This thesis has been submitted as partial fulfillment of the requirements for the doctorate in business economics. What is the role of company interventions in supporting constructive employee behavior during post-merger integration.
Introduction
- Overview
- Research Background
- Research Context
- Research Aim
- Research Objectives
- Research Questions
This study aims to investigate the role of employees during post-merger integration as a determinant of merger success by examining the impact of perceived organizational support and employee participation in decision-making on employee performance. What is the role of positive employee perceptions of change during post-merger integration in determining merger success.
Literature Review
Introduction
The positive contribution of employees during such an organizational change can be seen from the perspective of acting in the best interest of the new organization by promoting positive behavior and attitudes in the workplace. It then supports the success of a merger by acting in the best interests of the new organization.
Merger as an Organizational Change
This perspective will explore the latter mentioned areas of interest on organizational change in a substantial population of organizations, as attempted by Hannan et al. Academic disciplines commonly used in this research context are social psychology, sociology, and economics, with an emphasis on organizational behavior (Oreg et al., 2011) and strategic perspectives on organizational change (Schwarz & Huber, 2008).
Post-Merger Integration
Much research has argued that unsuccessful mergers are often attributed to failures in the integration process, which are usually related to insufficient integration of the human capital and the neglect of the human factor PMI (Brueller et al., 2018; . Homburg & Bucerius, 2005; Shrivastava, 1986). The integration of the human factor in post-merger integration can be argued to be significantly challenging due to the many variables during such an integration and the dynamics of the process itself (Sinha et al., 2015).
Perceived Organizational Support
In this study, perceived organizational support will be measured with the five items adopted by Eisenberger et al. 1990) Survey of Perceived Organizational Support (SPOS). Therefore, it can be concluded that the measurement of perceived organizational support is a distinctive construct that the SPOS measures with high reliability.
Employees Participation in Decision Making
It was suggested that employee participation in decision making is an effective tool to motivate employees to perform desirable behaviors. This positive relationship between employees. participation in decision making and organizational identification were also supported.
The Role of Organization Identification in Post-Merger
If this integration process is compromised, organizational identification is compromised and loss of identity will lead to a loss of trust and a limitation of social interaction between individuals in the new organization (Boen et al., 2006; Bryson, 2003). Remarkably, there is a convergence in the literature regarding the characteristics of employees' perceptions of the new organizational identity in the post-merger phase (Elstak et al., 2015).
Organizational Trust
Agrawal and Jaffe (2003) argued that organizational trust research is in fact categorized by level of analysis to vary from. Therefore, it can be argued that organizational trust is a broad and diffuse set of sources of risk when compared to interpersonal trust.
Mindful Corporate Interventions during Merger Integration
In this context, researchers in the field have proven, through empirical investigation of the phenomena, that resistance to change during post-merger integration will trigger negative emotions, which lead to unfavorable organizational behavior and eventually the failure of the merger (Stahl & Voigt, 2008). Furthermore, it will develop a sense of ownership and stewardship towards the organization, which is central to promoting identification and driving positive behavior in the new organization (Bartels et al., 2006). It is further argued that changes in employees' careers have a pronounced impact on how employees react to organizational changes.
Merger Success
The Health, Safety and Environment item measures the effectiveness of the implementation of the new HSE roles and policies of the new company's operations to ensure the health and safety of its employees while protecting the environment. Profitability takes into account the free cash flow generated from supplying oil and gas production, supporting production and optimizing spend by saving 5% on target operating expenses (manpower, service, contracts and materials) and 10% on capital expenditures (new assets and their related costs) while delivering the full budgeted scope for each line item and cost driver in the calendar year. The performance item on the new company balance sheet scorecard measures three key annual results, adding 5% additional production capacity, delivering new wells in addition to numbers approved in the business plan, and executing at least one strategic initiative that contributes to the company's performance and support its values.
Constructs and Items Summary
This can be considered appropriate as these items are widely accepted as performance indicators by the potential respondents of this study and will therefore eliminate any potential ambiguity and positively contribute to the scale validity of this study through their self-assessment of the stated performance items . during the post-merger integration phase. Remarkably, leading scientists have adopted similar strategies in operationalizing the BSC items and their efforts in this area have proved to be adequate and representative (Elbanna et al., 2015). In addition, it can be argued that the proposed items are directly related to the typical BSC perspectives, because the financial aspect is reflected by profitability, internal operations are reflected by HSE, and efficiency, innovation and learning are reflected by performance and people and the customer perspective is in irrelevant in this context, because the subject of this investigation is an operating company with international shareholders and no customer base.
Theoretical Framework and Hypotheses
H7: Mindful corporate interventions during post-merger moderate the relationship between perceived organizational support and organizational identification. H9: Mindful corporate interventions during post-merger moderate the relationship between perceived organizational support and organizational trust. H11: Mindful corporate interventions during post-merger moderate the relationship between organizational identification and employee change support behavior.
Chapter Conclusions
This research hypothesized that the role of employees can be better understood if it is studied from the perspective of the employees themselves and based on their beliefs. Reflecting the latter definition of employee psychology, emotions are defined as the feelings that behaviors and attitudes will generate according to a complex response pattern (American Psychological Association). Another organizational contextual variable that has been argued in the literature to be associated with positive employee behavior is employee participation in decision making.
Research Methodology
- Introduction
- Research Questions
- Research Paradigm
- Research Strategy
- Research Questionnaire
- Domain of Interest, Population and Sample
- Field Access
- Pilot Study and Experts Group Review
- Study Responders
- Ethical Considerations
- Data Coding
- Chapter Conclusion
For this study, data were collected from the new company after the announcement of merger and during the phase of post-merger integration.
Data Analysis and Results
Case Screening
- Unengaged Responses
- Outliers
Mahalanobis's distance (MD) is a statistical measure of the extent to which cases are multivariate outliers, based on a chi-square distribution, assessed with p<0.001 as a static cutoff or critical value. Six outliers were identified based on the critical Mahalanobis distance of 100 although a cutoff of 90 was identified. The critical Mahalanobis distance is the Chi-square statistic defined based on a significance level of 0.001 at 51 degrees of freedom which is the total number of psychometric items in the survey.
Variables Screening
- Missing Data in Rows
- Skewness & Kurtosis
The importance of sample size in the analysis is considered when deciding whether to perform data imputation. This is based on the claim that sample size affects the reliability and quality of analysis results, especially in structural equation modeling. However, it is emphasized that none of the data imputation methodologies provide a complete data set.
Descriptive Statistics
Data that are not normally distributed have outliers and clusters that can affect the accuracy of the mean and standard deviation and other parametric tests. A value for skewness indicates the symmetry of the distribution, while a value for kurtosis indicates the peakedness of the distribution. The skewness and kurtosis values did not exceed 1 or less than -1, so the results can be considered acceptable for normality assumptions.
Exploratory Factor Analysis
- Introduction
- Number of Extracted Factors
- Final Pattern Matrix for EFA Factor Structure
- Adequacy
- Reliability
- EFA Summary
As shown in the pattern matrix below, the factors are identified based on the loading specified in the pattern matrix. A statistically significant value (p<0.05) indicates the homogeneity of variances, so the sampling is adequate. Communalities are defined as the proportion of variance in an indicator (manifest variable) that can be explained by factors (latent variables).
Confirmatory Factor Analysis (CFA)
- Factor Loadings (Standardized Correlations)
- Determination of Model Fit Measures
- Path Analysis
- The Correlation Matrix
- Model Fitness Indices for the Final Model
- Validity and Reliability of Construct
- CFA Summary
As shown, one of the relationships between the variables and the seven constructs represents the factor loadings. The process of fitting the models and determining the factor loadings involves specification and respecification of the model based on the variables. After developing a graphical representation of the model based on the variables, constructs, and unobserved variables, the regression analysis is performed.
Hypothesis
- Direct Effects
- Mediation
- Moderation
H7a: Communication during post-merger integration moderates the relationship between perceived organizational support and organizational identification, or MCI1 moderates the association between POS and OID. H9a: Communication during post-merger integration moderates the relationship between perceived organizational support and organizational trust, or MCI1 moderates the association between POS and OT. H12a: Communication during post-merger integration moderates the relationship between employee participation in decision-making and employees' changing supportive behaviors, or MCI1 moderates the association between OT and ECSB.
Structural Equation Modeling
- Suggested Model
- Regression Coefficients
- Statistical Analysis
- The Causal Model
- Structural Model Fit
- Variables Summary
- ML Discrepancy (Implied vs Sample)
- Regression Weights for Mediation and Moderation
- Correlations
- Covariance
Regression coefficients indicate the nature of the relationship between two categories of variables in the SEM model. A summary of the variables used in the moderation (interaction) analysis is shown in Table 16. The correlation matrix below shows the extent to which the pairs of the variables in the moderation analysis influence each other.
Hypothesis Testing
- Direct Effects (H1 - H4)
- Indirect Effects (Mediation Analysis)
- Conditional (Moderation) Effects
However, the indirect effect of OID was statistically significant (β = 0.163, P<0.001), suggesting that the effect of POS on ECSB is entirely mediated by OID, supporting the H5a hypothesis. In addition, the indirect effect of OID was statistically significant (β = 0.112, P<0.05), suggesting that the effect of EPDM on ECSB is partially mediated by OID, supporting the H5b hypothesis. However, these results suggest that the mediating effect of OID on the relationship between POS and ECSB is greater compared to the mediating effect of OT.
Alternative Models Testing
- Introduction
- Methods
- Alternative Model 1: Baseline Model (No Moderators)
- Alternative Model 2: (Moderating Effects of MC1 Only)
- Alternative Model 3: (Moderation Effect of Only MC2)
- Alternative Model 4: (Moderating Effects of MC1 and
The purpose of this section is to assess the moderating effect of MC1 and MC2 in the context of the proposed structural model, i.e. whether MC1 and/or MC2 moderate the pathways identified in the structural model. The results were similar to those observed from the fully saturated model, i.e. only MCI1 x OT was statistically significant. The results were similar to those observed from the fully saturated model, i.e. only MCI2 x OT was statistically significant.
Findings Discussion and Conclusions
Introduction
The researcher verified the previous findings by reviewing the literature and all the findings were supported by recent literature as cited. However, they were statistically analyzed in the development of the model for comprehensiveness and robustness. Therefore, for a thorough and complete analysis of the findings and to provide a theoretical context supported by literature insights, this chapter addresses findings based on the formulation of 12 hypotheses and the research questions.
Discussion on Research Findings
- The Role of Perceived Organizational Support during
- The Role of Employee’s Participation in Decision-
- The Positive Contribution of Employees Change Support
Therefore, it can be assumed that the employees will act in the best interest of the organization to increase its success. In addition to the direct influence of employee participation in decision-making on organizational identification, the current structural model assessed the mediating role of the latter in directing employees to change supportive behaviors. The proposed hypothesis of the positive relationship between employee participation in decision-making during post-merger integration and organizational trust was statistically accepted by the structural model (β = 0.116, P = 0.008).
Conclusions
The discussion of this research has informed the relationship between the role of employees and their positive perception of change in merger success. The model showed direct, indirect, and mediating effects of employee role during post-merger integration as a determinant of merger success. Furthermore, the differences in research findings from two sources can be further validated to understand how the specific nature of the organization, its international relationships and the types of employees working in such organizations can lead to post-merger integration outcomes. .
Study Deliverables, Contribution and Future Works
Deliverables
Practical Implication and Theoretical Contribution
- Practical Implications
- Theoretical Contributions
In addition to the above, this study investigated merger success through five different performance measures extracted from the balance scorecard of the new company. Findings from this study therefore provide a new methodological approach using the balance sheet items, in measuring success from the perspective of the social actors during major planned organizational changes. The originality of this study comes from its contribution to an understudied field of social science related to the human factor and its contribution to major organizational change success.
Future Works and Limitations
