Resistance to change in the case of mergers and acquisitions: part 1

Abstract

Purpose Mergers and acquisitions (M&A) are inherent to firms evolving in today’s business world, whether they be corporate giants, SMEs or start-ups. While the ultimate objective of an M&A is to improve the newly constructed firm’s performance, financial and technical impacts are but some of the considerations the organization will need to face. Indeed, employee resistance appears to be a major factor in the overall success of this strategic move. The purpose of this paper, three part, is to provide a thorough overview of the forces at play in employee resistance to change, its influence on the M&A’s success, and the ways to address such resistance. Design/methodology/approach Based on existing empirical studies, industry expert findings and academic reviews, this paper sought to link together the concepts of communication at a time of change, leadership, employee involvement, feeling of adherence to the firm (the four key pillars) and their respective influences in how they may handicap or aid the firm in achieving its M&A objectives. Findings Although it may seem like a straightforward concept, resistance to change in the turbulent time that is a merger and acquisition situation is anything but simple. Classic assumptions of resistance being a negative force or participation being a requisite part of overcoming resistance are challenged. At the same time, leadership and employee feeling of adherence to their previous organization play a supporting role when compared to the significant influence of communication pre, during and after the merger. The ensuing portrait is thus multifaceted and underscores the complexity of handling an M&A at the human resources level. Research limitations/implications Whilst the paper allowed to identify and link the different factors at play, a thorough empirical study in order to compare and contrast those factors at an M&A’s different stages (pre-during-post), and thus evaluate their respective importance, would be commendable. Practical implications In providing an overview of several aspects at play in employee resistance to change, this paper allows a management practitioner to consolidate their knowledge on the process’ four key pillars. Social implications By illustrating not only its – expected – negative outcomes, but by also providing a glimpse at some potential benefits in terms of increased merger performance, this paper gives managers incentives to not always challenge but also embrace their employee’s resistance to change as a healthy part of the firm’s transformation process. Originality/value This literature review provides an overview of resistance to change and draws parallels between the concepts explored herein and the M&A situation, which would be useful to the general practitioner undergoing an M&A.

Consumer intentions, reactance and the marketing implications of policy induced mergers and acquisitions in financial services

“…The theoretical implication of this study echoes a recommendation in existing literature that there is a need for a joint communications operation by the parties involved, including the regulator and the affected firms before, during and after the merger is set up to offer a synchronous communication to reduce the incidences of conflicting and negative news headlines that is usually associated with regulator enforced M&A. We also add our voices to Alvarez-González and Otero-Neira (2020), Appelbaum et al. (2017) and Morall (1996) that in all types of M&A, communication must strongly focus on the marketing mix offerings that the customer is getting and less on the financial efficiency perspectives such as cost savings.…”

“…The theoretical implication of this study echoes a recommendation in existing literature that there is a need for a joint communications operation by the parties involved, including the regulator and the affected firms before, during and after the merger is set up to offer a synchronous communication to reduce the incidences of conflicting and negative news headlines that is usually associated with regulator enforced M&A. We also add our voices to Alvarez-Gonz alez and Otero-Neira (2020), Appelbaum et al (2017) and Morall (1996) that in all types of M&A, communication must strongly focus on the marketing mix offerings that the customer is getting and less on the financial efficiency perspectives such as cost savings. As Segal et al (2021, p. 2,935) more recently pointed out, following their structured literature review, "the literature is dominated by a unidirectional analysis that primarily considers the effect M&A has on stakeholders, falls short in investigating inter-and intra-stakeholder relationships and in eliciting the complex web of relationships between an M&A process and stakeholders."…”

“…Gomes et al (2017) suggest that, even though an acquiring firm may have an effective communication system, it is important that the acquired firm(s) also maintain a good communication procedure throughout the process. This is significant in managing uncertainties-disruption of management and employee duties, emotions associated with threat of job losses and ultimately customer distress anticipating erosion of value (Appelbaum et al, 2017). Appelbaum et al further note that for the brand value to be realised during the integration, the process must capture the new organisation's value proposition.…”

Integration in Mergers and Acquisitions: Bringing Together Type of Diversification, Synergy Potential and Cultural Distance

“…Some of the factors that lead to failure of mergers and acquisitions are employee resistance (van Dijk & van Dick, 2009), cultural factors (Pablo, 1994; Stahl & Voigt, 2008; Weber et al, 1996), organisational identification (Kroon & Noorderhaven, 2018), lack of communication (Appelbaum et al, 2017; Zagelmeyer et al, 2018)whether they be corporate giants, SMEs or start-ups. While the ultimate objective of an M&A is to improve the newly constructed firm’s performance, financial and technical impacts are but some of the considerations the organization will need to face.…”

“…Indeed, employee resistance appears to be a major factor in the overall success of this strategic move. The purpose of this paper, three part, is to provide a thorough overview of the forces at play in employee resistance to change, its influence on the M&A’s success, and the ways to address such resistance (van Dijk & van Dick, 2009), cultural factors (Pablo, 1994; Stahl & Voigt, 2008; Weber et al, 1996), organisational identification (Kroon & Noorderhaven, 2018), lack of communication (Appelbaum et al, 2017; Zagelmeyer et al, 2018), problem in the integration phase (Calipha et al, 2010), job insecurity among employees (Sung et al, 2017) and a lot more. Despite all these efforts to pinpoint the root causes of failure and suggestion of ways to improve the same, the exact factors that might predict the success or failure of a merger or an acquisition remain unclear.…”