IngentaConnect Complex Systems Applied? The Merger that made Glaxo SmithKline

Abstract:

With reference to the Glaxo SmithKline (GSK) case, and more widely, this paper asks 'what's going on?' when two separate corporations choose to combine their organizational and administrative facilities to pursue asserted shared corporate goals through merger. The paper explores whether complex systems thinking can help to capture and represent the interactions that occur across different classes of agent involved in the extended merger process. It is therefore explicitly concerned with the application of complex systems in socio-economic contexts as opposed to physical or natural systems. The paper argues that in order to understand the merger phenomenon, it is important to disentangle the revealed (as opposed to assumed) rationality of different classes of economic agent—operating across the corporate sector, across regulatory regimes, and from all sides of the market/exchange process. The analysis draws attention to the ways in which that rationality is both incentivized and (economically) expressed. Further, the paper uses the Instituted Economic Process (IEP) perspective to sketch an analytical framework representing the structures and structuring of interdependent markets in the pharmaceuticals sector. It argues that these interactions are responsible for instituting particular recurrent behaviours, appearing as event regularities in terms of outcomes. It further argues that these recurrent behaviours and interactions themselves change under pressure from various parts of the system and explores how these changes are revealed in this particular merger case. The analysis describes an unfolding situation which is inherently emergent, experimental, restless, and transformatory.

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