TOWARDS A MODEL OF ANTECEDENTS OF EMPLOYEES’ RESISTANCE TO MERGERS AND ACQUISITIONS

TOWARDS A MODEL OF ANTECEDENTS OF EMPLOYEES’

RESISTANCE TO MERGERS AND ACQUISITIONS

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

4 December, 2008 ZHENGXIA XIAO Studentnumber: S1591428 Barbusselaan 372 1102VB Amsterdam tel.: +31 (0)641967330 e-mail: Z.XIAO@rug.nl Supervisors

Hanneke Grutterink and Peter van der Meer

ABSTRACT

INTRODUCTION

In a dynamic environment, change is often inevitable for organizations that wish to maximize their competitive advantage. In order to improve their effectiveness and competitiveness in the global economy, many organizations have implemented mergers and acquisitions (Amiot, Terry, Jimmieson, & Callan, 2006). Not surprisingly, this boom of mergers and acquisitions has attracted the attention of many researchers (Becketti, 1986; Kay, 1988; Schwartz, 1983; Weston, 1953).

Undoubtedly, mergers and acquisitions can bring about apparent advantages, for instance, wealth creation and increased market share. However, mergers and acquisitions do not always improve organizational performance. It is estimated that more than half of all mergers and acquisitions prove financially unsuccessful (Cartwright, & Cooper, 1992). When exploring the reasons for failure after organizational change, many scholars have paid attention to issues such as strategic vision and fit (Epstein, 2004), culture (Horwitz, Anderssen, Bezuidenhout, Cohen, Kirsten, Mosoeunyane, Smith, Thole, & Heerden, 2002; Masood, Dani, Burns, & Backhouse, 2006), organizational structure (Marks, & Mirvis,1985) as well as human factors (Cartwright, & Cooper, 1992; Horwitz et al, 2002; Hunt, & Downing, 1990). Since many researchers used to focus on macro rather than micro issues, human factors were at first often neglected in studies of mergers and acquisitions (Hunt, & Downing, 1990). However, recently, many scholars have started to recognize the importance of human factors in determining the success of an organizational change (Bryson, 2003; Cartwright, & Cooper, 1992; Kay, & Shelton, 2002; Mace, & Montgomery, 1962). For example, a study by Vinten (1993) showed that an estimated one-third to a half of mergers‟ and acquisitions‟ failure is due to human problems.

employees‟ resistance (Amiot et al, 2006). Employees‟ resistance to change is a common reaction towards the uncertainty caused by organizational change. Resistance to change has been shown to be the human factor that is responsible for failure of mergers and acquisitions, because it provokes that behavior such as turnover, absenteeism and inefficiency that can bring loss to organizations and consequently contribute to the failure of mergers and acquisitions (Cartwright, & Cooper, 1992; Drazin, & Joce, 1979). Therefore, in this paper, we focus on the antecedents of resistance to organizational change. In other words, if we want to reduce employees‟ resistance, we need to find out under what conditions uncertainty provokes employees‟ resistance. After a literature review, we will distinguish three important types of moderators of this relation: individual predictors, leadership and organizational factors.

First, we will argue that when facing uncertainty, some people respond with less resistance while others are more hostile. Three individual difference variables seem of particular importance in this relation: openness to experience, emotional stability, and employees‟ job experience. Second, leadership during organizational change is important. Sufficient information (Nemanich, & Keller, 2007), individual consideration (Leiter, & Harvie, 1997; Kavanagh, & Ashkanasy, 2006), encouragement and empowerment (Bass, 1998; Behling, & McFillen, 1996; Nemanich, & Keller, 2007) provided by transformational leaders can help people cope with uncertainty, leading to lower levels of resistance. Third, we will discuss the influence of the internal organizational environment during change. In surveys of sources leading to organizational failure (Bert, MacDonald, & Herd, 2003; Buono et al. 1989), under-communication about organizational change is the number one reason. Without sufficient and timely communication, resistance increases because of employees‟ misunderstanding and wrong expectations. Otherwise, Skarlicki, Folger, & Tesluk (1999) advised that employees‟ response to change can be moderated by their perceptions of justice during change.

and acquisitions. Although human factors have been emphasized in some studies, until now a general framework is not available. Second, the exploration and integration of the literature on resistance to change also allows us to draw conclusions about how to reduce employees‟ resistance to organizational change by managing this human impediment.

After reviewing the relevant literature, the research framework is explored and carefully integrated as shown in the diagram below (figure 1). After a description of our research methodology, we will proceed with defining resistance to change and developing our theoretical framework. We will conclude with practical suggestions for managers on how to reduce resistance to mergers and acquisitions and some theoretical implications for future research.

Figure 1: Integrative model of resistance predictors

Uncertainty in Mergers and Acquisitions Transformational Leadership Organizational Factors - Communication - Procedural Justice Resistance Individual Predictors - Personality (openness to experience and emotional stability)

RESEARCH METHODOLOGY

A literature search was conducted to find valuable sources related to resistance to change. After a comprehensive consideration and comparison, we focused on 71 articles and 16 books, which were published mainly between 1980 and 2007. However 8 literatures before 1980 were also taken into account since they were important for further theoretical consideration. Two strategies were used to search the valuable literatures. First, an academic database search was done which covered EBSCO- HOST (Business Source Premier, PsycINFO, and PsycARTICLES), PiCarta, Rug combine link, and Google scholar. At the beginning, our key search terms were: “mergers and acquisition” and “human resource management”. After reviewing the resulting hits, we searched by the terms “resistance to change” and “readiness to change”. The articles that we then found helped us to extend our search to “individual factors” and “transformational leadership” because they were mentioned as important factors in 7 of the 16 articles about “resistance to change”. 12 of the 20 articles about “personality” and 4 studies on “job experience” were found helpful to explain why “individual factors” are antecedents of resistance. In 6 articles about mergers and acquisitions, “justice in organization” and “communication in mergers” were suggested as crucial organizational elements which were also mentioned in references related to personality and leadership. Through the academic database search, many hits were found. In addition, a manual search was used. By checking the sources cited in the reference sections of articles and books referring to this topic, we located relevant articles as well as journals.

RESISTANCE TO CHANGE

In the early studies, authors defined resistance to change as “behavior which is intended to protect an individual from the effects of real or imagined change” (cited from Dent, & Goldberg, 1999). In the view of Davidson (1994), resistance includes anything and everything that workers do that managers do not want them to do, and that workers do not do that managers wish them to do. Dent, & Goldberg (1999) maintained that resistance to change was the individual response which could cause all kinds of unproductive outcomes.

After a review of past empirical research, Piderit (2000) concluded that: “there are three different emphases in conceptualizations of resistance: as a cognitive state, as an emotional state, and as a behavior.” The cognitive state is related to an individual‟s belief towards change. Resistance is an individual‟s reluctance to organizational change (Watson, 1982; cited by Piderit, 2000). The second dimension, namely the emotional state, is the emotion of an individual that is evoked by the prospect of change. Piderit (2000) concluded that resistance to change is an emotional defense caused by frustration and anxiety provoked by uncertainty. The final dimension provided by Piderit (2000) aims at individual behavior during change. Various resistance behaviors include high turnover, lower than average efficiency and various aggressive acts towards management (Drazin, & Joce, 1979). Brower and Abolafia (1995) defined resistance as a particular kind of action or inaction. Although these three dimensions of resistance are not mutually exclusive, they have their own merits in conceptualizing resistance (Piderit, 2000). When defining resistance, we should bring them together.

Psychological resistance can behaviorally manifest itself since reluctance, depression and anxiety may make it impossible for an individual to face the job, resulting in absenteeism, turnover, etc. (Ivancevich et al, 2002), because negative attitudes can impact people‟s reactions more strongly, particularly when uncertainty exists (Van den Bos, Euwema, Poortvliet, & Maas, 2007). Nemanich, & Keller (2007) also proved that from another aspect: employees with a positive attitude towards change are likely to adjust more quickly to the new culture and strategies that the firm is trying to implement. We can not say that resistant feelings lead directly to resistant behavior. However, if at the outset of a change the resistant feelings are small, there is little support for any subsequent resistant behavior (Jha, 1977).

Dent, & Goldberg (1999) suggested that, people‟s resistance to change is just the appearance and that the real thing that individuals resist is the loss of present status, the loss of competitive payment, or the loss of convenient comfort, etc. In case of a merger, employees face all kinds of uncertainty, like job reallocation, new work relationships and culture (Cartwright, & Cooper, 1992). They become anxious and nervous as they worry that the organizational change may threaten their present or future profit such as payment and position. Of course, organizational change always entails a certain level uncertainty concerning the future benefits/loss for employees.

Based on the above literature review, we focus in this paper on the antecedents of psychological resistance to change after a mergers or an acquisition.

ANTECEDENTS OF RESISTANCE

This is the central part of this paper. Based on existing studies about resistance, mergers and acquisition, uncertainty, personality, transformational leadership, organizational factors, four elements are identified and categorized. Their relationships with resistance to change are explored.

Uncertainty

2000). Mergers and acquisitions differ from other processes of organizational change in three important aspects: the speed of change, the scale of change and the critical mass of the unknown they present for both parties (Cartwright, & Cooper, 1992). In short, they always produce a certain level of uncertainty for employees who are involved. During organizational change, employees are often confronted with job relocation, transfer, and even dismissal in mergers and acquisitions (Cartwright, & Cooper, 1992; Praeger, 1991). As mergers and acquisitions create a „new organization‟, previous organizational status, commitment and trust, and promises often no longer remain (Schraeder, & Self, 2003). Furthermore, present work relationships may also change (Ivancevich et al, 2002; Praeger, 1991; Vinten, 1993). Uncertainty in change may produce feelings of helplessness, depression, worry, uncertainty, and fear among employees (Mossholder, Setton, Armenakis, & Harris, 2000), and subsequently provoke resistance (Cartwright, & Cooper, 1992). Based on the study carried out by Cartwright, & Cooper (1992), some scholars support that uncertainty of most change in mergers and acquisitions is responsible for employees‟ resistance. Four types of uncertainty caused by mergers and acquisitions are distinguished: career uncertainty (including job content and employees‟ role) (Praeger, 1991), work relationship uncertainty (interpersonal relationships at work) (Ivancevich et al, 2002; Praeger, 1991; Vinten, 1993), culture uncertainty (Buono, Bowditch, & Lewis, 1985; Kavanagh, & Ashkanasy, 2006; Schraeder, & Self, 2003) and family issues (Ivancevich et al, 2002; Marks, & Mirvis, 1985).

mergers and acquisitions often bring about side effects and uncertainty (Gilmore, Shea, & Useem, 1997). Cultural uncertainty, which is induced by the change of traditions, shared beliefs and expectations, can result in consistent decreased performance, high rates of turnover and low dissatisfaction (Weber, & Camerer, 2003), because of misunderstanding, confusion, and conflict between employees and executives (Miller, 2000; Weber, & Camerer, 2003). Last, uncertainty of family issues also exist (Cartwright, & Cooper, 1992). The stability of a family may be ruined by an uncertain job future, particularly job loss, geographical relocation, and the imbalance between family and work (Ivancevich et al, 2002).

Although theoretically four dimensions of uncertainty can be distinguished, their individual effects on employees‟ resistance to mergers and acquisitions are not sufficiently discussed in the literature up to present. It is hard to find out when resistance is caused by a certain kind of uncertainty. What is more, the effect of uncertainty is usually the combined impact of four kinds of uncertainty. Therefore, in this paper we focus on the overall influence of uncertainty that is caused by an organizational change.

satisfaction and identification with the merged organization. In the view of Amiot et al (2006), the heavier stress in the situation, the more reactions of avoidance coping strategies can be found. As uncertainty makes mergers and acquisitions particularly stressful, employees are prone to adopt the avoidance coping strategies which concentrate not on the problem but deal with the concomitant level of distress and involve a certain disengagement from the stressful situation (cited by Amiot et al, 2006). Due to the increasing stress caused by uncertainty, employees are prone to resist organizational change which makes them involve in the uncertain and stressful situation.

No matter what type of change is implemented within the organization; leaders need to be aware of different sources of uncertainty (Appelbaum et al, 2000), because they can lead to employees‟ resistance to change.

Individual Predictors

When faced with the uncertainty caused by organizational change, people‟s responses may vary. Most studies of resistance to change have focused on the organizational situation under which employees respond with more resistance, while only recently studies have begun to explore concepts that are related to resistance from an individual difference perspective (Oreg, 2003). The Big-Five Model has attracted much attention to assess the relationships between resistance to change and individual personality. Openness to experience and emotional stability have been shown to be strongly related with resistance to change (Bing, & Lounsbury, 2000; Oreg, 2003; Oreg, 2006; Sagie, Elizur, & Greenbaum, 1985; Wanber, & Banas, 2000, Westerman, & Simmons, 2007). Meanwhile, job experience is also a valuable predictor. Oreg (2003) held that people‟s reactions towards change can be influenced by their experiences. Firstly we will introduce openness to experience, emotional stability, and job experience, and then discuss their effects as moderators.

According to some studies, employees‟ personality can affect employees‟ reactions towards organizational change (Bing, & Lounsbury, 2000; Westerman, & Simmons, 2007; Leiter, & Harvie, 1997; Oreg, 2006).

What is personality? McCrae, & Costa (1989) stated that personality is the internal psychological movement of an individual, which could be regarded as an explanation for why people differ in their behavior in similar situations. Personality influences our behavior and makes us distinctive from each other. Moreover, it is rather stable over time (Barrick, & Mount, 1991; Norman, 1963). After many years of studies (Allport, 1937; McCrae, & Costa, 1989; Barrick, & Mount, 1991; Noller, Law, & Comrey, 1987; Norman, 1963), five stable dimensions of personality (the Big-Five Model) were extracted: extraversion, emotional stability (neuroticism), agreeableness, conscientiousness, and openness to experience. Researchers pointed out that the Big-Five Model is important for the study of resistance to change (Judge, Thoresen, Pucik, & Welbourne, 1999; Oreg, 2003), because it is a more developed model of personality than other models. On one hand, the Big-Five Model is concentrated but has a broad based taxonomy of personality dimensions (Lee-Baggley, Preece, & Delongis, 2005), which includes the distribution traits of the general population, and universal cross-culturally traits (cited by Grant, & Langan-Fox, 2006). On the other hand, the Big-Five Model subsumes traits which distinguishes factors leading to different responses towards change (Mumford, Baughman, Threlfall, Uhlman, & Costanza, 1993), such as tolerance for ambiguity (Judge et al, 1999), adaptability (Ebberwein, Krieshok, Ulven, & Prosser, 2004), and willingness to cooperate with change (Hunt & Downing, 1990). Among five dimensions of the Big-Five Model, two dimensions have been proven to influence individual reactions to uncertainty: openness to experience and emotional stability (Bing, & Lounsbury, 2000; Oreg, 2003; Oreg, 2006; Sagie et al, 1985; Wanberg, & Banas, 2000, Westerman, & Simmons, 2007). As a result, we focus here on the impact of openness to experience and emotional stability on the relation between uncertainty and resistance.

Openness to experience

Proposition 1: Based on these arguments, we predict that openness to experience moderates the relation between uncertainty and resistance, in the sense that this relation is less positive for employees who score high on openness to experience than for individuals with low levels of openness to experience.

Emotional stability

Emotional stability includes traits such as being calm, secure and unemotional (Mount et al., 2005). Emotionally stable individuals are free from persistent negative feelings such as nervousness. Inversely, individuals who score low on emotional stability are more inclined to experience negative emotions (Westerman, & Simmons, 2007), for instance anxiety and depression (Sagie et al, 1985). When facing uncertainty, people with low scores on emotional stability tend to respond more intensely than people who score high on emotional stability, and can hardly effectively cope with organizational uncertainty as emotional stable employees. They are prone to interpret ambiguous situations as threatening, risky, and hopelessly frustration. In addition, their negative emotional reactions tend to persist longer than in others (Mount et al, 2005). Besides, emotional stability is related to interpersonal communication skills (Westerman, & Simmons, 2007). When facing an uncertain work relationship brought by mergers and acquisitions, individuals with a high level of emotional stability seem to adapt to the challenge easily since emotional stability is beneficial to form and maintain positive relationships in a new work environment (Westerman, & Simmons, 2007). In a nutshell, individuals who are less emotionally stable are expected to have less faith in their abilities to deal with change (Mumford et al, 1993; Oreg, 2003), and to create a positive relationship with their new colleagues, therefore they are more likely to feel threatened by uncertainty and resist organizational change.

Job experience

According to Cummings (1982) and Sagie et al (1985) job experience is also a critical component relating to resistance towards change.

Job experience can influence an individual‟s response to change since experienced employees tend to retain their predominance on familiar tasks rather than to face uncertainty in the new task. Sagie et al (1985) did an experiment about job transition from manual work to mechanical work and found indeed that there was a relation between employees‟ job experience and their resistance to change through an experiment. Time on the job was used as a measure of job experience. In this experiment, the high-experience group showed much more resistance to change (Sagie et al, 1985). We can conclude that the more experience an employee has with a task, the stronger resistance to its change will be found. Our reasoning is that an employee who has spent a longer time on one job is more familiar with it and has a well-control on his/her job. If this employee is transferred to another job, he/she will need time to learn and adapt to the new job. The uncertainty which is brought by changes on the job may provoke employees‟ intensive anxious feeling and encourage resistance. As some weaknesses exist in related articles, the impact of this predictor is called for further study. So we expect that there will be more experimental studies aiming at the moderating effect of job experience on the uncertainty-resistance relation, and explain how job experience can influence the uncertainty-resistance relation.

than younger employees, they are prone to resist change in order to remain present job and status. So the influence of the age of an employee on uncertainty-resistance is worthy of more experimental research.

Proposition 3: According to above suggestions, we deem that job experience can moderate the relation between uncertainty and resistance.

Leadership

Leadership can play an important role in alleviating the uncertainty-resistance relation in mergers and acquisitions since leadership during organizational change has an effective impact on employees‟ stress and coping processes (Amiot et al, 2006). However, many scholars have focused on the various “forces” that lead employees to resist excluding the effect of managers who initiate mergers and acquisitions (Eagly, & Chaiken, 1998; Piderit, 2000). If leaders are able to convey a clear vision of a merger or an acquisition, pay more attention to employees, and provide guidelines to help employees managing change, then stress from uncertainty can be reduced and less resistance should be found (Amiot et al, 2006; Appelbaum et al, 2000). It is crucial to find out the role leaders play in mergers and acquisitions, and the effect that leadership has on the staff.

systems of the organization (Tichy, & Ulrich, 1984), because transactional leaders orient to short-term goals while transformational leaders have a long-term orientation. Supported by many studies (Black, & Porter, 2000; Eisenbach et al, 1999; Tichy, & Devanna, 1990; Tichy, & Ulrich, 1984) of passing years, transformational leadership is regarded as a better approach during change, because it helps to encourage and inspire people to change. As a result, in this study, the main emphasis is on transformational leadership.

As being in the changing world, every organization needs leaders who can adapt to the change. The role of a transformational leader is to lead the organization to adapt to and improve in a changing environment. According to Tichy, & Devanna (1990), in organizational change transformational leaders engage in a sequence procedure: First, they realize the need for change, then they create a new vision for the organization to change, and finally they institute the change. However, what are the characteristics of transformational leaders managing these processes? Bass (1985) suggested that transformational leaders have three distinct characteristics: idealized influence, intellectual stimulation, and individualized consideration. Transformational leaders are trusted by employees and can influence their emotions (Eisenbach et al, 1999); coach employees to take on greater responsibility for their development (Howell, & Avolio, 1993); encourage employees to work for organizational profit and goals instead of individual self-interests during the mergers process.

management approach and also the execution of organizational strategies. This conclusion about transformational leaders‟ impact on employees is convincingly supported by other research. Nemanich, & Keller (2007) carried out a field study of employees involved in acquisition integration. An employee survey and supervisory performance rating were instruments used to measure employees‟ feelings of acquisition, their job satisfaction, their supervisor‟s transformational leadership behaviors and employees‟ performance. In this study, transformational leadership was positively related to acquisition acceptance, supervisor-rated performance, and job satisfaction (Nemanich, & Keller, 2007).

These and other studies showed that transformational leadership can effectively reduce uncertainty and contribute to less resistance of employees. These leaders convey a new vision for the future which can reduce the uncertainty and motivate employees to change. Transformational leaders can facilitate this process by providing sufficient information about the mergers and encouraging employees by the potential profit for organization and employees (Nemanich, & Keller, 2007). However, transformational leaders‟ concerns for employees have strong implications for staff member‟s hope for the future, and are helpful to reduce the effect of uncertainty and alleviate employees‟ feeling of exhaustion, tension and threatening (Leiter, & Harvie, 1997; Kavanagh, & Ashkanasy, 2006). What‟s more, transformational leaders involve employees in the change process and empower them, therefore raising their tolerance for uncertainty and enhancing their ability to cope with new, changing situation (Bass, 1998; Nemanich, & Keller, 2007). Last but not least, transformational leaders are said to give rise to inspiration, encouragement and empowerment in their followers, resulting in better performance, exceptionally high commitment and increasing willingness to take risks (Behling, & McFillen, 1996). The information, individual consideration, encouragement and empowerment provided by transformational leaders contribute to reduce uncertainty in mergers, lead to high commitment and job satisfaction, and come up with less resistance.

for the leaders in an organization to select a series of plans that are feasible within the capacity of the organization to adapt to change and manage organizational resources (Kavanagh, & Ashkanasy, 2006; Nadler, Thies, & Nadler, 2001).

Organizational Factors

Ebberwein et al (2004) suggested that individual responses to change depend not only on individuals themselves but also on the organizational environment. It implies that besides individual aspects and leadership, there are predictors which are related to organization. Two predictors, namely communication and justice, seem especially important organizational factors during mergers and acquisitions.

Communication

Most executives recognize that mergers and acquisitions involve the control of corporeal property, for instance, assets, capital and equipments of another firm (Feldman, & Murata, 1991). However, communication as an important human factor which is a form of interpersonal interaction is paid little attention to. According to Appelbaum (2000), communication is one of the most important factors through out the entire merger and acquisition process, but has not received enough attention. 58% of the respondents in his study indicated that under-communication existed and handicapped the integration of mergers and acquisitions (Bert et al, 2003). Scholars (Bert et al., 2003; Bryson, 2003; Messmer, 2006; Appelbaum et al., 2000; Appelbaum, Lefrancios, Tonna, & Shapiro, 2007) maintained that good communication tactics and practice are critical in merger and acquisition. Communication between managers and employees can exert effect on employees‟ ability to adapt to a new environment, sustain the change process and deal with stress (Appelbaum et al, 2000; Appelbaum et al, 2007).

turnover. Without adequate and enough information, individuals are more likely to resist change and give negative responses (Appelbaum et al., 2007), since uncertainty with regards to their future makes them anxious and nervous. Communication is critical to achieve employees‟ understanding and agreement because honest and frequent communication can reduce misunderstandings and wrong expectations (Appelbaum et al, 2000), and help employees to adapt to a new environment. Sufficient information provided via communication helps employees realize what specific changes will occur and how these changes will influence their future (Wanberg, & Banas, 2000). Concerns and advice provided by managers which contribute to assisting employees to cope with organizational change are also key benefits of communication. Additionally, potential benefits and challenges of mergers and acquisitions which may encourage employees to change can be made clear by employees through communication. Communication in periods of mergers and acquisitions shows its merit, since frequent and honest communication had stabilizing effects (Bryson, 2003), which helps to reduce feelings of uncertainty and lead to less employees‟ resistance.

Proposition 5: Based on above discussion, we propose that effective and timely communication is a feasible way to reduce uncertainty and alleviate employees‟ resistance towards mergers and acquisitions. Communication strategies and practices should be realized by managers, in order to achieve successful mergers and acquisitions.

Procedural Justice

mergers and acquisitions. During organizational changes, justice becomes a necessary and significant point.

There are two main forms of justice: distributive justice and procedural justice (Folger, & Corpanzano, 1998; Paterson, & Cary, 2002; Smollan, 2006). Distributive justice is the perceived fairness of employees related to various job outcomes, such as compensation conditions and organizational rewards (Pare, & Tremblay, 2007). The concept of procedural justice has been defined in the literature on organizational justice as the perceived fairness of the formal procedures used in allocation decision-making (Lipponen et al, 2004). The significance of distributive justice is easy to understand. If an employee works hard on his job but consequently receives a lower payment than his colleagues, he will most probably feel unfairly treated. However, procedural justice is less easy to manage since it is related to the whole organizational system (Smollan, 2006). However, employees‟ perceptions of procedural justice are a key factor in determining their attitudes to, and their experience of, mergers and acquisitions (Bryson, 2003). Lipponen et al (2004) maintained that it is especially the justice of the procedures for implementing the changes, rather than the changes themselves that matters to employees. According to uncertainty management theory, people have a fundamental need to feel certain about their world and their place within it, so that people generally feel a need either to avoid uncertainty or to eliminate uncertainty (Van den Bos, Euwema, Poortvliet, & Maas, 2007). Procedural justice is important because it gives people an opportunity to manage uncertain aspects of their lives (Van den Bos, 2001). Procedural justice can reduce uncertainty and increase employees‟ confidence, satisfaction and commitment through equal “voice” and “notice”, resulting in less resistance (Lipponen et al, 2004; Pare, & Tremblay, 2007; Steensma, & Milligen, 2003).

to the organization were enhanced. “Voice” is regarded as the central role played by procedural justice, which is defined as the fact that participants are allowed an opportunity to express their opinion in decision-making (Steensma, & Milligen, 2003; Van den Bos, 2001). Van den Bos (2001) stated that people who are allowed to voice their opinion show less resentment after rejection than those who are not allowed a voice. By expressing their ideas during the change procedure, employees think that even though they face uncertainty they still have some control over their own profit. According to a study carried out by Dent, & Goldberg (1999), individuals resist change because they perceive that they will suffer loss. As a result, if they can “voice” for their benefits and make their needs fulfilled, uncertainty in mergers and acquisitions works less powerfully in leading to resistance. Meanwhile, employees who are given the opportunity to voice their opinions regard it as a proof of their value and respect from other members which enhance their confidence and satisfaction (Bryson, 2003; Cobb et al, 1995). This will also increase their belongingness of their organizations. Another aspect that may influence the experience of procedural justice is adequate “notice” of the procedures and decisions during mergers and acquisitions (Steensma, & Milligen, 2003). Successful implementation of changes calls for informing employees appropriate and timely. In addition, employees want to receive as much information in order to feel that the organization treats everyone equally and provides fair opportunities to them. Fair treatment increases employees‟ satisfaction and commitment to the organization which contributes to less nervous and disagreeable feeling as well as lessens the influence of uncertainty. With less negative feelings and weakened power of uncertainty, employees most likely respond with acceptance rather than resistance.

DISCUSSION

Conclusions and Theoretical Implications

Limitations and Implications for Future Research

After reviewing the relevant literatures, this study sheds some light on employees‟ resistance to mergers and acquisitions and highlights four predictors which seem to have an important influence. In spite of these contributions, there are some limitations which should be pointed out.

First, when we consider our research methodology, we found that many articles provide support for the theoretical model. However we did not conduct an empirical study to prove our propositions. In future research it would be interesting to empirically test the propositions that we have put forward.

Second, four predictors (uncertainty in mergers and acquisitions, individual factors, leadership and organizational factors) are distinguished as having impact on employees‟ resistance to mergers and acquisitions. We focused on their individual influence and discussed their impact separately. However, the interrelationships between these four predictors are without the scope of this research. A further explanation of linkages among four predictors needs to be specified in both theoretical and statistical way. One could for instance imagine that leadership can influence communication and justice in organization.

threatened during change. The different categories of uncertainty and their individual influence on employees would also be interesting directions for future research.

Forth, we find that the age of an employee also seems to be an individual predictor. However, it is still not clear whether the older employees respond with higher level of resistance because age is related to job experience or it is relevant with openness to experience. So the influence of the age of an employee on uncertainty-resistance is worthy of more experimental research.

Finally, the organizational structure and design of the organizations involved in the organizational change were beyond the scope of this paper. However, Cartwright, & Cooper (1992) pointed out that structural change in organizations was also stressful for employees, so that it should be taken into account as a predictor of employees‟ resistance. The study of the relation between the change of organizational structure and resistance is needed in future research.

Practical Implications

After analyzing the antecedents of employees‟ resistance to mergers and acquisitions, several practical recommendations, although cautiously, can be drawn on how to reduce resistance.

with less resistance.

Employees‟ participation and involvement in mergers and acquisitions process should be encouraged. Participation, including plan involvement and implementation involvement, has been observed as an effective strategy supporting the implementation of planned changes (Schraeder, & Self, 2003). “Voice” as one form of participation which was recommended by Van den Bos (2001) has been supported as beneficial to reduce resistance. Above all, this involvement plays an important role in giving staff a better overall understanding of mergers and acquisitions process. In addition, it is easier for employees to realize the benefit of mergers and acquisitions and desired outcomes when they participated in the change. Besides, high-involvement practices communicate to employees that the organization values, cares, wishes to establish a social exchange relationship with them (Pare, & Tremblay, 2007). Meanwhile, employee participation results in employees‟ trust in the management and a feeling of job security of employees (Boselie, Hesselink, Paauwe, & Wiele, 2001). In short, high-participation and high-involvement practices are associated with employees‟ positive attitude and active behavioral responses to organizational change.

Creating readiness for change is necessary. Organizational change brought by mergers and acquisitions can be transformed into a positive and significant experience for enhancing employees‟ readiness to change (Holt, Armenakis, Field, & Harris, 2007). Some practices can create better conditions for the development of employees‟ readiness to change. In the first step, a transparent and detailed announcement and introduction of mergers and acquisitions is necessary for employees to prepare for change, which require communication. Meanwhile, essential training and learning projects provided by the organization may increase employees‟ confidence in coping with change and also help them improve their problem-solving ability at work(Holt, Armenakis, Field, & Harris, 2007). With increasing readiness to change, employees can contribute to organizational change through active job performance.

management and among peers, should be a major priority in any merger and acquisition process (Kavanagh, & Ashkanasy, 2006). Appelbaum et al (2007) suggested that communication in the early stage should include timely, honest and direct information, as well as a realistic assessment of future opportunities challenges and risks, such as career diversification and downsizing plans. Furthermore, during the change process, communication needs to consist of exchanging opinions, mutual care, recommendations and feedbacks. As a result, both leaders and employees should make an effort to communicate effectively and timely.

Justice in organizations should also be paid attention to. If employees perceive that distribution and implementation process during the merger were fair, they attain high degree of identification and belongingness (Lipponen et al, 2004). As a result, during mergers and acquisitions, the criterion of distribution and procedure should consider employees‟ input. What is important, procedure should be transparent and fair.

Rewards are incentives, because they can inspirit employees‟ positive responses to mergers and acquisitions. It is suggested that leaders can effectively influence employees‟ response to change by providing employees with rewards (Eisenbach et al, 1999). Rewards can fulfill individual satisfaction to some extent. When encouragement and incentives are enough, employees may reduce their resistance to change and become content to gradually change themselves, and their feeling of uncertainty and fear may become weaker. Both substantial bonus and honorary rewards can make sense in encouraging employees‟ supportive performance and decreasing opponent voice. Leaders can use one of these methods (substantial bonus and honorary rewards) or both of them.

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Appendix 1

Table 1: Summary of literature review

Highlight(s) Author(s)

1. Resistance to Change Armenakis et al (1993). Brower, & Abolafia (1995). Bryson (2003).

Cartwright & Cooper (1992) Davidson (1994).

Dent & Goldberg (1999). Drazin, & Joyce (1979). Eagly & Chaiken (1998). Ivancevich et al (2002). Jha, (1977).

Kay & Shelton (2002). Lawrence (1954). Leiter & Harvie (1997).

Marks, M. L. & P. Mirvis (1985). Nemanich & Keller (2007). Piderit (2000).

2. Mergers and Acquisitions Amiot, et al (2006). Appelbaum et al (2000). Cartwright & Cooper (1992). Ivancevich et al (2002). Marks & Mirvis (1985). Miller (2000).

Mossholder et al (2000). Schraeder & Self (2003). Weber & Camerer (2003). Work Life Report (1999). 3. Individual Factors

 personality

 job experience

Allport (1937).

Barrick & Mount (1991). Bing & Lounsbury (2000). Blickle (1996).

Busato et al (1999) Cummings (1982). Ebberwei et al (2004). Grant & Langan-Fox (2006). Hensley, (1977).

Judge (1999).

Kay & Shelton (2002). Noller et al. (1987). Norman (1963).

McCrae & Costa (1989). Mount et al. (2005). Mumford (1993). Oreg (2003). Oreg (2006). Prochaska et al. (1997). Sagie et al. (1985).

Wanberg & Banas (2000). Warr, et al. (2001).

Westerman & Simmons (2007).

4. Leadership Bass (1985).

Bass (1998).

Behling & McFillen (1996) Black & Porter (2000). Burns, (1978).

Cartwright & Cooper (1992). Eisenbach et al. (1999). Howell & Avolio (1993) Leiter & Harvie (1997).

Kavanagh & Ashkanasy (2006). Masood et al. (2006).

Nadler et al. (2001).

Nemanich & Keller (2007). Tichy & DeVanna (1990). Tichy, & Ulrich (1984). 5. Organizational Factors  communication  procedural justice Appelbaum et al. (2000). Appelbaum et al. (2007). Bert et al. (2003). Bryson (2003) Cobb et al. (1995).

Feldman & Murata (1991). Folger & Corpanzano (1998) Lawler (1986).

Lipponen et al. ( 2004). Messmer (2006).

Paterson & Cary (2002). Pare & Tremblay (2007). Skarlicki et al. (1999). Smollan (2006)