Employees' reactions to a merger and acquisition: A social identity perspective

Despite their popularity, more than half of mergers and acquisitions (M&A) are considered a failure, often times attributed to employee problems that were ignored or mishandled. Studies have shown that employees' loss of identity is one of these problems, especially for employees of the acquired company. The “death” of the pre-merger organization may reduce employees' pride, commitment, and sense of self-worth. Yet employees are often reluctant to give up their pre-merger identity and build a new organizational identity.; My dissertation examines the causes and consequences of identity problems among merged employees through a “multiple identities” lens. Organizational members maintain multiple identities; three distinctive ones within an M&A context are personal, group (pre-merger organizational), and new organizational identity. Examining multiple identities may provide more extensive understanding and prediction of employees' post-merger attitudes and behaviors.; Employees' perception of relative deprivation is examined as a contextual variable that influences merged employees. Reallocations and redistributions of scarce organizational resources are essential elements of most M&As, yet they may also cause employees to experience a feeling of deprivation. When employees perceive a high level of relative deprivation, they are more likely to experience identity problems and express more dysfunctional behaviors.; A total of 222 employees of a recently merged Korean company participated in the study twice by completing a survey before and after the merger. Pre-merger data were collected about a month before the merger, and post-merger data were collected five months after the merger was executed.; The results indicated that employees' identification to a post-merger organization had a strong impact on their turnover intention, and trust in top management. Perception of relative deprivation also influenced employees' intergroup competition and trust in top management.; This study demonstrated the importance of organizational identification in M&A context. The major theoretical contributions of this dissertation are (i) applying social identity theory in M&A context, (ii) examining multiple identities simultaneously, and (iii) collecting data longitudinally to keep track of identity change.