K) The Challenge of Merging
Abstract
- Employees often show resistance to merger
- 3 studies conducted to investigate the influence of premerger status (high/low)
and merger pattern (assimilation, integration-equality, integration-
proportionality, transformation) on participants’ support for a merger
- Across all studies, the low-status group favored integration equality &
transformation, whilst the high-status group preferred assimilation & integration
proportionality
- Perceived threat mediated effects
- Legitimacy was a stronger mediator for effects of low-status group
Intro
- Globalisation has led organisations to cooperate, in some cases to merge
- Many mergers do not meet expectations & have low success rates
- Paper looks at merger process from an intergroup perspective
- May be useful to understand the preconditions under which mergers are likely to
succeed or fail
- Organisational mergers: two companies merge to become one, & a new group
identity is imposed
- This identity often creates an ‘us vs them’ dynamic; causing an increased salience
of the premerger group membership
- These intergroup dynamics play a role at the start of the merger & can jeopardise its
success
- Paper draws on SIT and on the Social Identity model of post-merger
identification
A Social Identity Perspective on Mergers
- SIT = general theory of intergroup relations
- Assumes that individuals perceive the social world in terms of social categories
- Group membership also contributes to one’s self-definition, i.e. characteristics of
one’s ingroup (social identity)
- Group membership transforms individual motivation into collective motivation
- Thus perceptions of group-level consequences should impact on individual
evaluations/decisions
- Individuals strive to achieve/maintain a positive self-concept; evaluation of social
identity valence is derived from social group membership & their value connotations
in comparison to relevant reference groups
- SIT has been successfully applied to understand the intergroup dynamics during
mergers
- Research indicates that sociostructural characteristics of merging groups relations
impact on intergroup conflict & employee responses to merger
Status Differences In Organisational Mergers
- Most mergers are not mergers of equals
- Mergers often result in the heightened salience of status differences
, - SIT shows that membership in low-status groups (LSG) fails to provide members with
a positive social identity
- Bc of status differences, LSG members should feel more threatened & may seek to
enhance their status
- High-status group (HSG) members have a positive social identity & may try to
maintain status (as a decreases of status is threatening to HSG)
- Thus both groups should be motivated to optimise status position
- Knippenberg & Van Leeuwen proposed a (confirmed) Social Identity model of
post-merger identification which takes status relations into account
- Suggests that the dominant organisation is more likely to define the character of
the merged company
- Thus HSG/dominant group feel a sense of continuity of pre-merger identity & so
will identity more strongly with merged company/post-merger identity
VS
- LSG less likely to feel continuity & will identity less
- Members of all groups expect the HSG to dominate merger & so members of HSG
should be more willing to support it
Merger Patterns
- Status differences: the comparison between 2 groups before the merger
- Dimensions of comparison depend on context
- In organisational merger context, dimensions are defined by the economic
factors prior to merger
- & dominance within merger defined by the power relations
- Organisational dominance of HSG depends on how the organisations are merging
- Schoennauer differentiated between 3 major merger patterns:
A) Absorb
B) Blend
C) Combine
A) Absorb (assimilation)
- assimilation of the LSG into the HSG
- Employed in 49% of mergers
B) Blend (integration)
- Former identities of both organisations are still recognisable
- Previous organisations integrated into one, while not forsaking their
premerger identities
- 31% of mergers
C) Combine (transformation)
- Reflects a new group with no relation to the old pre-merger groups
- Represents a kind of transformation of the old subgroup identities into a
totally new group identity
- 8% of mergers
- Different merger patterns have big influences on employees willingness to support
merger
- E.g. Mottola found that group members are more supportive of an integration pattern
Abstract
- Employees often show resistance to merger
- 3 studies conducted to investigate the influence of premerger status (high/low)
and merger pattern (assimilation, integration-equality, integration-
proportionality, transformation) on participants’ support for a merger
- Across all studies, the low-status group favored integration equality &
transformation, whilst the high-status group preferred assimilation & integration
proportionality
- Perceived threat mediated effects
- Legitimacy was a stronger mediator for effects of low-status group
Intro
- Globalisation has led organisations to cooperate, in some cases to merge
- Many mergers do not meet expectations & have low success rates
- Paper looks at merger process from an intergroup perspective
- May be useful to understand the preconditions under which mergers are likely to
succeed or fail
- Organisational mergers: two companies merge to become one, & a new group
identity is imposed
- This identity often creates an ‘us vs them’ dynamic; causing an increased salience
of the premerger group membership
- These intergroup dynamics play a role at the start of the merger & can jeopardise its
success
- Paper draws on SIT and on the Social Identity model of post-merger
identification
A Social Identity Perspective on Mergers
- SIT = general theory of intergroup relations
- Assumes that individuals perceive the social world in terms of social categories
- Group membership also contributes to one’s self-definition, i.e. characteristics of
one’s ingroup (social identity)
- Group membership transforms individual motivation into collective motivation
- Thus perceptions of group-level consequences should impact on individual
evaluations/decisions
- Individuals strive to achieve/maintain a positive self-concept; evaluation of social
identity valence is derived from social group membership & their value connotations
in comparison to relevant reference groups
- SIT has been successfully applied to understand the intergroup dynamics during
mergers
- Research indicates that sociostructural characteristics of merging groups relations
impact on intergroup conflict & employee responses to merger
Status Differences In Organisational Mergers
- Most mergers are not mergers of equals
- Mergers often result in the heightened salience of status differences
, - SIT shows that membership in low-status groups (LSG) fails to provide members with
a positive social identity
- Bc of status differences, LSG members should feel more threatened & may seek to
enhance their status
- High-status group (HSG) members have a positive social identity & may try to
maintain status (as a decreases of status is threatening to HSG)
- Thus both groups should be motivated to optimise status position
- Knippenberg & Van Leeuwen proposed a (confirmed) Social Identity model of
post-merger identification which takes status relations into account
- Suggests that the dominant organisation is more likely to define the character of
the merged company
- Thus HSG/dominant group feel a sense of continuity of pre-merger identity & so
will identity more strongly with merged company/post-merger identity
VS
- LSG less likely to feel continuity & will identity less
- Members of all groups expect the HSG to dominate merger & so members of HSG
should be more willing to support it
Merger Patterns
- Status differences: the comparison between 2 groups before the merger
- Dimensions of comparison depend on context
- In organisational merger context, dimensions are defined by the economic
factors prior to merger
- & dominance within merger defined by the power relations
- Organisational dominance of HSG depends on how the organisations are merging
- Schoennauer differentiated between 3 major merger patterns:
A) Absorb
B) Blend
C) Combine
A) Absorb (assimilation)
- assimilation of the LSG into the HSG
- Employed in 49% of mergers
B) Blend (integration)
- Former identities of both organisations are still recognisable
- Previous organisations integrated into one, while not forsaking their
premerger identities
- 31% of mergers
C) Combine (transformation)
- Reflects a new group with no relation to the old pre-merger groups
- Represents a kind of transformation of the old subgroup identities into a
totally new group identity
- 8% of mergers
- Different merger patterns have big influences on employees willingness to support
merger
- E.g. Mottola found that group members are more supportive of an integration pattern
