Tying the Acquirer's Human Resource Management Quality to Cross‐Border Acquisition Divestment Probability: Curvilinear Connection with Slacklining

Abstract

Cross‐border acquisitions are growing in volume and global economic importance, yet a considerable number end in failure. Many of these failures may be linked to people management‐related issues. We extend this stream of research by investigating the impact of the acquirer's aggregate human resource management (HRM) quality on cross‐border acquisition divestment. Our empirical analysis uses a panel database of 4128 cross‐border acquisition/year observations and an event history design. The findings confirm a curvilinear relationship and suggest that acquisition failures are not merely associated with poor HRM quality, but also with very high levels of HRM quality, that is, with both extremes. Moreover, our results show that financial slack has a significant moderating effect on the curvilinear relationship between HRM quality and the likelihood of acquisition divestment. Overall, our study reveals boundary conditions for the widely demonstrated positive relationship between HRM quality and organizational performance in an acquisition context.

Entrepreneurial Finance and HRM Practices in Small Firms

“…However, for CVC investors who take a majority share in the firm with the intention of a full acquisition, there is evidence of transformational HRM. This finding is consistent with the insights on the role of HRM in acquisitions (Kuvandikov, Pendleton and Higgins, 2020; Marks and Mirvis, 2011), and other employment implications following external investment (Avetisyan et al ., 2020; Guery et al ., 2017). The CVC enacts major changes post‐investment, where the local management is of less importance to a CVC investor than the firm itself.…”

“…By using primary, qualitative data, gathering perspectives from firm management, employees, investors, investment advisors and industry experts, we develop a framework to provide deeper and more nuanced insights into HRM practices in small, entrepreneurial firms post‐investment. This framework contributes to the important research area of how HRM practices are influenced by firm growth (Avetisyan et al ., 2020; Bacon and Hoque, 2005; Bacon, Wright and Demina, 2004), with a particular focus on small, entrepreneurial firms (Cardon and Stevens, 2004; Sheehan, 2014). Previous literature on the influence of external financing on HRM practices identifies changes to employment (Bacon et al ., 2013), training (Bacon et al ., 2007) and compensation (Wright et al ., 2007), yet these are most common in more established, larger firms (Guery et al ., 2017; Stevenot et al ., 2018), with a single source of financing (Wood and Wright, 2009) or with aspects of growth other than changes in HRM practices (Jelic, Zhou, and Wright, 2019; Kuvandikov, Pendleton and Higgins, 2020).…”

“…As entrepreneurial finance generally reflects a discontinuous change for a small firm and may enhance growth opportunities (Hellmann and Puri, 2002; Shane, 2012), we show that it plays a role in how small firms approach their HRM practices. This insight contributes to the growing interest in HRM practices and firm growth (Avetisyan et al ., 2020; Bacon, Wright and Demina, 2004; Jelic, Zhou and Wright, 2019; Kuvandikov, Pendleton and Higgins, 2020). Second, the intersection of finance and internal operations is an increasing area of research (Bacon et al ., 2013; Burton et al ., 2019; Cumming et al ., 2017).…”

From play to pay: a multifunctional approach to the role of culture in post-merger integration

“…Mergers and acquisitions (M&A) are an important instrument for companies to enter new markets, gather vital skills, knowledge, and other resources, or scale up and diversify their business (Haleblian et al, 2009;Steigenberger, 2017;Yue et al, 2021). They have significant consequences for the involved organizations -both the acquirers and the acquired -as well as their respective members (Appelbaum et al, 2000a(Appelbaum et al, , 2000bAvetisyan et al, 2020;Bauer and Matzler, 2014;Cartwright and Schoenberg, 2006;Graebner et al, 2017;Meyer and Altenborg, 2007;Tetenbaum, 1999).…”

“…Edwards and Edwards, 2015;Giessner, 2011), the relevance of differing national cultures (e.g. Avetisyan et al, 2020;Halsall, 2008;Meyer and Altenborg, 2007;Morosini et al, 1998;Vaara et al, 2003), and which strategies of coping with the differences can be successful (Edwards and Edwards, 2015;Larsson and Lubatkin, 2001;van Dick et al, 2006). However, less attention has been paid to the macro-societal context that is just as crucial in shaping organizational cultures.…”