Past research provides evidence that organizational identification is a key factor predicting employees’ behaviours during mergers and acquisitions. In particular, recent studies demonstrate that members of the subordinate merger partner, in contrast to the dominant group, often find it difficult to transfer their identification to the post-merger organization. To understand this difference between dominant and subordinate groups, we examined employees’ sense of projected continuity in the future. We argue that projected continuity mediates the differential relationships between pre-merger and post-merger identification and propose that pre-merger identification relates positively to projected continuity in the dominant group but negatively in the subordinate group. As a result, the overall relationship between pre- and post-merger identification should be reduced or eliminated in the subordinate compared with the dominant group. We tested our hypotheses in a survey (N = 492) distributed in a merger of two international pharmaceutical companies at the beginning of the post-merger integration and 15 months later. Results were consistent with our assumptions of a moderated mediation effect. We conclude that a key challenge in merger integration is to support high identifiers in the subordinate group in developing a projected continuity or a focus on ‘the bright tomorrow'.

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PurposeThe purpose of this paper is to shed light on challenges faced in human resource (HR) integration in subsidiary mergers of western corporations in Poland. The paper seeks to investigate the central themes in HR integration in terms of the role of the HR function and the implications for the local workforce.Design/methodology/approachA qualitative method research design was adopted with semi‐structured formal and informal interviews, participant observation, and secondary/primary data analysis.FindingsFindings provide insights into the challenges of integrating the subsidiaries of western corporations based in transition economies and why problems might emerge from the collaboration between local and foreign managers. Specifically, the analysis suggests that a success of the HR integration might be particularly at stake in circumstances of a low HR power in a subsidiary and a low multiculturalism of the foreign investor.Research limitations/implicationsThe main study limitation concerns the fact that investigations concerned perspectives of local managers. It would be interesting in future research to observe the HR processes as perceived by both local executives and foreign parent decision‐makers.Practical implicationsThe paper's findings may help managers and change agents to understand the specific challenges to HR integration of subsidiary mergers.Originality/valueThe results shed light on HR integration in subsidiaries of corporations from western economies based in emerging or developing regions. Specifically, in circumstances of a low HR power in a subsidiary and a low multiculturalism of the foreign investor, officially proclaimed friendly mergers may turn to hostile takeovers and drastic changes risk implemention without a clear understanding of the local context. Then, HR integration risks having a dysfunctional impact on the workforce and consequently, failing to deliver expected synergies and, in the long‐term, cause M&As failure.

Both scholars and practitioners agree that constructing a shared organizational identity is necessary for successful outcomes in mergers and acquisitions. Yet the process of constructing shared identity is not an easy path. We report findings of a longitudinal in-depth case study of merging Mexican subsidiaries-part of two European Multinational Corporations. The study took advantage of a rare opportunity that includes prior knowledge of the merger and permission to follow-up until post-merger integration concluded. Particularly, in the studied case, status differences between pre-merger organizations were removed, external boundaries were reinforced and new outgroups emerged, namely the Head Offices and Latin American divisions. Our study contributes to the M&A literature, to the stakeholder approach to organizational identity and to identity construction in nested organizations. We shed light on how intergroup dynamics change over time during interactions between internal and external stakeholders, and whose status changes in the post-merger organization. Based on these findings, we argue that considering both intragroup and intergroup dynamics can refine the concept of shared organizational identity. Intragroup dynamics refers to employees of the postmerger organization, and intergroup dynamics refers to outgroup-outside the post-merger organization. We coin a concept of an optimal shared identity, defined as the members' shared belonging to the post-merger organization and to the Multinational Corporation (on the global or regional level) in the face of salient outgroups.