Diversification through Acquisition: Co-Operative Banks as Dynamic Players in Competitive Markets

Abstract

Mainstream strategic management literature has for long considered acquisition as one of investor-owned firms’ options when pursuing growth – to survive competition and gain greater profits. Relatively little attention has been given to this option in literature on co-operative enterprises. Therefore, the main purpose of the qualitative study at hand is to advance knowledge on strategic management of consumer co-operatives with a focus on acquisitions. Our interview data concerns one of the biggest corporate acquisitions in Finland, which served to give birth to the country’s leading financial services constellation: OP-Pohjola Group. Analysing the data we depict the context of the acquisition decision, identifying particular themes (forces and boundary conditions) seen as setting the stage for the strategic move and generate a model that helps explain when and why acquisition becomes a relevant strategy for a consumer co-operative (bank). Our study shows that mainstream strategic management doctrine can be integrated into co-operative management theory to the extent it fits the purpose of co-operative organizations.