Effect of Organizational Identity Change on Integration Approaches in Acquisitions: Role of Organizational Dominance

Date01 April 2018
Publication Date01 April 2018
AuthorTian Wei,Jeremy Clegg
DOIhttp://doi.org/10.1111/1467-8551.12226
British Journal of Management, Vol. 29, 337–355 (2018)
DOI: 10.1111/1467-8551.12226
Eect of Organizational Identity Change on
Integration Approaches in Acquisitions:
Role of Organizational Dominance
Tian Wei and Jeremy Clegg1
Department of Business Administration, School of Management, Fudan University, Siyuan Building, 670
Guoshun Road, Shanghai, 200433, China and 1Leeds University Business School, Maurice Keyworth Building,
University of Leeds, Leeds, LS2 9JT, UK
Corresponding author email: weitian@fudan.edu.cn
The main focus of this study is the role that organizational dominance in organiza-
tional identity change plays in shaping integration approaches in acquisitions. Using
four in-depth case studies, this study categorizes the organizational identity change
process into three stages: forms of resistance; conformation of new organizational
identity; and integration approaches. The authors first identify two distinct roles of
organizational dominance in organizational identity change after acquisition: multilevel
resistance and power struggles, which are the prerequisites for developing integration
approaches, according to the social identity theory. Second, they further investigate
the conformation of new organizational identity with each of these two roles. They
conclude that target firms completely lose their organizational identity when there is
high organizational dominance after the acquisition. Conversely, target firms workwith
acquirers in developing integration approaches, and the power winner dominates the
integration when there is low organizational dominance. Third, this study contributes
to the understanding of integration approaches by connecting three specific integration
approaches to the changed organizational identity.The study contributes to the literature
on both organizational identity change and acquisition.
Introduction
Acquisitions are often plagued by employee
stress, dissatisfaction and resistance (Greenwood,
Hinings and Brown, 1994), which arise from
perceptions of inter-group dierences (Jetten,
O’Brien and Trindall, 2002) and feelings of exclu-
sion (Harwood and Ashleigh, 2005) and usually
do not produce significant, positive returns (King
et al., 2004). These negative perceptions and
The authors are grateful for valuable insights when this
paper was presented at AIB 2016 in Bangalore, In-
dia. This research is supported by the National Natu-
ral Science Foundation of China (Grant No. 71302006),
Specialized Research Fund for the Doctoral Program
of Higher Education (Grant No. 20130071120018), and
Outstanding Scholar Plan of Fudan University.
feelings seem to be caused for the same reason:
members of the target firms feel that their organi-
zational identity is endangered by the inculcation
of a new organizational identify from the acquirer
(Vieru and Rivard, 2014). A sense of discontinuity
in the identity of the pre-acquisition organization
may be detrimental to identity post-acquisition
(van Knippenberg et al., 2002).
Social identity theory is a general theory of
group processes and intergroup relations (Hogg
and Abrams, 1988; Tajfel and Turner, 1986).
The important assumption of this theory is that
individuals perceive the social world in terms of
social categories and that perceived membership
in social categories can also contribute to the self-
definition by individuals (Giessner et al., 2006). It
has been taken as an approach to understanding
© 2017 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4
2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
338 T. Wei and J. Clegg
the complexity and uncertainty of organizational
identity change in acquisitions (Bartels et al., 2006;
Elstak et al., 2015; Haunschild, Moreland and
Murrell, 1994; Ullrich, Wieseke and Van Dick,
2005; Van Dick, Wagner and Lemmer, 2004). Af-
ter the acquisition, the new entity simultaneously
incorporates one’s former pre-acquisition group
and the other group (acquisition partner) and,
thus, implies a change in organizational identity
and then forms a new organizational identity.
Interestingly, organizational identity change
takes dierent forms for acquirers and target
firms as a result of the dierences in organiza-
tional dominance. With its dominant role, the ac-
quirer is likely to be more influential in deter-
mining the shape of the new organization than
the target firm (van Knippenberg et al., 2002).
This makes the change from the pre-acquisition
to the post-acquisition situation greater for em-
ployees of the target firm and poses a threat to
the identity of members of this dominated organi-
zation (van Knippenberg et al., 2002). Therefore,
post-acquisition, organizational dominance plays
a more important role for target firms than ac-
quirers in determining the conformation of new
organizational identity. However, how organiza-
tion dominance aect post-acquisition remains
unclear.
In post-acquisition, the newly formed organiza-
tional identity, which is determined by the winner
in the competition for power after acquisition
(Terry and Callan, 1998), serves as a guideline for
leading managers’ actions and decision-making
in relation to post-acquisition integration (Fox-
Wolfgramm, Boal and Hunt, 1998). An explicit
understanding of their new positions greatly helps
to develop integration approaches. Examining
integration approaches in various contexts of
organizational dominance advances understand-
ing of the organizational identity change process
after acquisition, but there is a lack of sucient
research to provide a complete picture. Specifi-
cally, how organizational identity change leads
to dierent patterns of integration approach is
still underexplored. Our research question then
becomes: ‘How does organizational dominance
aect organizational identity change and thereby
shape integration approaches?’ Four cases were
selected to explore organizational identity change
post-acquisition from the same industry: the
medical technology (MT) industry. In order to
conduct a comparative analysis, our selected cases
fall into two contrasting categories: cases with
high- and low-dominated target firms.
Our study contributes to the literature in three
aspects. First, using social identity theory, we
identified two distinct eects of organizational
dominance on organizational identity change:
multi-level resistance in situations of high domi-
nance, and power struggles for those of low dom-
inance. These two eects provide insights into the
role of organizationaldominance post-acquisition.
Second, we contribute to the acquisition literature
on integration approaches byindicating the eects
of organizational identity change. We found that
acquirers must have philosophical assimilation
and structural amalgamation to achieve a unique
and unified organizational identity. Interestingly,
owing to the two distinct eects of organizational
dominance, the new organizational identity does
have dierences, with organizational identity
loss in cases of high organizational dominance
and dominance by the power winner in cases of
low organizational dominance. Third, this study
contributes to the literature on the process of or-
ganizational identity change. In order to provide
insights into the organizational identity change
process, we identified three distinct stages: forms
of resistance; conformation of new organizational
identity; and integration approaches.
Organizational identity change and
post-acquisition
integration
Organizational identity change in acquisitions
Organizational identity is a specific type of social
identity ‘where the individual defines him or
herself in terms of their membership in a par-
ticular organization’ (Mael and Ashforth, 1992).
Importantly, drawn from social identity theory,
organizations are not fixed entities, but specify the
contextual factors that determine which organi-
zation becomes self-defining for an organizational
member and the strength to which it does so
(Oakes, 1987; Ullrich and Van Dick, 2007).
Thus, organizational identity change reflects
changes in social situations and has an impact on
organizational members.
Acquisition has been considered to gen-
erate high levels of uncertainty, especially post-
acquisition (Larsson and Finkelstein, 1999; Marks
and Mirvis, 2000; Schweiger and DeNisi, 1991).
© 2017 British Academy of Management.

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