Chapter 2: Literature Review
2.12 Theoretical Framework and Hypotheses
In literature many researchers have recently studied the combined role of perceived organizational support, employees participation and their impact on organizational performance (Zagenczyk et al., 2020; Thomas et al., 2020; Ding &
Shen, 2017; Wickramasinghe & Wickramasinghe, 2012).
Rhoades and Eisenberger (2002), argued that perceived organizational support can be explained from the social identity theory as it fulfills the socioemotional needs of employees and leads to a stronger identification with the organization. Lam et al.
(2016) have further expanded this argument by explaining that when employees perceive the support of their organization, they do in fact perceive the commitment of their organization toward them. Therefore, they will be more attuned to the organizational destiny and engage in behaviors that are rooted to their self- categorization and hence act in the best interest of the organization. Therefore, this study hypothesizes that perceived organizational support during post-merger integration has a positive relationship with organizational identification.
As for employees’ participation in decision making, its adherence with the social identity theory framework can be explained by acknowledging that if employees were involved in the decision making process and were further permitted to influence the outcomes of this process, this will categorize the employees of that organization by means of positive self-distinctiveness. This categorical membership through shared meaning will strengthen their identification with the organization and influence their behavior. Therefore, this study hypothesizes that employees participation in decision making during post-merger integration has a positive relationship with organizational identification.
Other researchers have proposed that the social identity theory is the foundation to predict critical outcomes in organizations that are supportive of their employees, an example of those outcomes are organizational identification and organizational trust (Farooq et al., 2019). Therefore, it can be argued that if the organization acts toward the well-being of its employees, support their work conditions, promotes respect and self-worthiness, the employees will reciprocate a stronger identification towards the organization. Therefore, this study hypothesizes that Perceived Organizational Support during post-merger integration has a positive relationship with organizational trust and employees participation in decision making during post-merger integration has a positive relationship with organizational trust.
As discussed in the literature review Section of this study, both organizational identification and organizational trust promotes employees supportive behavior toward change and motivate the employees to support the ongoing change to achieve success. Many researchers have capitalized on this relation and argued that acting in the favor of an organization and being supportive toward the change is driven by the employees’ intension to act in their best interest, because the organizational success is viewed as a success of their own. (Ashforth & Mael, 1989; Christ et al., 2003; Van Knippenberg & Sleebos, 2006; Erkutlu & Chafra, 2013; Thomas et al., 2020).
Therefore, this study hypothesizes that Employees Change Support Behavior during post-merger integration mediate the relationship between organizational identification and merger-success. Similarly and on the same theoretical basis, Employees Change Supportive Behavior mediate the relationship between organizational trust and merger success.
Moreover, it was argued that corporate mindful interventions are crucial during PMI, such as communication and training for employees’ development, because of their focus on the human integration dimension by strengthening organizational identification, which promotes citizenship like behaviors, drives employees’ positivity and reduces their resistance to change (Qiuyun et al., 2020; Cheema et al., 2020;
Dorling 2018; Vasilaki et al., 2016). Literature argues that this employees’ positivity is in fact contagious and increases productivity and positivity in the new organization during and after merger (Schuler & Jackson, 2001). Consequently, corporate mindful interventions during post-merger integration should contribute to merger success by adding value to the business through an undistracted focus on the human capital part (Wickramasinghe & Karunaratne, 2009). On the other hand, if the human factors were ignored or not emphasized enough the intended objectives of merger might be jeopardized, because the merger exercise is highly emotional and can drive negative employees’ behavior expressed by attitudes such as the feeling of injustice, insecurity, stress, anger, withdrawal, sabotage and identification loss.
The above can be explained under the social identity theory (Vasilaki et al., 2016), as individuals’ self-concept of the reality both personally and socially will be a realization of what they go through and sense in the workplace. Therefore, proper measures and interventions should aid them in reconstructing their reality and mitigate the psychological impact of merger integration by developing a sense of justice, security and new identification, which should drive positivity, performance and productivity. This suggests that corporate mindful interventions should have moderating role between post-merger integration activities and the creation of positive behaviors in the work place, in addition to the development of citizenship like behavior, which was hypothesized in this study as strong organizational identification.
Noteworthy, impact of mindfulness in this study was investigated from its role in developing PsyCap amongst the employees during post-merger integration activities by reducing resistance to change through helping the employees to be more resilient, optimistic and self-efficient (Gartner, 2013). However, mindfulness was argued in literature to be a personal character as in PsyCap, which vary between individuals’
(Charoensukmongkol, 2016), which support the argument made by this study of considering corporate mindful intervention for PsyCap development a moderator variable. Therefore, corporate mindful interventions were properly implemented to develop the employees PsyCap during post-merger integration effectively integrate human capital, it can be argued that the subject merger will have better chances to succeed and achieve a better performance, while maintaining a strong organizational identification that encourages all employees to act in the best benefit of the new organization. Therefore, this study hypothesizes the following relationships: mindful corporate interventions during post-merger moderate the relationship between perceived organizational support and organizational identification, mindful corporate interventions during post-merger moderate the relationship between employees participation in decision making organizational identification, mindful corporate interventions during post-merger moderate the relationship between perceived organizational support and organizational trust, mindful corporate interventions during post-merger moderate the relationship between employees participation in decision making organizational trust, mindful corporate interventions during post-merger moderate the relationship between organizational identification and employees change support behavior and mindful corporate interventions during post-merger moderate the relationship between organizational trust and employees change support behavior.
This study aims to navigate beyond the performance evaluation limitations imposed by one dimensional performance evaluation of lagging and historical financial indicator, by adopting a multi-dimensional merger performance evaluation that accounts for non-financial measures. To achieve this, the Balanced Scorecard (BSC) theory will be used. The use of this theory can be argued as a fit for the case in hand, because there is no single performance indicator account for the performance complexity in an organization (Epstein & Manzoni, 1998). Therefore, BSC approach would integrate both complementary and compatibility factors of performance to provide a multidimensional evaluation to drive performance (Kaplan et al., 2001).
The company in question practices this theory in evaluating their annual performance according to the following five prospective, namely Health, Safety and Environment (HSE), efficiency, profitability, performance and people. Each of those four prospective has a specific definition and an assigned annual Key Performance Indicator (KPI) value. Moreover, the availability of integration manager and integration team will be added as a control variable to test its impact on the proposed relationship in this study.
• H1: Perceived Organizational Support during post-merger integration has a positive relationship with organizational identification.
• H2: Perceived Organizational Support during post-merger integration has a positive relationship with organizational trust.
• H3: Employees participation in decision making during post-merger integration has a positive relationship with organizational identification.
• H4: Employees participation in decision making during post-merger integration has a positive relationship with organizational trust.
• H5: Employees Change Support Behavior during post-merger integration mediate the relationship between organizational identification and merger- success.
• H6: Employees Change Support Behavior during post-merger integration mediate the relationship between organizational trust and merger-success.
• H7: Mindful corporate interventions during post-merger moderate the relationship between perceived organizational support and organizational identification.
• H8: Mindful corporate interventions during post-merger moderate the relationship between employees participation in decision making organizational identification.
• H9: Mindful corporate interventions during post-merger moderate the relationship between perceived organizational support and organizational trust.
• H10: Mindful corporate interventions during post-merger moderate the relationship between employees participation in decision making organizational trust.
• H11: Mindful corporate interventions during post-merger moderate the relationship between organizational identification and employees change support behavior.
• H12: Mindful corporate interventions during post-merger moderate the relationship between organizational trust and employees change support behavior.
The proposed conceptual model based on the theorized framework is shown in Figure 1.
Figure 1: Theorized conceptual model