Focusing on the bright tomorrow? A longitudinal study of organizational identification and projected continuity in a corporate merger

Unpacking the dynamics in acquisition of capabilities: the role of identities during postmerger integration

Purpose

Despite best intentions, mergers and acquisitions often do not live up to the expectations for performance. This study examined how the salience of multiple identities creates dynamics in postmerger integration processes and how these dynamics influence the acquisition of the target's capabilities.

Design/methodology/approach

The authors conducted an in-depth case study of a large American consumer goods multinational corporation's acquisition of a family-owned German beauty business and examined responses to decisions and events during the postmerger integration process.

Findings

The results show how and why efforts to acquire unique target capabilities might not deliver the hoped-for results. The authors discovered multiple identities that became salient during the postmerger integration process which subsequently influenced interpretations and reactions to decisions and events and which created intergroup dynamics. The authors also noted the role of language in making these identities salient. Such dynamics pose challenges to managing the postmerger integration process and to acquiring sought after capabilities.

Originality/value

This study reveals how different identities become salient in the interpretation of particular events and decisions, resulting in emotional and behavioral reactions and intergroup dynamics. Furthermore, it uncovers the role of language in making identities salient. This study offers further insight into identity dynamics when the capability of the target firm is the motive of the acquisition.

Dynamics of Organizational Identification in the Wake of a Foreign Acquisition

Foreign acquisitions are perceived as threats to organizational identification. Consequently, they trigger members’ sensemaking on their relationship with the organization. Analyzing these sensemaking processes is fundamental to understanding how members interpret identity-threatening events and which logics and motives underlie their identification. We conducted interviews with 28 members of a German company that had been acquired by a Chinese competitor. The study reveals three phases of sensemaking about identification, namely assessment of uncertainty, evaluation of organizational continuity, and reassessment of the organization’s potential for self-enhancement. Initially, concerns for uncertainty reduction are prevalent. Needs for continuity, distinctiveness, and self-verification dominate continuity evaluation. In the last phase, members seek continuous self-enhancement. They hereby evaluate whether they still share the organization's ideology. Furthermore, they reassess the benefits they receive from the organization. The study constitutes a dynamic extension of identification theory. It uncovers salient identification motives and members’ causal reasoning during different sensemaking phases.

Status, stress and fit: comparing the faculty stress impact of university consolidations

Purpose

Institutions of higher education face challenges of fiscal responsibility and their value proposition for students and other stakeholders they serve. Strategies used in business sectors, such as merger and acquisition, are being increasingly adopted by higher education governing boards, especially for public institutions and systems. The purpose of this paper is to guide policy decisions related to university mergers.

Design/methodology/approach

This paper focuses on the interplay between the pre-merger status of the institution, the individual faculty member's sense of belonging, and their commitment to the organization on levels of job-related stress, which has well-established negative impacts on individual and organizational performance. Using survey data collected at the same time post-merger from two different universities within the same state system, we explore regression models to identify similarities and differences between the faculty responses in terms of the impact of the merger on faculty stress.

Findings

Differences are found between the two universities in terms of faculty stress with faculty of one low status institution pre-merger having significantly higher stress post-merger. A case is presented for differences in stress based on a part on differences in how the mergers were managed at the system and university levels.

Practical implications

This research is instructive for higher education policy makers and university administrators as the institution of higher education continues this type of transformation.

Originality/value

This paper examines the impact of mergers on a university's single-most important asset, faculty. Comparative and timely faculty survey results from two related universities early post-merger provide valuable insights for leaders in higher education.

They (Don't) Need Us: Functional Indispensability Impacts Perceptions of Representativeness and Commitment When Lower-Status Groups Go Through an Intergroup Merger

Intergroup changes occur often between subgroups who are asymmetric in status (e.g., size, power, prestige), with important consequences for social identification, especially among the members of lower-status groups. Mergers offer an example of such changes, when subgroups (merger partners) merge into a common, superordinate group (post-merger group). Lower-status subgroups frequently perceive they are less represented in the post-merger group, therefore committing less to the changes a merger implies. Five studies offered an intergroup relations’ perspective on mergers (N’s = 479, 150, 266, 113, and 229, respectively), examining how functional indispensability (instrumental contribution of the ingroup) positively influences perceptions of representativeness in the post-merger group (relative ingroup prototypicality), which, in turn, affect post-merger identification and, finally, change commitment. Additionally, the role of cognitive information processing (heuristic vs. systematic) on prototypicality was explored. Results suggest that functional indispensability impacts relative ingroup prototypicality (Studies 1–5), and this may be moderated by information processing (Study 2). Moreover, prototypicality and identification with the superordinate post-merged group mediated the effect of functional indispensability on change commitment (Studies 1–3). These findings provide important theoretical insights into prototypicality perceptions held by lower-status merger partners and minority groups in general, by identifying functional indispensability as a source of prototypicality other than relative status. In addition, by proposing a functional approach to the relations between social groups, these findings suggest better practices for managing structural changes, such as combining sources of strategic/functional and identity fit when announcing an intergroup change.