Perceptions of justice and organisational commitment in international mergers and acquisitions

Abstract

Purpose Although there is substantial and accumulating evidence on the link between market entry modes and performance, evidence regarding their impact on employee’s perceptions and thereby their commitment is scarce. This is more so in mergers and acquisitions (M&As) where employee’s commitment has a significant impact on post-entry performance. The purpose of this paper is to examine the association between perceptions of justice and organisational commitment in cross-border M&As. Design/methodology/approach The authors draw on market entry and M&As’ literature and studies on the link between perception of justice and commitment to develop the hypotheses. The authors test the hypotheses with survey data from a merger of two culturally different partners – British and Japanese. A total of 128 responses were received, out of a sample of 151 non-managerial employees within the firm. Findings The results show a strong association between employees’ perceptions of justice during the merger and commitment to the new organisation. Surprisingly, the results do not support the widely reported interaction effects between different organisational justices and employees’ commitment. Research limitations/implications Obtaining data from a single M&A is a potential limitation of this study. Practical implications The study underscores the importance of post-market entry. The results suggest that particular attention needs to be paid to the way employees of the acquired firm are treated during their interactions with their counterparts. Originality/value The link between market entry and performance is well documented. However, little progress has been made in understanding the antecedents/factors that influence commitment in foreign market entry and in particular cross-border M&As. This study helps close this gap.

Transformational Changes and Sustainability: From the Perspective of Identity, Trust, Commitment, and Withdrawal

“…Firstly, to avoid any influence of country differences, the present study focuses on a single country context, i.e., Pakistan, where industry is flourishing and evolving rigorously because of foreign investment and decentralization in the services sector. The majority of the past studies were conducted in the developed world [7,15,72], whereas the developing country context offers more insight and understanding towards organizational changes in a cross-cultural setting. Secondly, we focused on larger organizations (having more than 500 employees) with a view to avoid any potential firm size dynamics with respect to major organizational changes, such as merger and acquisitions, downsizing, major restructuring, and changes in culture, HR policies, as well as in leadership [36,73].…”

Integration of Non‐market and Market Activities in Cross‐border Mergers and Acquisitions

“…From an RDT lens, the success of M&As depends on the critical resources provided by employees (Aguilera, Dencker and Yalabik, 2008), which are related to avoiding or at least reducing the turnover of executives and key talents of the target company (Krug and Aguilera, 2005;Krug, Wright and Kroll, 2014;Zhang et al, 2015). The CSR scholarship shows that these critical resources can be procured thanks to ethical or responsible conduct in M&As, which helps to ensure employee identification and commitment Edwards, 2012, 2013;Gomes et al, 2017;Lin and Wei, 2006). Notably the study by Ellis, Reus and Lamont (2009), exploring the postdeal value creation in large related acquisitions, shows that procedural justice is critical in realizing market position improvements following the integration process, while informational justice is essential in achieving market position gains during integration and financial return gains both during and post integration.…”

“…M&A scholarship demonstrated that non‐market factors significantly affect M&A performance. Ethical or responsible conduct in M&As, as expressed through perceived conformity with corporate values or perceived fairness, affects employee identification and commitment and, in turn, affects M&A success (Edwards and Edwards, ; Gomes et al ., ; Lin and Wei, ), while political connections can help towards privileged access to information in advance of competitors or more favourable treatment by regulators and, in turn, improve M&A performance (Brockman, Rui and Zou, ; Liu, Wang and Zhang, ). However, while scholarship on the pre‐merger deal phase has provided rich evidence that market resources and capabilities (e.g.…”

A 27‐year review of mergers and acquisitions research in 27 leading management journals

“…Strategic management scholars have explored numerous topics within M&As, adopting a wide range of theoretical frameworks and methodological approaches that, as a result, have led to the emergence of a significant body of literature from various disciplinary perspectives. Numerous studies have investigated a broad range of aspects, including finance (Arikan, & Stulz, 2016; Erel, Jang, & Weisbach, ; Tuch & O'Sullivan, ), strategy (Humphery‐Jenner, Sautner, & Suchard, ; Nair, Demirbag, Mellahi, & Pillai, ; Park & Gould, ; Xing, Liu, Tarba, & Cooper, ; Yildiz & Fey, ), partner selection (Cuypers, Cuypers, & Martin, ; Gomes, Weber, Brown, & Tarba, ; Very, Lubatkin, Calori, & Veiga, ), management teams and leadership (Rao‐Nicholson, Khan, & Stokes, ; Vasilaki, Tarba, Ahammad, & Glaister, ; Xing & Liu, ), communication (Angwin, Mellahi, Gomes, & Peter, ), human resource management (HRM) (Aguilera & Dencker, ; Gomes, Angwin, Peter, & Mellahi, ; Khan, Rao‐Nicholson, Akhtar, & He, ; Sarala, Junni, Cooper, & Tarba, ; Sarala, Vaara, & Junni, ), speed of implementation (Angwin, ; Gomes, ), merger integration (Ahammad, Tarba, Frynas, & Scola, ; Almor, Tarba, & Benjamini ; Angwin and Meadows, ; Björkman, Stahl, & Vaara, ; Gomes, ; Stahl et al, ; Weber & Tarba, 2011), acquisition experience (Cuypers et al, ; Gomes, Donnelly, Morris, & Collis, ), culture (Ahammad, Tarba, Liu, & Glaister, ; Bauer & Matlzer, ; Björkman et al, ; Gomes et al, ; Morosini, Shane, & Singh, ; Reynolds & Teerikangas, ; Stahl et al, ), organizational justice (Ellis, Reus, & Lamont, ; Gomes, Mellahi, Sahadev, & Harvey, ) and pricing (Agarwal & Kwan, ; Agarwal, Kwan, & Paul, ). However, despite such substantial research endeavors, the field is accumulated knowledge and literature remains dispersed (Angwin & Vaara, ; Gomes, Angwin, Weber, & Tarba, ); hence the need to organize and structure the existing body of knowledge—the object of this study.…”