We investigate droplet breakup and coalescence under shear flow for an immiscible polymer blend system in which styrene-acrylonitrile random copolymer and poly(cyclohexyl methacrylate) are the blend components, and a symmetric poly(styrene-b-methyl methacrylate) block copolymer (bcp) is utilized as a compatibilizer. The influence on the blend morphology of the ratio (S r) between the swelling power at the interface of the bcp segment outside the droplet versus that inside the droplet is studied. We find that the balance of swelling between external and internal segments has an important influence on the ultimate blend morphology. Four zones of morphological behaviors are observed: Sr < 0.4, internal emulsification failure; 1 > Sr > 0.4, unstable emulsification; 2.5 > Sr > 1, stable emulsification; Sr > 2.5, external emulsification failure.