve over time. An agent's schema is influenced by a constant search for improving his fitness function -i.e. the actions or decisions taken by an agent are driven towards maximisation such as increasing a hierarchy position and role in the system.

Connections and interrelations

The agents, which are part of a system or subsystems are interconnected through network relationships. Complex behaviour arises from the interrelationship, interaction and interconnectivity of entities (agents) within the system and between the system and its environment. The degree of interconnectivity determines the nature and the density of the network relationships. Interaction is however minimally structured and follows simple rules.

Interdependence

Agents in a system or sub-system are interdependent. The action and decision of an agent impact on others, who are part of the same system or subsystem. The influence of one agent to another depends on his experience (history, cultural context). Furthermore subsystems being part of a larger system, i.e. for instance the merged firm, they are also interconnected and interdependent, so that the behaviour and structure of a subsystem impact on the behaviour and structure of a related system.

Non linearity

Interactions between agents and related systems are non-linear. Agents adapt to each other and their environment in a cause-effect relationship that introduces changes in equilibrium, which do not reproduce linear trends.

Co-evolution

Agents co-evolve. Given the inter-connectivity and interdependence of entities (individuals, groups, branches, departments, divisions), the evolution of one entity is partially dependent upon the evolution of the related entities. Moreover, each step taken by any agent modifies the environment of the other (Kauffmann, 1993). Therefore each agent's adaptive landscape, mapping his behaviour to his achieved outcome, is constantly shifting [START_REF] Levinthal | Adaptation on rugged landscapes[END_REF]. The equilibrium resulting from agents' co-evolution is dynamic and not static and lies at the edge of stability or the "edge of chaos" (Kauffmann, 1993).

Self-organisation

Complex systems have the capacity to self-organise -i.e. creating new order and coherence through the interactions of agents within the system. It comes under a "spontaneous coming together of a group to perform a task", where the group decides about what to do, how and when (Midleton-Kelly, 2004, p.26). Therefore no single component in the system determines the collective behaviour (Drazin & Sandelands, 1992). Rather, it is the local set of rules of interaction within a system that creates and recreates structure and organisation. From that angle, the rules of interaction might be subject to change over time, in particular to adapt endogenous changes -i.e. entry or exit of new agents and transformation of present agents' schemata, and to exogenous changes -i.e. changes in the environment. Subsequently, the capacity to self-organising means that CAS is able to self-repair and maintain. Besides, new agents may emerge by recombination of the elements of the system.

Emergence

Together with self-organisation, emergence is a process, which creates new order. It refers to the assumption that the whole is more than the sum of the parts or the assembly of distinct, separate elements. The emergence of properties, patterns and structures is directly related to agents' interactions, with an emphasis on the interacting whole.

Feed-back loops

CAS evolution and organisation are influenced by interactions' feedback loops. Positive feedback produces a strengthening of cause and effect relationships. In turn, it introduces scope for destabilising effect prompting changes. Negative feedback has a balancing or attenuating effect, which tends to maintain stability in the system.

Although the attributes of the complexity theory might be perceived as far remote from the issues under study, a degree of relevance may be ascertained. Thus, what might be learned from complexity theory according to the analysis of the human factor in M&A?

From a complexity framework perspective, an important characteristic is the interdependence and co-evolution of agents. Moreover, one agent's behaviour or decision has an impact on the system's behaviour and constitution of which he is a part, as well as on those related to it.

In the contribution, agents is used a generic term referring to the members of the merging entities -i.e. individual employees and/or group of individuals that are part of the integration process. Agents belong to one or more subsystems in the organisation, in other words offices, departments, divisions. The subsystems are themselves constitutive of global systems, which in the case of a merger means the firms involved in the M&A operation and the resulting merged organisation.

The behaviour of agents interacting in a complex system are driven by improving their own position or fitness. However, they are reciprocally influenced throughout their interactions and according to the degree of interconnectedness. The network of interactions sets the agents' room for manoeuvre. The network itself is self-organising, defining in fine the structure of the system. Consequently, the prevailing role of interactions between agents in the modelling of the organisation entails that the members of the merging organisations themselves shape the possible outcomes on performance [START_REF] Ramlogan | Complex Systems and the Merger process[END_REF]. From that angle, the M&A performance outcome hinges on the capacity of the agents to self-organise, taking into account their schemata, objectives and strategies. Here, the equilibrium is reached through conflicting and competing strategies, the interdependence of agents playing the crucial role. It may be viewed as agents entering in a co-opetitive setting where they seek maximising their position using co-operation and competition, alternatively and/or simultaneously [START_REF] Adam | Coopetition[END_REF].

Subsequently, the interest of the perspective with regard to M&A appears twofold. Firstly, it enables to discuss the constructing dynamics at individual and group levels developing at the heart of merging process. Secondly, it allows for adopting an alternative approach on postacquisition performance by looking at it as a de-centralised construct, with stressing the significance of employee autonomy. Therefore, approaching M&A from a complexity theory framework offers the insight of a dynamic decentralized construct of performance. Such a perspective is in contrast to those generally endorsed by M&A researchers, where the integration process and its outcome are related to managerial planning and behaviour, and to exercising strategic control over the transformation of the organisation [START_REF] Ramlogan | Complex Systems and the Merger process[END_REF]. In the dominant literature stream, the organisation is often viewed as a predictable set whose activities might be fully developed and controlled by means of strategic choices. Yet, in complex systems, where self-organisation is a major component, the evolution of an organisation cannot be entirely planned or anticipated. Rather, it is set into motion through prodding and impulses. In other words, the study of the integration process needs considering, on the one hand the interrelation between leadership impulses and the organisational response, and on the other hand the building up of a new organisation setting, which emerges from the interactions of its members.

In this regard, the combination of the firms resources, and the set of the organisational and individual knowledge appears promoting a research orientation on the issue of the human factor and post-acquisition performance.

IV. Knowledge transfer in complex systems as offering an integrative framework to study the human factor in M&A The section is above all exploratory. It looks at combining KBV with complexity theory, offering an integrative perspective on the human factor and M&A performance.

In the literature the different dimensions of the human factor are overall studied in isolationi.e. psychological, cultural, managerial factors. However, the review has illustrated that the dimensions were intertwined. Therefore the interest in the approach is to weave them together under a single integrative framework [START_REF] Javidan | Where we've been and where we're going[END_REF][START_REF] Schoenberg | Cross-border acquisitions : a comparative analysis[END_REF]Cartwright & Schoenberg, 2006). It invites to put the stress on three main items: the organisation dynamics; the prevalence of interactions and networks; the mechanisms by which knowledge transfer emerges and develops.

Organisation dynamics

The complexity theory looks into the merging of organisations as a multifaceted dynamics system constantly evolving over time. It assumes setting at the forefront of the analysis the dynamics elements, in other words, the view of M&A as a continuous process, a coevolutionary system (the firm) with its subsystems (branches, departments, divisions) and agents (individuals and groups of individuals).

In that respect, the dynamic view comes in contrast to the rather static approach developed in the literature, which studies the impact of employee reactions and organisation changes at one point in time, the lapse to assess HR integration issues being usually short, from two to three years after the merger. Furthermore, such a perspective does not give account of the evolving character of a complex system and does not offer scope for a study of non linear dynamics where the firm is seen as made up of transforming networks.

The changes in integrative strategies may provide with an example. In a M&A, the acquiring firm may not plan to integrate the acquired firm. For a while, it may decide on leaving it as an independent entity with only small changes at the fringes since the market conditions. Under such circumstances, only several years after the deal may the decision of full integration been decided. Or else, the managerial relationships between the acquiring and acquired firms may reverse over time -i.e. France Telecom with Orange, Renault with Nissan.

Therefore, rather than cross-sectional analysis, a more appropriate device to give account of the M&A dynamics would be to introduce sequence analysis (Abbot, 1995, Dumez & Jeunemaître, 2006b), aiming at the identification of related patterns among sequences -i.e. "either over the whole sequences or within part of them" (Abbott, 1995, p.105), their interrelatedness and development throughout a series of events. Moreover, drawn from the theory, the co-evolutional character of a complex autonomous system would require a multi-dimensional and multi-level approach. Suppose that in M&A the emergence of an order results from the interaction of agents, sub-systems and the environment, which defines an equilibrium of the system -i.e. the firm, then, the analysis should look at the different dimensions -i.e. psychological, cultural, managerial in dynamics at a micro level -i.e. agents interactions-and sub-systems level -i.e. branches, departments, divisions, together with characterising the end performance result of the system, seen as a whole -i.e. the firm.

As exemplified by [START_REF] Nonaka | A dynamic theory of organizational knowledge creation[END_REF], the process of knowledge creation and transfer is "a neverending, circular process that is not confined to the organisation but includes many interfaces with the environment" (p.27). Environmental fluctuations are continuous drivers of knowledge creation, which might result in generating a "creative chaos" (p.28) since the organisational members need adapting to the new conditions. They have to recreate their own system of knowledge in dealing with "ambiguity, redundancy, noise, or randomness generated from the organisation and its environment" (p.18) Thus, in M&A, knowledge transfer would be triggered off by organisational members facing some sort of organisation crisis, requiring a collective involvement in problem solving and recreating a new order. Therefore, the co-evolution of a system with its environment would spur individual commitment

Networks

Research on knowledge transfer assumes that interactions between individuals or groups facilitate the exchange and creation of new knowledge. Constructive collaborations between entities, notably in the form of self-organising teams [START_REF] Nonaka | A dynamic theory of organizational knowledge creation[END_REF] help knowledge transfer, in particular of tacit form. Moreover, such "communities of interactions" [START_REF] Nonaka | A dynamic theory of organizational knowledge creation[END_REF] institute a socialisation dynamics among individuals and groups. A shared culture and social identity develops, which has an effective knowledge transfer impact.

Therefore, from the KBV, networking and interactions are important factors for an M&A outcome. If viewed from a complexity theory perspective, the issue becomes how cooperative and competitive opportunities, among agents, subsystems may enhance autonomous adaptation and improve the performance. As stressed before, the dynamic environment in which agents operate relates to a co-opetitive setting, made at the same time of co-operation and competition.

The resulting interactions and networks determine knowledge transfer processes. The degree of connectedness between agents and subsystems shapes the relationships and create room for manoeuvre within the subsystems and system. It structures the network of relations, having a direct impact on information flows within the system and on feedbacks when managing with information.

Mechanism

A particular issue when attempting to merge the KBV of the firm and complexity theory is characterising the engine of the integration dynamics.

From a complex theory perspective, knowledge transfer develops from interactions among agents and subsystems, alongside the structuring of networks. It refers to a self-organising process based on autonomous adaptation.

From the KBV of the firm, if such mechanism is recognised, the stress is rather on the strategic importance of human resource planning. Existing work supports the view that early and effective integration planning is decisive for post-acquisition performance.

Therefore, combining the two theoretical streams require to deal with a tension between autonomous adaptation and integration planning. Of course, both are at work during the continuous process of acquisition. They may operate in harmony or opposition. Therefore, managing knowledge transfer in M&A requires a fine tuning between managerial "prodding" through impulses, -i.e. setting up the system into "motion" and helping its evolution through the minimising negative feed back loops, and an appropriate degree of flexibility in the system, giving rise to self-organisation, which is compulsory to ensure the coherence of the new emergent system.

Here it will be to the research design to combine the two dimensions of the knowledge transfer mechanism. It will have to associate not only a longitudinal case study of an M&A over a long period of time by means of an analytic narrative (Dumez & Jeunemaître, 2006a) accounting for sequences and changes in equilibrium, but also a framework of investigation at the micro level -i.e. agents, subsystems, and top managerial level -i.e. integration planning.

Concluding comments

The review of the literature has given account of the accumulated knowledge about the role of the human factor in M&A performance. It has highlighted a cognitive gap from two angles, on the one hand, the role of the human factor in the organisation dynamics of M&A and, on the other hand, the knowledge transfer mechanism by which performance might be achieved and sustained.

To provide with an extended theoretical framework on both considerations, a combined perspective associating the KBV of the firm with complexity theory has been proposed, putting the stress on knowledge transfer processes in M&A, viewed as complex systems.

The lessons to be drawn from the exercise may be summarised in looking at the amendments it produces to the current streams of research and the scope for implementing the renewed framework from a practical research device.

With regard to the amendments proposed to the current approach, perhaps the most salient point is the view of the human factor in M&A as governed by a continuous dynamic process, of which the outcome is a changing equilibrium over time according to endogenous and exogenous factors, and of which the view on performance differs from normative and static assessments. At the heart of performance, lies the transfer of knowledge, which is the decisive resource allowing to encompass the isolated measurements and findings reviewed in the literature.

As for implementing the renewed framework, the combined perspectives have introduced the importance of networks and interactions between agents, subsystems and systems present in M&A. Bearing in mind the dynamics elements, it invites to consider a longitudinal M&A investigation, structured around narratives and sequences analysis and applied to a microlevel, more likely the branches or departments of the merged firms.

Centre de Recherche en Gestion, PREG-CRG, Ecole Polytechnique, 1, rue Descartes, 75005 Paris -France

(19-20 April, 2007)

We should mention here that even though M&A effects on employees are mostly dealt with as negative, several scholars point out positive influences on employees, such as offering opportunities for new responsibilities and career development[START_REF] Buono | Human side of mergers and acquisitions: Managing collisions between people and organisations[END_REF][START_REF] Empson | Fear of exploitation and fear of contamination : impediments to knowledge transfer in mergers between professional service firms[END_REF][START_REF] Mirc | Le changement identitaire lié à une modification de l'accès au pouvoir lors d'une fusion d'entreprises -l'exemple de la fusion TotalFina-Elf[END_REF], increased job security, greater job satisfaction and more varied work tasks[START_REF] Napier | Mergers and acquisitions, human resource issues and outcomes : A review and suggested typology[END_REF].


Colette Depeyre
email: colette.depeyre@polytechnique.edu

EGOS 2007 -Sub-theme 40 "Organizing to shape and create markets" Stabilization and openness: how strategies shape the markets The case of the US defense industry

Stabilization and openness: how strategies shape the markets

The case of the US defense industry

To analyze what a market is and how it works as a complex social object, the question of stability and uncertainty is central. A market is both stable and "open and fluid" [START_REF] Marie-Laure | Introduction to the Special Issue on "Institutions, Markets and Organization[END_REF]: 1739). Which are the processes that lead to a stabilization of the market and the ones that lead to destabilization, to creation of uncertainty? How do these processes combine with each other? Which actors lie behind?

Economists and economic sociologists have tackled these issues. But two comments can be made. The first one is that for the last years, all the disciplines that have been interested in studying the market have focused on stabilization. In economics as well as in sociology, what has been highlighted is the stabilizing role of institutions (as noted by Aoki, 2005, most of studies start from the statement that "institutions matter"), the stabilizing role of networks of actors [START_REF] Mitchel | Markets as Cultures: An Ethnographic Approach[END_REF][START_REF] Uzzi | The Sources and Consequences of Embeddedness for the Economic Performance of Organizations: The Network Effect[END_REF] or the necessary role of trust [START_REF] Paul | Market, Hierarchy, and Trust: The Knowledge Economy and the Future of Capitalism[END_REF][START_REF] Bart | Trust: forms, foundations, functions, failures and figures[END_REF]. Secondly, uncertainty of markets is rather seen as coming from exogenous factors as, for example, technology. A technological breakthrough shakes up ongoing strategies and afterwards new strategies are elaborated by market participants to stabilize the market [START_REF] Neil | Markets as Politics: A Political-Cultural Approach to Market Institutions[END_REF][START_REF] Neil | The architecture of markets[END_REF].

The present article aims, on the one hand, to show that the study of markets should highlight both the processes of stabilization and the processes of upholding or creation of uncertainty. On the other hand, it stresses the strategies of actors backing up both types of processes. Consequently, a market is dynamically shaped through the combined effect of strategies of stabilization and strategies of uncertainty creation developed by actors. That markets are both stable and open (even if structural conditions and exogenous factors play a role in stability and uncertainty) is explained by these strategies.

In order to understand the way processes of stabilization and of upholding/creation of uncertainty are connected on a market and the way actors create and structure these processes through their strategies, the case study methodology has been adopted. It allows to study more deeply dynamic phenomena [START_REF] Robert | Case Study Research: Design and Methods[END_REF] through sequences of events. The selected case is the one of the US defense industry.

Since at least 1945, this case is characterized by deep structural uncertainty. Actually, transactions are rare (States launch a new fighter program every 20 or 30 years). Yet when transactions on a market are neither repeated nor frequent, setting a price for the exchanged good or service becomes difficult with the absence of relevant reference. It stands as a major uncertainty, the one of valuation (Möllering, 2007). Therefore, as a counterbalance, strong strategies take place to stabilize the market. The US defense market happened to experience a deep exogenous crisis at the end of the Cold War. The post-crisis period should therefore be characterized by extreme stabilizing strategies. The paper is focusing on this period and will strive to underline that the market shaping has been a process coming from both strategies of stabilization and strategies of upholding/creation of uncertainty.

The following part will first examine how economists and sociologists see the market dynamics, especially the importance they attach to stabilization processes, uncertainty and actors. Some propositions will be set to guide the analysis. The paper will then present the case of the US defense industry as a deviant case, well fitted to study these propositions, and give a detailed analysis of the way out of the crisis. Finally, going back to the propositions, results regarding the market dynamics and its interaction with actors will be derived from the case study.

Theoretical framework

For the last years, economists and sociologists have been interested in the functioning of markets. They tend to demonstrate that market uncertainty is exogenous, coming as a crisis or triggered by the action of peculiar players, and that incumbents develop strategies to stabilize the market by relying on institutions.

For traditional economists, the market stability is directly related to the number of competitors. When this number is reduced, when the oligopoly is a narrow one, actors can stabilize the market, even without explicit sharing of information and rules. Game theory is coherent with this approach: it actually explains that coordination is possible when the number of players is really small and much harder when the number of players rises [START_REF] Louis | Competition Policy: A Game-Theoretic Perspective[END_REF].

Under these conditions, a market's destabilization can only come from an exogenous shock.

Nonetheless, empirical studies show that "spontaneous" stabilization does not work even with only a few players: when the number of competitors is reduced, on a commodity market, one can still observe the constitution of cartels, that is to say of rigid and elaborated mechanisms that aim to counterbalance the destabilizing forces (the case of the cement market is an example - [START_REF] Hervé | Understanding and Regulating the Market at a Time of Globalization: The Case of the Cement Industry[END_REF]. Therefore, indirectly, the presence of cartels in such markets tends to prove the possibility of destabilizing strategies, but this has not been studied a lot by traditional economics.

Institutional economists (North, 2005;[START_REF] Oliver | The Economic Institutions of Capitalism: Firms, Markets, Relational Contracting[END_REF] have added the institutional dimension to the traditional economic perspective that tended to ignore it (in the Walrassian model, the only market institution, the auctioneer, is a fictitious institution). Institutions build the necessary trust to ensure the functioning of markets. They themselves have a stability that guarantees the one of the market.

There is an economic school that stresses uncertainty: the Austrian one. The question of uncertainty is not homogenous among the school. As regards von Mises (1998), uncertainty lies at the heart of human action and market decisions: "That man acts and that the future is uncertain are by no means two independent matters. They are only two different modes of establishing one thing (…) To acting man the future is hidden. If man knew the future, he would not have to choose and would not act. He would be like an automaton, reacting to stimuli without any will of his own". Some authors insist on the fact that the market is in itself a process based on uncertainty. A chapter from Lachmann (1986) that is called "The market is not a clockwork" uses an image borrowed from Shackle, the one of a kaleidoscope: the market is both difficult to understand and changing. It is a fundamentally dynamic and uncertain process that is made possible thanks to institutions that maintain the indispensable order: "both equilibrating and unbalancing forces are at work" (Lachmann, quoted by Chiles, Bluedorn & Gupta, 2007: 477). For Lachmann (as well as Schumpeter), the entrepreneur is the actor who, through his choices, has the role to maintain and create uncertainty.

Sociologists have also highlighted the structural conditions for the stabilization of markets. The degree of concentration and institutions stand as common points with the analysis of economists. But they add the power dimension -if it is on the suppliers' side [START_REF] Baker Wayne | Hazards of the Market: The Continuity and Dissolution of Interorganizational Market Relationships[END_REF]. Then sociologists analyze how stabilizing strategies take place on markets. According to [START_REF] Neil | Markets as Politics: A Political-Cultural Approach to Market Institutions[END_REF][START_REF] Neil | The architecture of markets[END_REF], dominant players, at first, share and impose a common vision of the market, a vision that helps them to control behaviors on the market ("conception of control"). Secondly, they manage to capture the State so that it defines "property rights" in their interest, thus creating profit opportunities. They also define products and services, qualify them so that they can be exchanged, again with an opportunity of profit [START_REF] Benjamin | The social construction of markets[END_REF]. Thirdly, dominant players can influence formal and informal rules defining what is possible in terms of competition and cooperation (it is the "governance structure"). Lastly, "[r]ules of exchange define who can transact with whom and the conditions under which transactions are carried out. Rules must be established regarding shipping, billing, insurance, the exchange of money (i.e., banks) and the enforcement of contracts" (Fligstein, 1996: 658). Möllering (2007) takes up Fligstein's approach with another perspective. He shows that a market can work only if three types of uncertainty are lifted: uncertainty on valuation (the fact that goods or services can be associated to a value which, through the market mechanism, will turn into a price), uncertainty on competition (an excess of competition can hinder the functioning of a market as well as an insufficient level of competition) and finally cooperation mechanisms have to take place to create trust and limit opportunism.

In a dynamic perspective, markets are seen, in normal periods, as stabilized under the effect of strategies of dominant players. They become open or uncertain only during periods of crisis triggered by exogenous shocks.

Therefore, economists and sociologists have mostly pointed out what can lift uncertainty and stabilize markets, both on the structural side (degree of concentration, institutions) and on the strategy side (the way dominant players seek to stabilize the market). They see uncertainty, market's openness, as essentially caused by exogenous phenomena and happening through crises, followed by a period of fluidity and new periods of stabilization. Only Austrians consider that uncertainty can be intentionally created through strategies of actors on the market, but they ascribe those strategies to a specific actor who is in practice difficult to identify, the entrepreneur.

With an analysis of the case of the US defense industry, this article will strive to show that the shaping of a market is in fact continuous (and not punctuated by crises followed by stabilization periods), jointly made of strategies of stabilization and strategies of upholding and creation of uncertainty that interact and are not determined by specialized actors (dominant players who only stabilize the market and "entrepreneurs" who only create uncertainty).

For this purpose, it will discuss the following propositions deriving from the theoretical

Counter-proposition: Dominant players do not necessarily manage to capture institutional actors (especially antitrust authorities which maintain or create market uncertainty).

Proposition 4: Market actors who are not dominant players are passive or dominated.

Counter-proposition: Other market actors also themselves develop strategies of stabilization and strategies of upholding/creation of uncertainty.

Methodology: study of a deviant case

In order to analyze the questions previously mentioned, a longitudinal case study has been designed [START_REF] Andrew | What Is A Processual Analysis?[END_REF]. The above propositions serve as a "theoretical orientation guiding the case-study analysis" (Yin, 2003: 112). The analysis will pay particular attention to the study of competitive actions and reactions within their industrial environment [START_REF] Ken | Competitive Dynamics Research: Critique and Future Directions[END_REF], competitive actions being defined as "purposeful and observable moves undertaken by firms in order to improve their competitive position vis-à-vis their competitors in the industry" (Gnyawali, He & Madhavan, 2006: 511). The study of sequences of stabilizing actions and destabilizing actions (maintaining or creating uncertainty) and of turning points, epiphanies and apparent transformation associated to these trajectories (Dumez & Jeunemaître, 2006a) will help understanding how processes of stabilization and destabilization are simultaneous and complementary and what is the role of actors in those processes.

How was the case selected? Among possible cases, the most interesting from a theoretical point of view are the "most likely cases" -those that look "over determined by existing theories" (George & Bennett, 2005: 251) -that end up as deviant cases. The US defense industry was chosen as such: it looks like a "most likely" case (this market endured a deep crisis at the end of the Cold War and the crisis was followed by strong stabilizing strategies) that ends up as a deviant case (even in this context, one can notice that actors developed both strategies of stabilization and strategies of upholding and creation of uncertainty). Some more details can be highlighted regarding these features that make the US defense market an interesting one.

According to Fligstein (2006: 251): "Markets are usually destabilized by some form of extreme crisis. This crisis can be caused by governments (either intentionally or unintentionally), by a severe market downturn, or by the emergence of new firms that are outsiders who claim to have a new way to structure the business. It is this situation that reintroduces fluidity into market arrangements and allows for a shake-up of existing market players and the possibility for a new set of rules to emerge to structure market activity." The US defense market experienced such a crisis with the fall of the Berlin wall and the end of the Cold War (non intentional elements). This extreme destabilization was followed by two intentional changes operated by the government -a strong decrease in the defense budget and a redefinition of military missions (e.g. the ability to conduct two conflicts at the same time in two different locations in the world) -and contributed to a market slump and a reshuffle of the "conception of control" shared by dominant players (the development of new technologies emphasized the crisis). Actually, between 1989 and 1999, the US defense budget decreased from a third of its volume. But mainly, the procurement budget (i.e. the budget for the development and production of weapon systems) is the one that most declined, loosing more than half of its value in ten years. This comes from the fact that procurement stands as more adjustable than human resources or maintenance outlays. So in ten years, the sector lost half of its volume (see Figure 1). Even if the defense market has always been cyclical and has endured some important jolts, in that case actors could have had the feeling that cutbacks would be persistent and that previous budget levels would never be reached again. This constituted an epiphany: actors both from the supply and the demand (i.e. the Department of Defense -DoD) sides changed their representations of the market and their strategies. And still, even if some firms exited the industry, the big ones (Lockheed Martin, Raytheon, General Dynamics, etc.) have been on the market for decades, giving some evidence that stabilization strategies were and are still at work. Then comes another interesting feature of the market. Economists and sociologists insist on firms, on the supply side. It is the latter that stabilize the market. The case of the US defense industry is appealing because the customer is a powerful one (it is a monopsonic situation) that is in fact also a regulator (through the Federal Acquisition Regulation -FAR). This situation is extreme, but other market settings happen to exhibit a similar feature, even if it is less accentuated: Airbus or Boeing, even though they do not constitute a monopsone, are in a situation to impose rules to their suppliers; strong distributors probably as well. The US defense industry case was chosen because there is, on this market, a face to face between a powerful customer and powerful suppliers, that enhances strategic initiatives from both the supply and demand sides.

As a result, the studied case stands as a "most likely case", meaning that after the abovedescribed crisis one should observe, after a period of relative fluidity (a shake-up of existing players), a clear stabilizing dynamics led by dominant players. Is it the case? More precisely:

after the crisis, is there some fluidity and then stabilization? Was this stabilization carried out only by dominant players? To answer these questions and discuss the propositions, the paper will now analyze the dynamics of the way out of the crisis. It means understanding the processes through which actors have changed and how strategies have been renewed. This will lead to see that in reality, the way out of the crisis is made of both stabilizing and destabilizing strategies, and that these actions were carried out by diverse actors from the market.

For the purpose of this case study analysis, we made some exploratory interviews with American analysts specialized in the defense industry as well as defense firms' representatives.

These interviews were completed with a systematic analysis of firms' annual reports, newspapers' articles as well as official reports and documents related to the defense sector (DoD, US General Accounting Office, now US Government Accountability Office, etc.).

Case study analysis: the post-crisis period

The case study emphasizes that the shaping of a market is made of strategic actions and reactions, which jointly create stabilization and destabilization. This is a dynamic phenomenon.

Two successive phases can be contrasted.

1. The restructuring process and the first market shaping dynamics

In the depths of the crisis, the first strategic move came from the customer -the Department of Defense. In July 1993 the Deputy-Secretary of Defense William Perry declared he would foster the restructuring of the industry through mergers and acquisitions that had just begun at that time. He made it clear that the government would pay for "restructuring costs on contracts transferred as part of a merger or acquisition if the business combination was expected to result in overall reduced costs for DoD or preserve a critical capability that might otherwise be lost" (GAO Report on Defense Contractor Restructuring, 1998).

This strategic action is ambiguous and difficult to interpret in terms of stabilization and uncertainty. On the one hand, the future market structure the DoD had in mind was clearly fewer and bigger prime contractors. This was supposed to improve efficiency in the development of complex programs. But this could lead to a reduced competitive intensity and market stabilization by dominant players. It was indeed likely, at the beginning of the 90s, that the firms that would survive would be the big market actors. On the other hand, the DoD strategy introduced high uncertainty on the market: firms knew that an intense restructuring process was about to take place and that ruptures between competitors could happen, some of them creating a competitive gap between players. This first strategic move by the DoD therefore proves to be at the same time stabilizing and destabilizing.

The market actually evolved as expected by the DoD: towards fewer and bigger dominant players (see Figures 2 and3). Faced with the impulse given by the DoD, some firms exited the market, some specialized in the defense area and some chose a dual strategy -both in the civil and military activities. Those who exited and those who specialized, showing their commitment to the market, contributed to stabilize the market. The firms that engaged in the dual strategy tended to maintain the openness of the market; for, according to Chen (1996), non "market commonality" can lead to more aggressive competitive actions. Most of the firms were acquired or chose to specialize. It is, for example, the case for General Dynamics: "The chairman of General Dynamics, William Anders, dismisses the rewards for diversification as largely illusory. His firm is slimming. The company plans to stick to four main businesses: tactical aircraft, nuclear submarines, tanks and space equipment. It has sold others, like the light-aircraft maker Cessna, and used the cash to strengthen its core" (The Economist, August 8, 1992, "The Defense Industry Jettisons Its Excess Baggage"). Only one of the main actors, Boeing, chose a dual strategy. Following the merger with McDonnell Douglas in 1997, the firm's turnover ended up being balanced between civil and military activities. With this strategy, Boeing prevented the formation of a "conception of control" [START_REF] Neil | Markets as Politics: A Political-Cultural Approach to Market Institutions[END_REF], that is to say a vision of the market shared by actors (see Figure 4). Concurrently to these "asset orchestration" strategies (Helfat, et al., 2007: 28), actors handled some non-market strategies [START_REF] David | Business and its Environment[END_REF]Dumez & Jeunemaître, 2006b). They tried to promote the idea that the specificity of the defense industry prevented antitrust law to apply. In 1992, the Federal Trade Commission prohibited the merger between Alliant and Ordnance, a merger that would have created a monopoly for the supply of 120mm tank ammunition [FTC v.

Alliant Techsystems Inc., 808 F. Supp (DDC 1992)]. The affair triggered a debate. The DoD gathered a Task Force, headed by a law professor who had already advised antitrust authorities in the past, Robert Pitofski (he will be later nominated president of the FTC by Bill Clinton).

The report was delivered in April 1994 (DoD Science Defense Board, 1994). It resulted in the upholding of antitrust control on the market. Firms did not manage to manipulate the institutional framework applying to the market. On March 23rd, 1998, the Department of Justice prohibited the project for the acquisition of Northrop Grumman by Lockheed Martin (two of the top prime contractors), thereby stopping the restructuring process through mergers and acquisitions. This decision maintained a certain degree of openness of the defense market, necessary for competitive emulation.

Besides, the DoD has been using another strategy to uphold uncertainty. In fact, it has kept on using the "winner take all" rule that allows to introduce some uncertainty to stimulate innovation, by giving an incentive prize for the firm which gets the production contract [START_REF] William | Economic Incentives and the Defense Procurement Process[END_REF]. The DoD acquisition process falls into different phases in the relationship with suppliers (design, development -source selection through prototypes -and production), the number of suppliers being reduced as one goes along with the program. The division of the process into several sequential contracts introduces uncertainty on the side of firms, as they have no guarantee to get a production prize before the last phase of the program. Moreover, production contracts themselves fall into annual contracts (or multiannual, exceptionally), concurrently with the Congress annual oversight: it gives some maneuver for negotiation, being it for the DoD or for firms. As a result, despite the length of programs that tends to stabilize, the practice that consists in dealing sequentially with several contractors with a winner "taking all" in the end, allows to keep some openness. The combination of a reduced but open number of players and of the "winner take all" rule maintains these different players on a level playing field, which allows guaranteeing some openness in stability.

What is the result of the whole process as regards the shaping of the market?

During an interview, an actor expressed, through a metaphor, this market shaping resulting from combined strategies of stabilization and uncertainty creation. The market was compared with the US Major League Baseball. In such a championship, every team wins at least around one third of its games, and none wins a priori more than two thirds; consequently, the only uncertainty, reduced but present, concerns the remaining third part. In the same way, on the defense market, it looks like the consolidated prime contractors will now stay on the market, all of them winning a minimum of contracts and none of them being able to win all of the contracts (given the need to maintain the industrial base). They are regularly called to cooperate -prime contractors can become the subcontractor of another prime for some contracts (e.g. Boeing is a subcontractor of Lockheed Martin for the F-22, a US Air Force fighter), or two firms can be prime together (the last US Navy destroyer, the DDG-1000 Zumwalt, is for example coproduced by two prime contractors). But uncertainty remains regarding the relative position of the different primes.

Strategic interaction between the customer and suppliers thus led to a shaping made of stabilization and openness, where institutions acted to maintain this openness. However, this shaping has been questioned by firms' stabilization strategies. The latter triggered a new sequence of interactions leading to new strategic answers in terms of uncertainty creation.

Systems integration strategies and the second market shaping dynamics

As said before, the crisis triggered by the end of the Cold War was a budgetary one, but it was also a technological crisis in the sense of a change of paradigm, due to the expansion of new technologies linked to the notion of systems of systems (or Network Centric Warfare -NCW). New information and communication technologies lie at the core of the development of systems connecting different platforms: according to the Pentagon's Office of Force Transformation, "NCW represents a powerful set of warfighting concepts and associated military capabilities that allow warfighters to take full advantage of all available information and bring all available assets to bear in a rapid and flexible manner". For example, the US Army develops the Future Combat Systems program which consists in the production of a networked system of systems including a C4ISR backbone (central architecture), a ground soldier system as well as 18 systems grouped in 3 categories (manned ground vehicles, unmanned air vehicles, unmanned ground robotic vehicles).

Dominant firms have seized this opportunity by trying to stabilize the market to their advantage and by getting out of the Major League Baseball model that remained too much open.

There again, strategies of stabilization and destabilization have been combined. Actually, the DoD, which has been losing technological capabilities because of the decreasing budget (that led to more delegation), created a new type of contract: the Lead Systems Integrator (LSI) contract. According to Bergey, O'Brien & Smith (2003: 1): "An LSI is an agent with the authority to acquire and integrate assets from a variety of potential system suppliers on behalf of an organization that is acquiring a complex software-intensive system. The LSI has the authority to contract with and manage other suppliers on behalf of the acquirer." More precisely, requirements become a variable that the contractor co-defines with the customer, thanks to its capabilities. And the LSI can be responsible for setting itself the request for proposals and choosing the contractors. In a way, this strategy is clearly stabilizing. These new systems are highly complex and ask for firms to combine diverse capabilities: it means being able to define the customer's needs, to technically design the system and later integrate the subsystems (simulation and test capabilities) and to organize and manage the subcontracting. The few firms that get a contract are likely to benefit from a first mover advantage with a lock-in effect.

The Future Combat Systems (FCS) program embodies this change that affects both the process of definition of needs and the process of contractors' selection. Regarding the definition of needs, it is important to understand that, with NCW technologies, the US Army literally needed to reinvent its identity and missions. In 2002, it chose the Boeing and SAIC team to As for the shaping of the market, several points can be highlighted.

Systems integration goes with a risk of an excessive stabilization of the market. The restructuring process already led to the constitution of a market with a limited number of actors.

Systems integration could lead to the selection of three or four durably dominant firms.

Yet the case study shows that the customer used the expansion of systems integration to develop strategies of uncertainty creation. For example, when the US Army decided to grant an LSI contract to both Boeing and SAIC for the FCS program, two new actors were thus introduced on the army market, to the detriment of the traditional first-tier contractors of the US Army, namely General Dynamics and United Defense. Whereas they previously had a direct contact with the military customer, they have become a partner-supplier of Boeing and SAIC.

De facto, the DoD created a new type of actors, an intermediary between the customer -that is itself -and suppliers. It therefore opened the traditional playing field that was too much stabilized in a face to face between the US Army and its established suppliers.

On the suppliers' side, systems integration poses a challenge. The firms that manage to get hold of an intermediary monopolistic position between the DoD and suppliers face a problem: they have to adopt the same competitive behavior towards suppliers and their own subsidiaries (it is an independence of judgment capability - [START_REF] Peter | Buying Military Transformation: Technological Innovation and the Defense Industry[END_REF]. As they are vertically integrated, the customer can suspect them to favor their internal solutions.

For that reason, they have to adopt some self-restraining strategies that prevent them to excessively stabilize the market at their profit. However, it is possible that the value chain is more favorable to subcontractors. So even if they manage to get hold of the highest position of the market (the new one of intermediary), it can also lead them to give up inferior positions that can be more valuable.

Moreover, the superior position is not free from reversibility. In April As for firms, they can play on their strong position to answer to these strategies of uncertainty renewal with strategies creating a new stabilization. Subsequent to the strategy of the US Navy regarding the use of a fixed-price contract, Lockheed Martin answered by refusing to take on more risks and the contract was eventually interrupted. This is related to the fact that it is very difficult to rightly anticipate the price of highly innovative programs (valuation problem), this price resulting from the power balance between supply and demand.

The study of the development of systems integration strategies, which renewed the "conception of control" of the market, therefore clearly enhances the double dimension of the shaping. The stabilization can be seen in the formation of a new hierarchy of actors, through the monopolization by a few firms of the relationship with the customer and through the dynamic transfer of competences. Firms also develop some self-restraining strategies allowing the market to stay open. The DoD creates some uncertainty at the level of the traditional playing field where firms were too highly anchored, by creating a new position, the one of intermediary.

Discussion and results

We can now come back to the propositions and see what has been enlightened by the case study.

At first, the dynamics that follows a strong exogenous perturbation is not univocally stabilizing (even if in the short run the crisis particularly destabilizes the market and accentuates its fluidity, the latter does not disappear after). The supposed sequence -crisis / emergence / stabilization -tends to screen the intrinsically dual nature of the market process: actions that stabilize the market and actions that uphold or create uncertainty coexist in a complementary way.

Then, who is carrying out these actions? Are some actors specialized in destabilization and institutional actors specialized in stabilization? On the contrary, the case study points out that each actor has some levers for stabilization and destabilization. For example, the DoDboth a customer and a regulator -can play with the rules of exchange by switching between fixed-price contracts (destabilizing) and cost-plus contracts (stabilizing); by selecting contractors according to the "winner take all" rule (that creates a beneficial uncertainty) and by sometimes using "compensatory" selections (stabilizing); or also by being selective early in the acquisition process (choice of a Lead System Integrator who will lead the program) or by keeping uncertainty until the choice of a producer. As for firms, they can share the same "conception of control" as well as keep some exit options; they can specialize univocally in one area or, on the contrary, surprise competitors by mobilizing their capabilities to enter new activities (cf. Boeing's interest for the FCS program for the US Army). It is important to note that there are some sequences of actions, some series of actions and reactions. For example, a firm as Lockheed Martin took up a cost-plus contract and underperformed, far away from the initial target; the customer considered that this performance was caused by bad management and decided to turn back to a fixed-price contract so as to give an incentive for a better performance;

the firm refused and preferred to stop the contract rather than accept to bear the associated risks.

Therefore, one can conceive the shaping of a market as a double movement of both stabilization and upholding/creation of uncertainty, from actors who are parts of the market. The notion of stabilization is ambiguous and calls for cautious interpretation, it is more complex than Fligstein could let think. Some strategies can, at the same time, be stabilizing and destabilizing. Two types of actions are complementary: if a certain degree of stabilization is clearly necessary for actors to take part in the exchange (one only has to see the strong need for stabilization on the defense market, due to the intrinsic valuation uncertainty), a certain degree of openness of the market also needs to be maintained. The notion of openness, destabilization, upholding or creation of uncertainty, is a way to remind that stabilizing elements emanate from actors that could decide otherwise. Actors' asymmetries are of course possible, but dynamically the possibility for change and reversibility is essential. It must be possible to go back and forth, that is the only way the market can let exchanges occur.

The notion of market shaping as we tried to support it helps to identify some critical points for the evolution of a market. In the case of the defense market, it can be argued that the actual trend is probably one of an excessive stabilization. Despite some strategies to recreate some uncertainty, both on the demand side (call for fixed-price contracts, creation of new intermediary positions) and on the supply side (self-restraining strategies), a market stabilization is taking place; due to the fact that firms are progressively getting some key capabilities that the buyer has dropped (it is a path-dependency dynamics). The government has to renew its capabilities to take on a role that is no more the one of an implementer but that rather becomes a role of overseeing [START_REF] Scott | An assessment of the lead systems integrator concept as applied to the future combat system program[END_REF]. What levers could allow the DoD to get back some maneuver by creating new uncertainties? Chu & Waxman (1998), for example, think that the actual game is closed because firms are too specialized. They think that the DoD should give incentives for civil firms to enter some segments of the market by working with them (the knowledge of the military customer is one of the barriers to entry, probably more than the specificity of technologies). The solution would be in a modification of the framework for exchanges, of the required capabilities to be in the market, through a decrease of firms'

"defense-ness" (i.e. "the degree to which a firm has built the capability and competency to engage in business with agencies like DoD", p. 38). It comes down to play on the openness of relationships between military and civil activities, so that "specialized knowledge necessary to do business with the Department of Defense [is] either easily obtained, or no longer differentiate[s] the defense and non-defense sectors" (p. 42). As for [START_REF] Peter | Buying Military Transformation: Technological Innovation and the Defense Industry[END_REF], they suggest to mobilize an independent expertise with no production activity in the sector, that is to say no industrial stake, but with some capabilities that the DoD lost and cannot exclusively leave to contractors.

The notion of shaping as it was used in this article thus appears to be an interesting tool to analyze and predict in some way a market dynamics. It restores the strategic dimension of actions of market's players, without over valuating the stability of markets as process.

  The dynamics of stabilization and market's openness is punctuated and looks like a crisis / emergence (more fluid and open period) / stabilization sequence. Counterproposition: Market shaping is a continuous process made of concurrent strategies of stabilization and upholding or creation of uncertainty. Proposition 2: Dominant players only develop strategies of stabilization. Counterproposition: Dominant players also develop strategies of upholding or creation of uncertainty. Proposition 3: Institutional actors are captured (regulatory capture) by dominant players.

Figure 1 .

 1 Figure 1. Decrease in the procurement budget after the end of the Cold War

Figure

  Figure 2. Consolidation during the 90s Figure 3. Decrease in the number of contractors during the 1990-98 restructuring

Figure 4 .

 4 Figure 4. Percentage of military activity for the 5 « Top US prime contractors » (2002)

  propose a global solution allowing to link platforms, sensors, weapons and soldiers within a seamless and integrated network. Even if the program came from DARPA's research (Defense Advanced Research Projects Agency), it was specified by the selected contractors, working jointly with the military customer. Boeing and SAIC had to transform the concept imagined by the US Army and DARPA into an operational solution. Regarding the contractors' selection, the LSI has progressively built a network of 31 first-tier partners.

  2007 for example, the US Coast Guards, under the pressure of the Congress, retrieved the LSI contract of the joint venture formed by Lockheed Martin and Northrop Grumman because of their inability to properly run the Deepwater program (a massive modernization program of the Coast Guards that was set up after the 9/11 events). The costs went from the initially predicted 17 billions of dollars to 24 billions "and has included problems such as failed encryption technologies, which jeopardizes classified government information, and boats rendered unusable due to buckling and cracking hulls" (Defense-Aerospace.com, May 22, 2007, "Defense Contractors Running Government: A Recipe for Disaster"). The government went back on delegation: after retrieving the Deepwater LSI contract, the Coast Guards announced that from now on they would internally ensure the management of the program by reincorporating this responsibility within the Coast Guards. Even though Lockheed Martin and Northrop Grumman are not completely thrown out of the program, they are still downgraded to a "classical" prime contractor role.Going on with strategies recreating uncertainty, the DoD recently suggested to go back to fixed-price contracts in order to favor more firms' efficiency. It looks like if there were a pendulum according to which, when there are too much costs' slippage (on average, costs are underestimated of 20% -Report from the RAND Corporation, 1993), the DoD can go back to stricter rules to balance the situation. For example, the development of information technologies is giving rise to numerous technically complex and demanding programs for which the maturation of technologies is quite slow. It creates strong uncertainty on costs and time schedules, with a DoD knowing less about the program than firms do. Using fixed-price contracts is thus a way for the DoD to transfer some risks to the contractors. It stands as an incentive for them to be more efficient. For that reason, at the beginning of 2007 the US Navy asked Lockheed Martin to build its second prototype for the Littoral Combat Ship program under a fixed-price contract, following important slippage in costs and time schedules for the first prototype. This attempt to go back to fixed-price acts as a signal that the DoD can periodically mobilize to make the market more dynamic. The decision of the Congress to set up a price-cap for the costs associated to the F-22 program stands as another example of the strengthening of contractual settings.