MERGERS & ACQUISITIONS : A STUDY OF SOCIO CULTURAL DIMENSIONS

Abstract

Mergers and Acquisitions (M&A) are integral to the global strategies of corporations’ zeal to grow inorganically, develop resource and capabilities and means of foreign market entry. However, a fairly large number of M&A fail or are able to achieve suboptimal results. Besides, studies on M&A have been conducted in disciplinary silos studied largely from financial or strategic perspective which has failed to account for cause of failures, if it occurs. This has accentuated the need to shift the focus to more qualitative aspects, especially the human aspect that drives the social-cultural adjustment progress and the largely under researched variables of Socio-Cultural dimensions involved in the M&A. Analysis of these aspect yields significant benefit in terms of integration, communication, leadership, change management and overall outcome of M&A. This research has attempted to address this research enigma by addressing theoretical perspective which have been largely ignored or not studied by correct methodology. The current research stream is also a paradigm shift in M&A as it proposes various post mergers integrations mechanism like integration mechanism, perceived organization justice and cultural fit to be positively related to employees’ psychological outcomes. An empirical investigation has been carried out to study the impact of various organization integration initiatives as correlates and predictive of employees’ psychological outcome of satisfaction, adoption, affective commitment and achievement, all of which have a collective bearing on M&A outcome. The study established linkages that employees’ psychological outcome and organizational integration initiative studied in unison are related and can be predicated to a certain level of confidence. The study is divided into two major parts, empirical study of forty-eight M&A case worldwide by content analysis and select five M&A cases on which case study analysis has been done. Hence, a mix method approach is used applying statistical tools on qualitative data. This mix of qualitative and quantitative data has allowed rich insight into integration phase of M&A and is a pioneer design in M&A methodology. Based on the findings of research work a model has viii

been hypothesized for study of psychological outcomes the employees experience firsthand during integration phase. For case study analysis five cases, out of which four are cross border acquisition are examined on soft issues of M&A and inference drawn for each case on HR parameters of study by means of content analysis for outcome of M&A .Value creation in M&A can only be achieved only if employees of merging entities work synergistically are committed, merge culturally to merger a unified entity and work to achieve motive of the merger. The study is hence significant for all stakeholders in M&A field be it Corporate, HR Managers, Investment Bankers’, Consultants, Scholars and Academicians; all having an incentive in ensuring M&A achieve its desired objectives. For organization opting for inorganic growth, the study has implicit implications to move towards a more ‘human relation model’ of functioning to create a high performing work organization as major factors for failure in M&A are the intangible people issues. M&A are a tumultuous time for employees, management, and stakeholders alike, but with appropriate communication plan and focus on human aspects of mergers, companies will have a positive impact on employees’ attitudes, emotions, and behaviours’, which will maximize the probability of management controlling the volatile situation and achieve the cherished goal of smooth integration for creating wealth or synergy for merged entities.