This case study of a precision device manufacturer discusses knowledge integration in a product development organization after M&A. The goal is to contribute to establishment of a methodology that helps to accomplish the purpose of M&A. The special feature is to analyze establishment of a new product development organization, and its entry into a new market from the standpoint of knowledge management. This study proposes the ARC Model to explain knowledge integration in product development organizations after M&A. Knowledge integration is conducted in three phases, i.e., Assessment, Reorganization and Cooperation. In the first phase, knowledge of the acquiring company and the acquired company is assessed. In the second phase, product development organizations are reorganized based on assessment in the first phase. Strategic transfer and far transfer of existing knowledge are conducted. In the third phase, knowledge is created in the process of product development in the new organization. Near transfer and serial transfer of the newly created knowledge are conducted.
This study indicates that one of the adverse factors against knowledge integration in product development organizations is difference of corporate cultures and another is persistence of knowledge not necessary for the new market.