Methodological issues in merger and acquisition research
Nemeth, Yvette Marie
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The failure of mergers and acquisitions has been blamed on cultural differences between companies. The successful integration of acquired employees is one piece that is needed for a successful merger or acquisition. However, integration success has not been clearly defined in the literature nor has a theory of integration been empirically tested. There is also a need for new techniques to evaluate the success of mergers and acquisitions. In this study, integration success was defined in reference to an acquisition. CFA and IRT ME/I techniques were utilized to determine whether management and non-management employees in the acquiring and acquired companies differed in their perception of the workplace environment and company policies. Comments were qualitatively analyzed to strengthen findings from the quantitative analyses. Findings indicated that management and non-management employees in the acquiring and acquired companies perceive the workplace environment and company policies differently. Management employees tended to be more satisfied than non-management employees, and acquiring employees tended to be more satisfied than acquired employees. Overall, acquired management and non-management employees differed on fewer items than management and non-management employees from the acquiring company. Acquiring and acquired management as well as acquiring and acquired non-management were more similar than management and non-management employees in either the acquiring or acquired company. Perceptions of one’s workplace environment and company policies predicted employee perceptions of integration success. This relationship was further moderated by job position (management vs. non-management). Acquired management employees demonstrated the greatest difficulty with the integration process. Qualitative results revealed four themes that were also evidenced in the survey results. These themes centered on workplace interactions, integration, company tools, and workplace culture. Acquired employees were more optimistic about the new company once the integration was complete than acquiring employees. The integration process needs to address the specific concerns of employees dependent on their level within the company instead of assuming that all employees react the same. Further investigations into an empirically founded theory of integration need to be pursued. Finally, CFA and IRT techniques are new to the mergers and acquisitions literature and can assist in the development of innovative research.