From culture clash to integration: The role of leadership in transforming post-merger employee identification

Merger and acquisition (M&A) activity continues to rise, despite evidence that the majority of mergers and acquisitions fail to meet the financial and synergistic expectations of shareholders and employees. One of the frequently cited reasons for this lack of success is the inherent difficulty in bringing together organizations with very different organizational cultures. These post-merger “cultural clashes” are often blamed for disappointing M&A outcomes, although very little research exists to guide organizations or managers through this difficult process. In particular, the role of leadership as an important influence on merging organizational cultures and subcultures has been only sporadically examined.; This dissertation advances theoretical and practical approaches to post-merger integration in a number of ways. Specifically, a model of the relationship between cultural leadership, individual identification, and employee attitudinal and behavioral outcomes is presented. While previous research has hinted that culture may play an important role in M&As, the current study provides evidence that employee identification with cultural aspects of the post-merger organization is critical in determining M&A outcomes. In addition, cultural leadership (Trice & Beyer, 1991) is demonstrated to play an important role in influencing whether or not employees form identifications with new cultural frameworks.; A multi-method study of a post-merger organization is conducted to test the culture-identification framework. An embedded case study approach involving four stages of research is designed to uncover whether or not cultural leadership plays a role in facilitating employee identification and positive attitudinal and behavioral outcomes. This research design incorporates both qualitative and quantitative measures of key constructs, as well as employee self-reports of attitudes, behavioral intentions, and performance outcomes.; The findings of this dissertation contribute to both theory and practice in three fundamental ways. First, it develops current theoretical work on the “people side” of mergers and acquisitions by presenting cultural identification as a mechanism through which employees interpret post-merger cultural changes. This has theoretical and practical implications for how to anticipate and more effectively manage the cultural clashes that frequently occur after M&As. Second, this study advances the construct of cultural leadership both theoretically and empirically. Theoretically, this dissertation delineates the process through which cultural leadership takes place. Empirically, this study advances the definition and measurement of cultural leadership, bringing it out of the purely theoretical realm to establish its empirical relationship with post-merger employee identification. Finally, this study helps to establish cultural leadership as an important influence on individual behavioral and attitudinal outcomes that contribute to M&A successes and failures. Taken together, these findings have important implications for how managers and employees can anticipate post-merger cultural clashes and tailor leadership programs to effectively address their underlying roots, ultimately enhancing merger success rates.