Discovery paths: Exploring emergence and IT evolutionary design in cross-border M and As. Analysing grupo Santander's acquisition of abbey (2004-2009)

In this paper, we present the notion of discovery paths stemming from our study of the M and A between Grupo Santander (GS) and Abbey (2004-2009), in which the resulting synergies after the merger were 35% better than expected. In fact, GS achieved a unique level of efficiency in 2012 in the banking industry, which we consider a sign of radical novelty. During the M and A, the GS management decided to apply its customer-centric model through the transfer of the information and communication technology (ICT) platform Partenón. This unusual decision led to the endogenisation of critical ICT functions to scale up this model to Abbey. In the paper, we argue that while some steps that lead to synergies can be planned in advance, other essential variations are only learned and discovered during the M and A process itself, thus leading to emergent synergies. In the model presented, a discovery path explains the firm's evolution by sets of variations in the strategic interaction between the organisation and technology. These variations led to new design principles resulting from problem solving and modularity, which in turn led to (1) economies of scale and scope, (2) hybrid structures combining ICT and organisational knowledge domains that generate efficiency through fast integrations, and (3) organisational morphogenesis-that is, the creation of new organs such as ICT factories-which generates efficiency by avoiding diseconomies of scale by encapsulating the inherent complexity of technology and provides increasing returns.