Cultural influences and the mediating role of socio-cultural integration processes on the performance of cross-border mergers and acquisitions

This article has been made available through the Brunel Open Access Publishing Fund.This paper reports findings from a longitudinal case study (2005–2011) of a merger between an Austrian and a German energy provider. I develop a model of socio-cultural integration processes based on an analysis of critical incidents expressed in 71 problem-centred interviews and observations with acquired and acquiring employees at four different points of time: immediately before the takeover and during the first negotiation talks, and one, three and six years after the takeover. The findings suggest that the relationship between national and organizational cultural differences and M&A outcomes is mediated by socio-cultural integration processes defined in terms of the formation of interpersonal relationships, trust and shared identity. Based on these findings I formulate specific propositions and build an evidence-based model of M&A socio-cultural integration processes that guides future research and practice

Causes of post-merger workforce adjustments

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The role of the psychological contract in affecting employee behaviour under the influence of merger and acquisition: a study of local regional managers in Hong Kong

In past decades, the expectation of synergy has fueled many thousands of mergers and acquisitions. Meanwhile, economists and analysts have reported a large proportion of merger failures. This apparent contradiction has provided researchers with a rich source of studies. One of the likely causes of a merger failure is the “people factor”. Revolving around the axis of mergers and acquisitions, the peoples affected are, on the one side, the stockholders, top management, and economists who “talk the project” and tend to have a positive attitude and on the other side, the people who “walk the project” – the employees - who have a more hesitant attitude.This empirical study adopted the construct of Psychological Contracts to measure the expectations of employees who are influenced by mergers and acquisitions. Based on this construct, a model was developed to study employees’ behaviour after a merger, examining it from a multitude of dimensions. Using the PLS-Graph analysis tools, the model was tested with the aim of assessing the factors’ impact on employees’ behaviour. Apart from the direct causal relationship between two variables, the indirect effects caused by other variables are assessed as well.The first contribution made by this research is the fact that it examines the relevance of a psychological contract in a non-Western geographical region. Next, the study clearly confirms some of the existing conceptualizations regarding psychological contracts and reveals some additional insights, particularly in relation to the consideration of psychological contracts in a non-Western socio-cultural context.The research aspires to generalize the model for predicting the post-merger behaviour of employees anywhere, across any industry, business segment and profession

Resource-based theory and mergers & acquisitions success

Mergers & acquisitions (M&A) are most popular external growth strategies. While the number of M&A has been increasing during the past decades, on average, only the shareholders of target firms gain value during the acquisitions process, while acquirers do not receive abnormal positive returns. This paper analyses the impact of strategically valuable resources on the success of M&A decisions. We test complementary resource-based hypotheses regarding the value of M&A for the shareholders of both transaction partners. Our sample consists of transactions in the pharmaceutical and biotechnological industry. The results of our study show that the shareholders of both transaction partners will gain above average positive returns only when the acquirer and the target own and combine strategically valuable resources and capabilities. --

Post transfer of undertakings psychological contract violation: modelling antecedents and outcomes

Msc Human Resource ManagementThe purpose of this study was to test a model of antecedents and outcomes of psychological contract violation based on social exchange theory within the context of an acquisition. A cross-sectional quantitative survey research design was used. A total of 200 office and operational employees who had recently gone through a TUPE transfer process as the result of an acquisition partiCipated in the study. PartiCipants were] asked to complete a questionnaire to measure their perceptions of procedural justice and perceived organisational support experienced at the point of TUPE and the resulting psychological contract violation and employee engagement post-TUPE. Multiple regression analysis through SPSS 19.0 was used as the method of analysis. Results indicate that procedural justice and perceived organisational support predicts psychological contract violation. Results indicate that psychological contract violation in turn predicts employee engagement. In addition, psychological contract violation mediates the relationship between procedural justice, perceived organisational support and employee engagement. Therefore, support has been found to state that the psychological contract can be used to explain the relationship between employee perceptions of fairness and support during a TUPE and their post-TUPE reaction of engagement. The study used cross-sectional and self-reported data which limits the conclusions that can be confirmed about causality and also raises concerns about common method bias. Furthermore, it is acknowledged that various extraneous or confounding variable may have an influence on the variables. The study offers insights into employees' responses within the context of TUPE transfers as explored through the psychological contract within the social exchange theory the framework

Investor Protection and the Value Effects of Bank Merger Announcements in Europe and the US

Investor protection regimes have been shown to partly explain why the same type of corporate event may attract different investor reactions across countries. We compare the value effects of large bank merger announcements in Europe and the US and find an inverse relationship between the level of investor protection prevalent in the target country and abnormal returns that bidders realize during the announcement period. Accordingly, bidding banks realize higher returns when targeting low protection economies (most European economies) than bidders targeting institutions which operate under a high investor protection regime (the US). We argue that bidding bank shareholders need to be compensated for an increased risk of expropriation by insiders which they face in a low protection environment where takeover markets are illiquid and there are high private benefits of control

Performance Implications of Firm Resource Interactions in the Acquisition of R&D-Intensive Firms

We explore the role of resource interactions in explaining firm performance in the context of acquisitions. Although we confirm that acquisitions do not lead to higher performance on average, we do find that complementary resource profiles in target and acquiring firms are associated with abnormal returns. Specifically, we find that acquiring firm marketing resources and target firm technology resources positively reinforce (complement) each other; meanwhile, acquiring and target firm technology resources negatively reinforce (substitute) one another. Implications for management theory and practice are identified