MERGERS WITHOUT HARM? THE IMPACT OF MANAGEMENT STRATEGIES AND PERCEIVED ORGANIZATIONAL SUPPORT ON POST-MERGER ORGANIZATIONAL IDENTIFICATION

MERGERS WITHOUT HARM?

THE IMPACT OF MANAGEMENT STRATEGIES AND PERCEIVED ORGANIZATIONAL SUPPORT ON POST-MERGER ORGANIZATIONAL

IDENTIFICATION

Master thesis, MSc Human Resource Management University of Groningen, Faculty of Economics and Business

June 11, 2017

Name: Peishan Chen Student number: S2969408 Supervisor: Dr. Susanne Täuber

ABSTRACT

Psychological issues have received more attention in organizational mergers, in particular employees’ identification with the post-merger organization. This research investigated whether management strategies targeting employees’ perceived identity continuity (IC) and indispensability can promote employees’ identification with the post-merger organization through increasing perceived organizational support (POS). Potential differences of the impact of these variables between the high- and the low-status merger partner were examined. An online experiment was conducted to compare participants’ reactions to the merger with different manipulations. The 240 participants in the experiment were randomly assigned to one of six conditions: 3 (management strategies: IC, indispensability, no intervention) × 2 (pre-merger status: high, low). The results of the research indicated that management strategies played an important role in promoting participants’ identification with the post-merger organization, willingness to support and satisfaction with the merger. The direct effect of management strategies targeting IC on post-merger organizational identification (OI) was mediated by POS, and this evident only for the low-status merger partner. While the management strategies targeting IC was more effective in increasing participants’ positive responses to the merger for the low-status compared to the high-status merger partner, and no evidence for an interactive effect of management strategies and status on organizational identification was found. Further, irrespective of pre-merger status, no evidence was found for a positive effect of management strategies targeting indispensability on employees’ positive reactions to the merger mediated by POS. Theoretical and practical implications of these findings are discussed.

INTRODUCTION

With the development of global markets, some companies choose to use a merger as a strategy to increase their competitiveness in the market by capitalizing on the resulting economics of scale and diversification (Faulkner, Teerikangas, & Joseph, 2012; Giessner, Ulrich, & van Dick, 2011). However, only half of all mergers and acquisitions met their initial financial objectives (Pikula, 1995), psychological issues became main obstacles to the success of organizational mergers. Marks and Mirvis (2001) also indicated that social and human costs are critical inhibitors for successful and effective mergers. Mergers even have negative influences on employees: Cartwright and Cooper (1996) indicated that mergers might result in lower job satisfaction, conflicts, and higher employee turnover rate in organizations. These negative consequences have been found to be, to a large extent, caused by employees’ decreased identification with the post-merger organization (Giessner et al., 2011), especially for the employees who are in the low-status merger partner (van Knippenberg, van Knippenberg, Monden, & de Lima, 2002).

Organizational identification (OI) is “the perception of oneness with or belongingness to an organization, where the individual defines him or herself in terms of the organization in which he or she is a member” (Mael & Ashforth, 1992: 104). Identification with an organization satisfies individuals’ needs to belong (Baumeister & Leary, 1995), increases job satisfaction and reduces the turnover rate in organizations (Jetten, Haslam, & Haslam, 2011).

of social identity theory. Tajfel and Turner (1985) proposed that people classify themselves and others into different social groups through idiosyncratic characteristics such as gender, abilities, values, and interests – in the case of OI, through organizational affiliation. Thus, according to social identity theory, the employee-organization relationship is built on the self-definitional function of social membership, and the essence of OI is the perceived oneness between individuals and the organization in the relationship (Asforth & Mael, 1989).

He, Pham, Baruch, and Zhu (2014) suggested that perceived organizational support (POS) is a critical antecedent to employees’ organizational identification from a social exchange perspective. However, little study has investigated the effects of POS on promoting identification with the post-merger organization. Furthermore, to the best of my knowledge, no studies have yet investigated whether management strategies aiming to increase employees’ identification with the post-merger organization should be grounded in social exchange and social identity theory conjunctively. To address these research gaps, this study experimentally tested whether management strategies targeting identity continuity and indispensability can promote employees’ identification with the post-merger organization and whether POS mediate these facilitating effects.

THEORY

Perceived organizational support (POS) was defined as employees’ beliefs about the extent to which the organization they work for values their contributions and cares about their well-being (Eisenberger, Huntington, Hutchison, & Sowa, 1986). In social exchange theory, “voluntary actions of individuals are motivated by the returns they are expected to bring and typically do in fact bring from others” (Blau, 1964: 91). The core of social exchange theory is the norm of reciprocity – obligations to reciprocate the benefits received from others along with expectations that favourable actions towards others will be rewarded (Korsgaard, Meglino, Lester, & Jeong, 2010). The organization provides employees with rewards for their inputs to the organization in return. When employees perceive valued and rewarded fairly by their organization, they will feel more obliged to care about the organization’s welfare and make more efforts to support the organization (Eisenberger et al., 1986). Once an exchange-based relationship is formed between employees and the organization, the norm of reciprocity motivates employees to improve their in-role and extra-role performance (Neves & Eisenberger, 2012) to obtain more rewards, such as pay, rank, job enrichment and power in decision-making (Blau, 1964; Eisenberg et al., 1986). Hence, employees’ POS can catalyse their motivation and performance in the work. Furthermore, according to the investment model, employees are willing to develop an enduring and strong relationship with the organization so that they can get consistent return for their investment (Farrell & Rusbult, 1981; Rusbult & Martz, 1995). POS can act as a social exchange variable to motivate employee investment, thereby reinforcing the interdependent relationship between the organization and employees and increasing employees’ identification with the organization.

Lee & Peccei, 2007; Tajfel & Turner, 1979). Therefore, in line with the research by He et al. (2014), there is a positive relationship between POS and OI.

Neves and Caetano (2006) analysed the social exchange process in the context of organizational change. The merger is a process of restructuring two organizations, and it may change the trust relationship between employees and the organization. Organizational change will increase the risks for organizations independent of types of change (Hannan & Freeman, 1984) and will disrupt the established orders in the pre-change organization (Carnall, 1982). Similarly, Hunsaker and Coombs (1988) found that at the initial stage of the merger, employees feel uncertain about the future and think that they will have no control over the situation. The insecurity from the merger makes them grieve the loss of their current organizational identity and focus on the differences between the two organizations. Therefore, the perceived uncertainty in the merger makes it difficult for employees to integrate with the post-merger organization. Supports by an organization can increase employees’ perceptions of being valued, included, involved and respected (Wiesenfeld, Raghuram, & Garud, 2001). Based on the norm of reciprocity, increasing employees’ POS in the merger can help them reduce the feelings of uncertainty and increase their self-esteem. Once employees’ feelings of uncertainty are mitigated, they will start to implement behavioural compliance in the merger and become more secure in their positions, and finally are committed to the post-merger organization and like their work (Hunsaker and Coombs, 1988). Thus, I expect that employees’ POS during the merger can contribute to build the trust relationship between employees and the organization, thereby increasing employees’ identification with the post-merger organization, their willingness to support and satisfaction with the merger.

Hypothesis 1: POS during a merger can have positive influences on the employees’ identification with the post-merger organization, willingness to support the merger, and satisfaction with the merger.

Identity Continuity

groups (social identity) (Tajfel & Turner, 1985). When we work at an organization, we will define ourselves on the basis of our membership in that organization. Group membership that can constitute the self-concept is the organizational identity (Asforth & Mael, 1989).

In the “merger syndrome” proposed by Hunsaker and Coombs (1988) to explain employees’ reactions to a merger at different stages, employees may concentrate on differences between the operations of two companies when they feel that they will lose their organizational identity in the new organization. This is in line with research by Giessner et al. (2006) who stated that the announcement of a merger stimulates employees to be aware of their membership in the current organization and begin to compare the differences with the other organization, thereby leading to intergroup hostility and bias among employees of two merging organizations. The employees will compare the sizes, reputations, sales and profits between the two organizations, which creates an “us versus them” relationship during the merger. In addition, there are clearer defined identity and consistent purpose in the pre-merger organization for employees, but the identity in the post-merger organization is too vague to clarify during the merger. Therefore, employees’ identification with the pre-merger organization is usually higher than their identification with post-merger organization (Blake & Mouton, 1985; Giessner et al., 2006).

organization (Giessner, Horton, & Humborstad, 2016; Leeuwen, Knippenberg, & Ellemers, 2016; Rousseau, 1998). The more uncertainty employees feel about how changes in the merger will affect them and the less they are informed about the change, the more negatively employees feel about the upcoming merger (Jetten et al., 2002). Although no study has investigated the relationship between IC and POS, management strategies targeting IC can be considered as support from the organization, which help employees reduce their feelings of uncertainty during the organizational merger.

Changes in the merger make employees realize that their current organizational identity is at stake and will be replaced by the new post-merger organizational identity (van Dick, Ulrich, & Tissington, 2006). Employees may have negative reactions to the merger because they feel that they are being forced to change or abandon an existing valued group identity. Also, the prospect of having to incorporate with another distinctive organization increases employees’ feelings of threats, resistance and intergroup discrimination in mergers (van Leeuwen, van Knippenberg, & Ellemers, 2003). Management strategies targeting IC can make employees feel that they are considered and supported during the merger, so they will feel less forced to change their organizational identity to adapt to the post-merger organization. IC in the merger makes employees believe that the post-merger organization is still their organization and perceive more relationship between pre-merger and post-merger, resulting in stronger identification with the post-merger organization (Jetten et al., 2002). Thus, I expect the management strategies targeted at increasing employees’ perceived IC could make employees feel considered and supported in the merger and promote their identification with the post-merger organization further.

Hypothesis 2: Management strategies targeting IC are positively related to employees’ identification with the post-merger organization.

Hypothesis 2a: This effect is mediated by POS. Indispensability

Rodrigues, Gaertner, Deegan, António (2016) proposed a functional and identity indispensability scale (FIIS), which focused on majority (national) and minority (ethnic) relationships in society contexts. Groups can claim indispensability in two dimensions: namely functional indispensability and identity indispensability. Functional indispensability means that groups can perceive themselves and be perceived by others as contributing some benefits to the host society. Identity indispensability means that groups can perceive themselves and be perceived as contributing to the host society’s identity. Relating the FIIS to the merger context, functional indispensability reflects the perceived instrumentality of a merger partner contributing to the success of the merger, identity indispensability implies that earlier (pre-merger) organizational identity remains significant in forming the superordinate (post-merger) organizational identity (Dovidio, Gaertner, & Saguy, 2009). Functional indispensability and identity indispensability are distinct, but they are related (Guerra et al., 2016). Indispensability means that the subgroup (ethnic minorities or national majorities) is a necessary element for defining the superordinate group (the host society) (Ng Tesung-Wong & Verkuyen, 2010). In general, according to the definition of indispensability by Merton (1986), indispensability in a merger can be considered as that every employee fulfils some vital functions, has some tasks to accomplish, can represent an indispensable part in the process of merger, and his or her contributions are acknowledged by the organization. Thus, I expect that in the merger, management strategies targeting indispensability could make employees feel considered and valued in the merger. In other words, increasing employees’ perceived indispensability, whether functional indispensability or identity indispensability, can promote employees’ POS in merging organizations.

themselves as in the merger and the post-merger organization, the more willingness to contribute to the merger they have. In addition, several studies suggested that indispensability also works in conjunctive tasks (Hertel, Niemeyer, & Clauss, 2008; Kerr, Messe, Seok, Sambolec, Lount, & Park, 2007). Guerra, Gaertnert, António, and Deegan (2015) researched group indispensability on majority attitudes towards immigrants. They found that perceived in-group indispensability which means groups perceive themselves as complementary parts to define a common identity (Verkuyten & Martinovic, 2015; Verkuyten, Martinovic, & Smeekes, 2014) catalyse positive intergroup outcomes, thereby reducing acceptable social distance towards immigrants. Indispensability is a new concept in the research about organizational mergers and OI, but a merger can be seen as a conjunctive task that requires intergroup corporation between two merger partners. Moreover, in terms of the integration-proportionality, the low-status merger partner can be regarded as the minority group and the high-status merger partner as the majority group. Thus, increasing employees’ perceived indispensability could reduce the conflicts between high-status group and low-status group and facilitate employees’ motivation and efforts in the integration.

Haslam (2004) demonstrated that if indispensability of one’s efforts has positive influences on group members’ task motivation, one possible cause is that high indispensability tends to facilitate identification with the group. Dovidio et al. (2009) also suggested that high identity indispensability promotes the development of inclusive common identities and positively influence intergroup attitudes and behaviours. Identity indispensability can increase the inclusion of employees in forming common identities in the post-merger organization. Thus, I expect that management strategies targeting indispensability could increase employees’ motivation and efforts to support the merger and boost their identification with the post-merger organization.

Hypothesis 3: Management strategies targeting indispensability are positively related with the employees’ OI with the post-merger organization.

Hypothesis 3a: This effect is mediated by POS. High Status versus Low Status

(Cartwright & Cooper, 1996; van Oudenhoven & de Boer, 1995). One organization will have higher status and dominate the merger because of its advantages in resources or welfare. Van Knippenberg, van Knippenberg, Monden, and de Lima (2002) stated that identification with the pre-merger organization is positively related with identification with the post-merger organization, but only for members of the dominant group in the merger because that group can perceive a higher sense of continuity.

Because the high-status merger partner dominates the merger, its members can have more power than low-status merger partner in the merger. Employees in the high-status merger partner may construe the merger as a partial continuation of their organization and still perceive the post-merger organization as their organization (Terry, Carey, & Calla, 2001). In contrast, employees in the low-status merger partner exhibit more negative responses to the merger since they perceive the merger mostly as threats (Terry & O’Brien, 2001). The low-status merger partner has less control over the merger, even over the operation in the post-merger organization. It leads that its employees feel forced change to adapt to the high-status merger partner. Furthermore, the low-status merger partner usually fails to provide a positive social identity for its employees in the merger (Tajfel & Turner, 1985), so their employees will seek opportunities to enhance their status positions, whereas employees in the high-status merger partner only need to maintain their status position and existence of status difference in the post-merger organization (Ellemers, Doojse, van Knippenberg, & Wilke, 1992). Because of perceived uncertainties and threats, employees in the low-status merger partner exhibit relatively weak OI (Ellemers, van Knippenberg, & Wilke, 1990) and poor self-esteem in the post-merger organization (Brown & Lohr, 1987). Management strategies targeting IC, such as keeping their organizational structure, goals, and culture can help those employees reduce their perceived uncertainties and threats from the merger and increase their self-esteem in the post-merger organization.

merger partner than the low-status merger partner, the high-status employees focus more on reasserting their superiority on status. Salient status difference makes employees in the high-status merger partner distinguish themselves positively from the other merger partner, thus they are more likely to display stronger in-group bias than employees in the low-status merger partner on status-relevant dimensions (Terry & Callan, 1998). For the high-status merger partner, the strategy targeting IC heightens the significance of their relatively inferior status in the merger. The more IC the high-status merger partner experience during the merger, the more in-group bias its employees will experience, and the more negative attitudes to the other merger partner they will have (Terry, 2001). Therefore, I expect that management strategies targeting IC could have less effective influences on promoting employees’ identification with the post-merger organization for the high-status compared to the low-status merger partner.

Hypothesis 4: Both management strategies are expected to more strongly affect identification with the post-merger organization for member of the low status compared to the higher status merger partner.

FIGURE 1: Research Model

METHOD

Two-hundred-and-forty participants participated in the online experiment on MTurk: 90 were females, 150 were males. Ages ranged from 19 to 73 years (M = 38.13, SD = 10.79). Only two participants indicated having no work experience. Moreover, 79 participants (32.9%) indicated having experienced the merger of companies in the past.

Perceived organizational support Management strategies: Ø Identity continuity Ø Indispensability

Status: High vs. Low

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Design and Procedure

Participants were randomly assigned to one of six conditions of a 3 (management strategies: IC, indispensability, no intervention) × 2 (status: high, low) between-subjects design. The numbers of participants in each condition are 41 (high status and IC), 39 (high status and indispensability), 41 (high status and no intervention), 41 (low status and IC), 39 (low status and indispensability), and 39 (low status and no intervention) respectively.

At the beginning of the study, participants were asked to imagine that they were working as a middle level manager at a company with good conditions (“You keep good relationship with your supervisors, subordinates and co-workers. Overall, you think you have an interesting job, feel responsible for your job, and receive fair pay”) (Mottola, Gaertner, Bachman, & Dovidio, 1997) and fill in the questionnaire for measuring their identification with the pre-merger organization.

Next, participants were asked to imagine that they were employees of either a low-status or a high-status organization that was going to merge with another organization. Pre-merger status was manipulated via a comparison between the two companies (ACME and BOLT) that were going to merger (Giessner et al., 2006; Mottola et al., 1997). ACME was used for the high-status company and BOLT for the low-status company, and the post-merger company was named as ACME-BOLT. Participants received information about the two merging companies, including their founding dates, products, markets and sale profits before the merger. In addition, they were informed of the status difference directly through a written scenario that described the operations in the post-merger organization (“ACME-BOLT is mainly run by the headquarters of ACME and to a smaller extent by BOLT”) and the logo of the post-merger company (Giessner et al., 2006).

management strategies, participants were asked to fill in questionnaires to measure their reactions to the merger.

Measures

Manipulation check: Status, IC, and indispensability

After participants received the comparison between two merger partners and before they were informed about the status differences directly, they were asked to answer a question that served as a manipulation check for status (“Which of both companies has higher status prior to the merger?”). In the data analysis, the option of ACME was valued as 1 and BOLT was valued as 2.

After the manipulation of management strategies, all the participants had to answer some questions, which measured their perceived IC and indispensability in the merger, for management strategies manipulation check. There is no existing scale to measure IC directly in current studies. Thus, based on the descriptions of continuity in the merger, a six-item scale containing a 5-point response scale (see Appendix), ranging from 1 (strongly disagree) to 5 (strongly agree), measured participants’ perceived IC. The IC scale was reliable (α = .80). Perceived indispensability was measured via two dimensions: functional indispensability and identity indispensability. A twelve-item scale (six items for each dimension) adapted from Guerra et al. (2016) containing a 5-point response scale (see Appendix), ranging from 1 (strongly disagree) to 5 (strongly agree), measured participants’ perceived indispensability by the scenarios. Functional indispensability and identity indispensability scale were both reliable (6 items, α = .88; 6 items, α = .87). In the data analysis, I combined two dimensions and used average score of the 12 items to measure participants’ perceived indispensability, and the twelve-item scale was still reliable (12 items, α = .80).

Main dependent variables: POS, post-merger OI

SPOS based on their relevance and applicability to the merger context. The items used are shown in the Appendix. The POS scale used a 5-point response scale, ranging from 1 (strongly disagree) to 5 (strongly agree) and was reliable (α = .87). In the data analysis, I used the average score of the 6 items in the POS scale to measure participants’ POS.

In the experiment, I measured participants’ organizational identification twice: the first was after the introduction of working conditions before the merger to measure their identification with the pre-merger organization; the second was after management strategies manipulation to measure their identification with the post-merger organization. The seven-item OI scale adapted from Mael and Ashforth (1992) containing a 5-point response scale, ranging from 1 (strongly disagree) to 5 (strongly agree) measured participants’ identification with the pre-merger and post-merger organization. The OI scale is reliable in both measurements (pre-merger: α = .90; post-merger: α = .91). The average score of the 7 items was used to measure the participants’ OI.

Other dependent variables: Willingness to support the merger and satisfaction Besides identification with the post-merger organization, willingness to support the merger and satisfaction with the merger were measured to analyse participants’ reactions to the merger. Participants’ willingness to support the merger was measured by a four-item scale, ranging from 1 (strongly disagree) to 5 (strongly agree). Example items are shown in the Appendix. The scale is reliable (α = .75).

RESULTS

In the manipulation check for status, 237 participants thought “ACME” would have higher status in the merger and only 3 participants chose “BOLT” (M = 1.01, SD = .11). However, the data from these 3 participants were still included in the data analysis because participants were informed of the status difference directly after answering the status check question as mentioned in the method.

Moreover, a 2 (status) × 3 (management strategies) ANOVA was conducted to check the manipulation of the experiment. There were no interaction effects between management strategies and status on perceived IC (F(2, 235) = .43, p =.65, η2 =.004) and perceived indispensability (F(2, 235) = .05, p =.95, η2 <.001). Management strategies affected participants’ perceived IC (F(2, 235) = 5.84, p =.003, η2 =.047) but not significantly affected perceived indispensability (F(2, 235) = 1.89, p =.154, η2 =.016). Participants in the IC condition reported higher perceived IC than other participants in the indispensability and control condition (see Table 1). Thus, the manipulation of IC worked out in the experiment, but the manipulation of indispensability did not. Furthermore, the manipulation of status affected participants’ perceived IC (F(2, 235) = 25.95, p<.001, η2 _{=.10) and likewise on perceived}

indispensability (F(2, 235) = 39.16, p<.001, η2 _{=.14). Participants in the high-status}

group reported higher perceived IC and indispensability than low-status group (see Table 1).

TABLE 1

Perceived indispensability - High status 3.91 .68 3.92 .63 3.77 .73 - Low status 3.41 .50 3.42 .53 3.22 .76 POS - High status 3.76 .72 3.73 .78 3.63 .58 - Low status 3.58 .81 3.54 .65 3.34 .70 Post-merger OI - High status 3.59 .95 3.71 .76 3.65 .77 - Low status 3.24 .86 3.40 .80 3.38 .82 Willingness to support - High status 3.63 .76 3.53 .65 3.73 .62 - Low status 3.75 .80 3.61 .78 3.67 .66 Satisfaction - High status 3.85 .61 3.70 .75 3.86 .62 - Low status 3.86 .76 3.62 .68 3.83 .63

Note: a: No intervention; Judgment were made on 5-point scale (1 = low perceived IC, perceived indispensability, POS, post-merger OI, willingness to support the merger, satisfaction; 5 =high perceived IC, perceived indispensability, POS, post-merger OI, willingness to support the merger, satisfaction)

Correlations

post-merger OI. This result supported the prior assumptions that IC and indispensability played important roles in promoting employees’ identification with post-merger organization. Moreover, perceived IC was also positively correlated with participants’ willingness to support the merger and satisfaction with the merger. However, perceived indispensability was only positively correlated with participants’ willingness to support the merger but not with satisfaction (p =.067). In order to investigate the influences of IC and indispensability on participants’ reactions to the merger further, I also used willingness to support and satisfaction with the merger in moderation and mediation analysis.

TABLE 2

Correlations between Variables

Note: a: perceived IC; b: perceived indispensability; N = 240; * p < .05; ** p < .01 Moderation Analysis

Another 2 (status) × 3 (management strategies) ANOVA was performed to test the moderation hypothesis. However, similarly to the results in the manipulation check, there was no interaction effect of management strategies and status on post-merger OI (F(2, 234) = .034 p=.967, η2 =.000), willingness to support the merger (F(2, 234) = .370 p=.691, η2 =.003) and satisfaction with the merger (F(2, 234) = .083 p=.920, η2 =.001). Thus, the difference in the influences of three management strategies between high-status group and low-status group was not significant. However, I found that the manipulation of status affected post-merger OI significantly (F(1, 234) = 8.368, p=.004, η2 =.035). The average score of post-merger OI in the high-status group was significantly higher than that in the low-status group (see Table 1). In order to further explore my assumptions that management strategies targeting

IC and indispensability have more positive effects on the low-status group than the high-status group, I conducted additional analyses for the high-status and the low-status group separately.

Mediation Analysis

Separate regression analyses of management strategies on perceived IC and indispensability were conducted for the high-status group and the low-status group before testing the mediation hypothesis. Dummy variables were created as the dual independent variables for multiple-linear regression analyses: Dummy 1 represented the binary independent variable – the IC condition (value = 1) against control and indispensability (value = 0); Dummy 2 represented the binary independent variable – the indispensability condition (value = 1) against control and IC (value = 0). The results of regression analyses with perceived IC as the dependent variable showed a significant effect for the low-status group (R2 = .044, F (2,117) = 3.70, p = .027) and only for Dummy 1 (B = .195, p = .034), but no significant effect for the high-status group (R2 = .041, F (2,118) = 2.51, p = .080). Furthermore, there was no significant effect in the regression analyses with perceived indispensability as the dependent variable whether in the low-status group (R2 = .007, F (2,117) = 1.43, p = .224) or in the high-status group (R2 = .010, F (2,118) = .600, p = .550). Thus, only Dummy 1 (testing IC against control and indispensability) was used as the independent variable in the mediation analysis. Nevertheless, in order to keep the completeness of the research and compare the differences of mediation models between high-status group and low-status group, I still reported the mediation model for both groups.

confidence interval). Similarly, in the mediation models with willingness to support the merger and satisfaction as the dependent variables, perceived IC and POS mediated that positive relationship between Dummy 1 and post-merger OI (95% confidence interval). And POS as the single mediator did not mediate the relationship between Dummy 1 and willingness to support the merger or satisfaction (95% confidence interval). However, perceived IC as the single mediator mediated the relationship between Dummy 1 and willingness to support to the merger or satisfaction (95% confidence interval). Furthermore, only in the mediation model with post-merger OI as the dependent variable, Dummy 1 had a direct effect on post-merger OI, but this effect was negative. It rejected the assumption that management strategies targeting IC can make positive influences on promoting post-merger OI directly.

In general, the results for the low-status group supported the assumption that management strategies highlighting IC can have positive impact on post-merger OI, willingness to support the merger and satisfaction with the merger through increasing perceived IC and POS, which is consistent with the hypotheses.

TABLE 3

Regression Results for the Indirect Effects in the Low-status Group with Post-merger OI, Willingness to Support the Merger, and Satisfaction as Dependent Variable, Dummy 1 as Independent Variable, and Perceived IC and

POS as Sequential Mediators

Mediation Model DV=post-merger OI (R2=.38) DV=Supporta (R2=.46) DV=Satisfaction (R2=.37) Predictor b SE t b SE t b SE t Perceived IC .14 .10 1.44 .43 .08 5.28** .40 .08 4.94** POS .63 .09 6.80** .41 .08 5.11** .29 .08 3.69** Dummy 1 -.27 .13 -2.10* _{-.09 .11 -.82 -.05 .11 -.44} Dependent variable

Model DV=post-merger OI DV=Support

a _{DV=Satisfaction}

Predictor b SE t b SE t b SE t

Dummy 1 -.27 .13 -2.10* -.09 .11 -.82 -.05 .11 -.44

Indirect effects DV = post-merger OI

Effect Boost SE BootLLCI BootULCI

IVàM1àDV .49 .04 -.10 .34

IVàM1àM2àDV .10 .05 .03 .17

IVàM2àDV -.03 .08 .20 .12

DV = Supporta

Effect Boost SE BootLLCI BootULCI

IVàM1àDV .15 .07 .41 .32

IVàM1àM2àDV .06 .04 .02 .17

IVàM2àDV -.02 .05 -.13 .09

DV = Satisfaction

Effect Boost SE BootLLCI BootULCI

IVàM1àDV .14 .08 .01 .29

IVàM1àM2àDV .05 .06 .04 .13

IVàM2àDV -.01 .03 -.01 .06

Note: a: willingness to support the merger; 95% confidence interval; *_{p < .05,} ** _{p < .01; IV =} Dummy 1, M1 = perceived IC, M2 = POS, DV = Post-merger OI, Support, Satisfaction; N = 119

the positive relationship between management strategies targeting indispensability and post-merger OI. There was no significant relationship between Dummy 1 and perceived IC (p = .07), thus manipulation of strategies targeting IC did not worked out in increasing participants’ perceived IC in the high-status group. However, I still found some significant relationship in the high-status group. POS was also positively related with post-merger OI, willingness to support the merger, and satisfaction with the merger. It demonstrated that generally POS played an important role for employees’ positive reactions to the merger in the high-status group. Moreover, perceived IC was positively related with participants’ POS, and also positively associated with participants’ willingness to support the merger and satisfaction with the merger. For the high-status group, the results only demonstrated that POS mediated the positive relationship between perceived IC and post-merger OI, willingness to support the merger, and satisfaction with the merger. Therefore, POS only mediated the positive relationship between management strategies highlighting IC and participants’ identification with post-merger organization in the low-status group but not in high-status group. The results supported the assumption that the management strategies targeting IC can have more positive effects on post-merger OI in the low-status merger partner than the high-status merger partner.

TABLE 4

Regression Results for the Indirect Effects in the High-status Group with Post-merger OI, Willingness to Support the Merger, and Satisfaction as Dependent Variable, Dummy 1 as Independent Variable, and Perceived IC and

Mediation Model DV=post-merger OI (R2=.28) DV=Supporta (R2=.39) DV=Satisfaction (R2=.48) Predictor b SE t b SE t b SE t Perceived IC -.03 .10 -.33 .36 .08 4.65** .52 .07 7.68** POS .64 .10 6.44** .40 .08 5.27** .26 .07 3.83** Dummy 1 -.14 .14 -1.04 -.12 .11 -.1.18 -.08 .09 -.90 Dependent variable

Model DV=post-merger OI DV=Support

a _{DV=Satisfaction}

Predictor b SE t b SE t b SE t

Dummy 1 -.14 .14 -1.04 -.12 .11 -1.18 -.08 .09 -.90

Indirect effects DV = Post-merger OI

Effect Boost SE BootLLCI BootULCI

IVàM1àDV -.01 .03 -.10 .04

IVàM1àM2àDV .05 .04 .00 .15

IVàM2àDV -.00 .08 -.17 .16

DV = Supporta

Effect Boost SE BootLLCI BootULCI

IVàM1àDV .09 .05 .00 .21

IVàM1àM2àDV .03 .02 .00 .09

IVàM2àDV -.00 .05 -.11 .10

DV = Satisfaction

Effect Boost SE BootLLCI BootULCI

IVàM1àDV -.15 .07 -.28 .01

IVàM1àM2àDV -.12 .02 -.07 -.00

IVàM2àDV .00 .03 -.06 .08

DISCUSSION

This study investigated the effects of management strategies and POS in organizational mergers. The results supported Hypothesis 1 that POS contributes to promoting employees’ identification with the post-merger organization, willingness to support the merger and satisfaction with the merger. Thus, POS played an important role in promoting employees’ positive responses to the merger, whether for the high- or the low-status merger partner.

Another objective of this study was to investigate whether POS mediated the direct relationship between management strategies targeted at increasing employees’ perceived IC and indispensability and their identification with the post-merger organization. The results from moderation analysis showed that the high-status group reported stronger identification with the post-merger organization than the low-status group. Because there was no interaction effect of management strategies and status on participants’ identification with the post-merger organization, the hypotheses related to mediation effects of POS were tested for high-status group and low-status group separately. The only significant effect was found in the low-status group with the condition of IC. The results in the low-status group only supported Hypothesis 2a that POS mediated positive relationship between management strategies targeting IC and post-merger OI but rejected the assumption about the direct relationship, because the direct relationship between management targeting IC and post-merger OI was negative.

on promoting identification with the post-merger organization for the members of the low-status compared to the higher status merger partner.

In the experiment, the manipulation of status and management strategies targeting IC worked out as expected, whereas strategies targeted at increasing participants’ perceived indispensability did not. Thus, I cannot investigate mediation effects of POS on the relationship between management strategies targeting indispensability and post-merger OI and compare the difference in participants’ reactions to strategies targeting indispensability between the high-status and the low-status group. No evidence in the study can support or reject Hypothesis 3 and the part about indispensability in Hypothesis 4.

Since participants’ willingness to support the merger and satisfaction with the merger were considered as dependent variables and used to test the mediation effects of POS as well, I obtained some extra findings besides my proposed hypotheses. Similarly to the research model with post-merger OI as the dependent variable, the mediation effects of POS were only found in the low-status group with the condition of IC. The results for the low-status group supported the positive relationship between management strategies targeting IC and participants’ willingness to support the merger through higher perceived IC and POS, and likewise between management strategies targeting IC and satisfaction with the merger. Nevertheless, no evidence suggested a direct relationship between management strategies targeting IC and these two dependent variables.

Implications

Theoretical implications

Prior research suggested that POS played an important role in improving OI (He et al., 2014). The current research extended these insights by showing that POS is also important in merger contexts and indicated that POS during the merger increased employees’ identification with the post-merger organization. Moreover, POS also affected the participants’ willingness to support the merger and satisfaction with the merger. It is consistent with the research by Eisenberger et al. (1986) that the higher the employees’ POS, the higher employees’ motivation is to support the organization. Thus, the findings indicated that the explanations of social exchange theory (Farrell & Rusbult, 1981; Rusbult & Martz, 1995) and work engagement model (Tyler & Blader, 1999) of the functions of POS also worked in the merger context.

Consistent with the research by Terry and O’Brien (2001), employees in the low-status group exhibited weaker identification with the post-merger organization than employees in the high-status group. However, little research has investigated how to improve the reactions of employees in the low-status group to the merger. The findings supported the assumption that management strategies targeting IC indirectly promote post-merger identification through increasing perceived IC and POS in the low-status group. The merger means dramatic changes for the low-status merger partner, and its employees may perceive more threats from the merger (van Knippenberg et al., 2002). In line with the research by Jetten et al. (2002) that decreased sense of continuity of identity is a critical antecedent to feelings of uncertainties for the low-status group in organizational mergers, maintaining IC can be regarded as an effective strategy to increase positive responses of employees in the low-status merger partner through increasing their perceived IC and POS. For the high-status merger partner, its employees reported higher IC than low-status merger partner irrespective of management strategies, but the findings did not support that maintaining employees’ IC promoted their post-merger OI.

indispensability of minorities is beneficial in reducing intergroup conflicts. The other one is that relative in-group indispensability is positively associated with intergroup bias for both majority and minority group (Ng Tseung-Wong & Verkuyten, 2010; Verkuyten & Khan, 2012). The difference in perceived indispensability between the minority and the majority group will lead to intergroup conflicts. In the current research, management strategies targeting indispensability did not have the expected effects, no evidence indicated its positive impact on employees’ positive reactions to the merger. However, from the correlation analysis, I found that the higher indispensability employees perceived, the higher identification with the post-merger organization and willingness to support the merger they have. It means that indispensability is also important in promoting employees’ positive responses to organizational mergers.

Practical implications

Mercer (1989) stated that HR activities and related psychological issues are critical in determining the success of a merger, such as employees’ well-being, satisfaction, and organizational identification. This research indicated that POS played an important role in promoting employees’ identification with the post-merger organization. During the merger, the organization should make employees feel valued and considered to reduce their feelings of uncertainty. The relationship between the organization and employees is based on the norm of reciprocity, by which employees perceive that they are supported in the merger, so they are willing to support the merger and commit to it. Thus, the organization should pay more attention to employees’ POS during the merger, such as listening to employees’ suggestions through frequent communication and fair treatment for both companies. Moreover, to eliminate the harms caused by the merger to employees’ well-being, the organization should search for management strategies that can increase employees’ POS.

cultures to reduce their perceived forced change and make them perceive supported, thereby increasing their identification with the post-merger organization.

Limitation and Future Research

This research was conducted through an online experiment. It is very difficult to present a real environment of a merger for participants, because the conditions of management strategies and status were manipulated by written scenarios. The manipulation of indispensability did not work as expected so that mediation effects of POS in the relationship between management strategies targeting indispensability and post-merger OI cannot be tested. The prior researches related to indispensability only analysed its functions for ethnic minorities in society, but not related to merger contexts. Thus, no research can be referred to in creating the manipulation of indispensability in the experiment. To improve the efficacy of the manipulation of management strategies, future research should determine which factors participants are concerned about in the merger through pre-testing the materials before manipulating of management strategies.

extent retaining pre-merger organizational identity after the merger can increase employees’ identification with the post-merger organization most effectively for the high-status and the low-status merger partner separately.

A merger is a process of continuous change, as merger syndromes proposed by Hunsaker and Coombs (1988). Employees have different reactions from rejecting to accepting and even commitment at different stages. Future research can compare the effects of management strategies on increasing employees’ positive response at different stages, such as when merger is announced, during the merger, and after the merger.

CONCLUSION

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APPENDIX – ITEMS IN SCALES

If you were indeed working for ACME/BOLT, how would you feel about working about your company? (1 = strongly disagree; 5 = strongly agree)

1. When someone criticizes ACME/BOLT, it feels like a personal insult. 2. I am very interested in what others think about company ACME/BOLT. 3. When I talk about company ACME/BOLT, I will say “we” rather than “they”. 4. The success of ACME/BOLT is my success.

5. When someone praises company ACME/BOLT, it feels like a personal compliment.

6. If a story in the media criticized ACME/BOLT, I would feel embarrassed. 7. In general, I am satisfied with ACME/BOLT.

IC

When thinking about the newly merged company ACME-BOLT, how much do you agree with the following statements? (1 = strongly disagree; 5 = strongly agree) 1. The newly merged company is in fact a continuation of my previous company. 2. The previous company I worked for is strongly represented within the newly

merged company.

3. The newly merged company forces me to change to adapt to the integration. 4. Because of the merger, outsiders will think differently about my previous

company.

5. How people interact with each other within my previous company will change after the merger.

6. The unwritten rules which used to be upheld in my previous company will receive less attention in the newly merged company.

Indispensability

Functional indispensability:

1. I would have a very different conception of the merged company if my organization was not part of the merger.

2. Without my organization, the newly merged company would feel like a different organization.

3. You can’t possibly describe the merged company without speaking of my company,

4. The merged company would be a different organization without the presence of my organization.

5. I would feel very different about what it means to be an employee of the merged company if my organization was not part of the merger.

6. The meaning of what it is to be an employee in the merged company would change if my organization was not part of the merger.

Identity indispensability:

1. Without my organization’s contributions, other employees in the merged company would experience economic hardships.

2. The economic future of the merged company depends on contributions of my organization.

3. Economically, the merged company needs my organization.

4. Without my organization, the merged company would be much weaker.

5. The profits of the merged company depend heavily upon employees of my organization.

6. My organization contributes to the strength of the merged company.

Post-merger Organizational Identification

Please think about your expectations regarding your relationship with the newly merged company ACME-BOLT. In how far do you agree with the following statements? (1 = strongly disagree; 5 = strongly agree)

5. When someone praises company ACME-BOLT, it feels like a personal compliment.

6. If a story in the media criticized ACME-BOLT, I would feel embarrassed. 7. In general, I am satisfied with ACME-BOLT.

POS

When thinking about the newly merged company ACME-BOLT, how much do you agree with the following statements? (1 = strongly disagree; 5 = strongly agree) 1. The newly merged company will strongly consider my values and contributions

after the merger.

2. The newly merged company really cares about my well-being after the merger. 3. If I do the best job possible, the newly merged company will notice and reward

me.

4. The newly merged company will take pride in my accomplishments at work. 5. The newly merged company cares about my satisfaction during and after the

merger.

6. The newly merged company shows little concern for me in the merger.

Willingness to Support the Merger

Please think about your willingness to support the merger between ACME and BOLT. In how far do you agree with the following statements? (1 = strongly disagree; 5 = strongly agree)

1. My willingness to participate in the planned mergers is strong. 2. I think that the integration of both companies will lead to success.

3. I expect resistance from the employees of my company towards the planned merger.

4. I am looking forward to the planned merger.

Satisfaction with the Merger

When thinking about the upcoming merger, how much do you agree with the following statements? (1 = strongly disagree; 5 = strongly agree)

taken placed.

2. There will be a lot of friction or conflicts between ACME’s and BOLT’s employees.

3. My previous company will be strengthened by the merger between ACME and BOLT.

4. I would likely search for a new position with another employer after the merger. 5. It is likely that I will leave ACME-BOLT.

6. The integration efforts in the merger are unfair.