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UPPSALA UNIVERSITY
Department of Business Studies
Bachelor Thesis
Spring 2010
Authors: Martin Malmström
Henrik Orre
Supervisor: Christina Hultbom
HOW A MERGER IN THE OPERATIONAL COMBINATION
STAGE AFFECTS EMPLOYEE MOTIVATION
A quantitative case study of a Swedish professional service firm
Abstract
This paper aims to examine how employee motivation is affected during the operational combination stage of a
merger between two relatively small Swedish professional service firms. This is done through a quantitative
study conducted by examining the relationship between employee motivation and three approaches; social
identity, role conflict and acculturation. Those approaches were first by themselves tested in order to examine
the relationship between their respective indicators that represent respective approach. The main result of this
study is that the three approaches have a positive significant impact on employee motivation. Therefore, it is
important for the professional service firm to take those variables into consideration when formulating future
strategies and when trying to improve the organizational climate.
Keywords: Merger, employee motivation, operational combination stage, social identity theory, role conflict
theory, acculturation theory
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CONTENTS
1. INTRODUCTION .............................................................................................................. 4
2. THEORETICAL APPROACH .......................................................................................... 7
2.1 Employee Motivation ................................................................................................... 7
2.2 Social identity theory ................................................................................................... 8
2.3 Role conflict theory ...................................................................................................... 9
2.4 Acculturation theory .................................................................................................. 11
2.5 An analytical framework ............................................................................................ 12
3. METHODOLOGY ........................................................................................................... 14
3.1 The professional service firm ..................................................................................... 14
3.2 Quantitative study ...................................................................................................... 15
3.2.1 Statistical methodology ...................................................................................... 16
3.3 Variables .................................................................................................................... 16
3.3.1 Workplace identity ............................................................................................. 17
3.3.2 Relationship ........................................................................................................ 17 3.3.3 Communication .................................................................................................. 17
3.3.4 Social Identity .................................................................................................... 17 3.3.5 Preparation ......................................................................................................... 18 3.3.6 Understanding .................................................................................................... 18
3.3.1 Role Conflict ...................................................................................................... 18 3.3.2 Efficiency ........................................................................................................... 19
3.3.1 Acculturation ...................................................................................................... 19 3.3.2 Employee motivation ......................................................................................... 20
4. RESULTS ......................................................................................................................... 21
4.1 Quantitative results .................................................................................................... 21
4.1.1 Control variables ................................................................................................ 21 4.1.2 Workplace identity ............................................................................................. 22 4.1.3 Relationship ........................................................................................................ 22
4.1.4 Communication .................................................................................................. 22 4.1.5 Social identity ..................................................................................................... 23
4.1.6 Preparation ......................................................................................................... 23 4.1.7 Understanding .................................................................................................... 24 4.1.8 Role conflict ....................................................................................................... 24
4.1.9 Efficiency ........................................................................................................... 25 4.1.10 Acculturation ...................................................................................................... 25 4.1.11 Employee motivation ......................................................................................... 26
4.1.12 Open ended question .......................................................................................... 26
5. ANALYSIS ...................................................................................................................... 28
5.1 Workplace identity ..................................................................................................... 28
5.2 Relationship ............................................................................................................... 28
5.3 Communication .......................................................................................................... 28
5.4 Social identity ............................................................................................................ 29
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5.5 Preparation ................................................................................................................. 30
5.6 Understanding ............................................................................................................ 30
5.7 Role conflict ............................................................................................................... 30
5.8 Efficiency ................................................................................................................... 31
5.9 Acculturation .............................................................................................................. 31
5.10 Employee motivation ................................................................................................. 32
6. CONCLUDING DISCUSSION ....................................................................................... 34
7. REFERENCES ................................................................................................................. 36
APPENDIX 1 ........................................................................................................................... 39
APPENDIX 2 ........................................................................................................................... 41
APPENDIX 3 ........................................................................................................................... 43
Statistical methodology ........................................................................................................ 43
Results .................................................................................................................................. 44
Results for hypothesis 1 ................................................................................................... 44
Results for hypothesis 2 ................................................................................................... 45 Results for hypothesis 3 ................................................................................................... 46
Results for hypothesis 4 ................................................................................................... 47 APPENDIX 4 ........................................................................................................................... 49
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1. INTRODUCTION
To survive in a competitive market firms has to develop a long run strategy to
maintain or expand their market share, one common strategy is to merge with or acquire
another firm. Mergers and Acquisitions (M&A) are transactions of great significance by
which two companies are combined together to achieve strategic and business objectives.
Regardless if an M&A is a success or a failure it has an enormous impact on communities,
shareholders, lenders, competitors and employees since companies invest millions of dollars
while involved in M&A activity (Sudarsanam, 2003). Owing the financial crisis in 2008, the
total volume and value of M&A deals have decreased but on the other hand the crisis may
create lucrative business opportunities since stock prices dramatically decrease and companies
are consolidating their businesses (Raukko, 2009).
Executives that are involved in M&A activity would argue that it is a rational behavior
and in the long-term interest of their company and shareholders. M&A activity is used as a
tool for everything from increasing market share to diversifying products and services;
gaining operational flexibility and new skills; improving innovation and learning; reducing
managerial deadwood and increasing global competitiveness (Auster & Sirower, 2002). Thus,
the executives’ have legitimate arguments for involving their firms in M&A activity.
However, the general success of M&A activity is inconclusive (Guerro, 2008):
Statistics show that 75 percent of all mergers and acquisitions in the US fail and only 15
percent manage to reach their financial goals. According to a similar study conducted in
Europe by Schuler and Jackson (2001), half of all M&As actually destroyed value instead of
increasing it and only 17 percent created value. Bhal et al. (2009) demonstrate that about two-
thirds of all M&As that failed to achieve the desired result did so because the senior
management did not consider the employees reactions or interests.
During 2009, financial distress has continued to be a challenge throughout various
industries and troubled companies looked into aligning with larger, stronger players in order
to survive in a competitive market. To reach new strategic objectives and compete in the
market a storm of mergers has taken place (Focarino & Wu, 2009).
Mergers can be categorized into three types: horizontal, vertical and conglomerate
mergers. Each type corresponds to a specific need of the merging firms. Horizontal mergers
combine two competitive firms with the same set of products and customers. Vertical mergers
are when two firms want to get access to the whole distribution chain. Conglomerate mergers
occur when two firms want to diversify their business. This type of merger is divided into two
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sub-types; market-extension mergers and product-extension mergers. A market-extension
merger is when firms that sell the same type of products merge to get access to new markets.
Product-extension mergers are characterized by firms that merge to gain advantages from
diversifying its product range. The merged firms products are similar but do not directly
compete and through the merger they expand into a bigger player (Amburgey & Miner,
1992).
Changes caused by a merger affect the organizational climate, work assignments and
group dynamics which have shown to have a significant effect on employee motivation
(Locke & Latham, 2004). The organization’s performance is affected by psychological
responses of employees and the correlation becomes clearer during drastic organizational
change like a merger. This may result in negative behavior like absence and even acts of
sabotage on the other hand it can result in positive behavior like more commitment and
loyalty (Bhal et al., 2009).
According to Seo and Hill (2005), there are four different stages in a merger process
and each stage has different effects on the employees in the merged company. These stages
are: pre-merger, initial planning and formal combination, operational combination and
standardization, see table 1 in Appendix 1. The most significant effects on employee
motivation occur during the operational combination stage which is the actual integration of
organizational functions and day-to-day operations. During this process budgets, work
assignments, reporting responsibilities are redistributed and employees are forced to learn
new ways of handling their operations, managing new performance requirements and
adopting a new corporate culture. The changes often leads to issues for employees and
researchers have determined three significant sources that occur during this stage that derive
from the social identity, role conflict and acculturation which has an impact on employee
motivation (Seo & Hill, 2005; Locke & Latham, 2004). Qualitative studies have previously
established that these three approaches derive employee motivation. However, the statistical
relationship between these variables are yet unknown.
Researchers have stressed that managers need to examine the consequences of the
human perspective in a merger and especially the impact on employee motivation. During the
operational combination stage of a merger there should be a possibility for employees to
improve their way of handling their day-to-day operations and therefore increase their
motivation and the firms’ efficiency. As a result, one of the most valuable assets in a merged
firm is the employees which are consequently one of the key components to finalize the
mergers’ goal for value creation (Zhou et al., 2008).
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An industry whose core competence lies within their human capital is the professional
service firm industry. The firms in this industry rely on their employees and their knowledge
to gain a competitive advantage. Therefore, it is interesting to observe how employee
motivation is affected in this particular industry after a merger.
In February 2009 a merger took place between two relatively small Swedish
professional service firms’ whose strategic purpose was to expand the firms’ supply of
services and become more competitive within their industry and doing so through a product-
extension merger. However, organizational changes were not implemented until September
2009. In January 2010 they started to share the same physical office where they began with
the actual integration of organizational functions and operations, in which employee
motivation might become affected.
Hence, this paper aims to examine how employee motivation is affected during the
operational combination stage of a merger between two relatively small Swedish professional
service firms. This is done through a quantitative study conducted by examining the
relationship between employee motivation and three approaches; social identity, role conflict
and acculturation. Furthermore, those approaches are by themselves tested in order to
examine the relationship between those indicators that represent respective underlying theory.
This is done in order to get an apprehension about which variables that derives employee
motivation.
The outline of the paper is as follows; the concepts of employee motivation, social
identity theory, role conflict theory and acculturation theory are briefly presented in part 2
which combined develop an analytical framework. Part 3 discuss the underlying methodology
behind the research, which also include the relevant variables that were used to conduct the
survey. In part 4, the results of the study are presented and part 5 analyzes the results using
the analytical framework to analyze the results. Finally, part 6 concludes the paper and
provides suggestions for further research.
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2. THEORETICAL APPROACH
According to Seo and Hill (2005), the existing literature in the field of human behavior
and psychological responses to mergers has accumulated descriptive data about how
employees have experienced the organizational change that a merger process implies. Based
on their literature review they have identified six theoretical approaches that, explicitly or
implicitly, explain how employees react to merger activity. These approaches include anxiety
theory, social identity theory, acculturation theory, role conflict theory, job characteristics
theory and organizational justice theory. Each theoretical approach has indentified problems
that occur during a merger process, predicts the human behavior and psychological effect on
employees and finally suggests recommendations for how to handle the problems. The
essentials of the theoretical approaches are summarized in table 2 in Appendix 1.
As previously mentioned, the three most significant sources of problems that occur
during the operational combination stage derive from the social identity theory, role conflict
theory and acculturation theory which has an impact on employee motivation. Each approach
derives indicators that affect respective approach which will result in hypotheses that will be
tested later on in the paper. Finally, the relationship between the three approaches and
employee motivation results in a fourth hypothesis.
2.1 Employee Motivation
Employee motivation can be explained as both intrinsic factors that drive actions and
extrinsic factors that serve as encouragement to actions (Locke & Latham, 2004). The
intrinsic motivators are the individuals desire to do activities, regardless of whether it is a
hobby or a work assignment. Extrinsic motivators are factors that are used to try to affect
individuals’ motivation (Tremblay et al., 2009). Employee motivation can affect three aspects
of actions which are direction, intensity and duration. The first aspect, direction, implies that
the individual has an opportunity to choose which way work will progress. The second aspect,
intensity, refers to how much effort an individual put into work. The third aspect, duration,
explains how persistent an individual are at work. These three aspects of action has a
significant impact on how an employee’ performs and utilizes skills at work (Locke &
Latham, 2004).
Employee motivation theory is also divided into cognitive theory and process theories.
Cognitive theory is based on Maslow’s hierarchy of needs which states that employees’
behavior will focus on satisfying lower needs in order to be able to reach a higher level on the
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hierarchy of needs. It is also assumed that if the individuals’ needs are unsatisfied it will
change its behavior to achieve self-satisfaction which can result in inadequate work
performance. Therefore, managers have to recognize that the individual needs depend on
where they find themselves in the hierarchy of needs (Udechukwu, 2009).
A merger is a period of turbulence where managers’ role becomes more important
since they play a vital and distinct role during this period of organizational change. They play
the role as a mediator in order to reach the inside of each employee and utilize their skills in a
more efficient way. To effectively motivate employees during a merger, a manager need to
deal with each person one at a time and ask questions, listening to and working together one-
on-one. A good manager helps people to find satisfaction in their work during a merger and
therefore increase their motivation (Kreisman, 2002).
2.2 Social identity theory
The social identity theory implies that an individuals’ identity is a result of its
membership in groups and was originally developed by Tajfel and Turner (1979). According
to Ried and Giles (2005), the theory has expanded since then and has become the basis for a
general social identity approach to the field of social psychology.
In the case of mergers, several identities can be recognized and changed during an
M&A process, namely; the organizational, professional and workgroup identity (Seo & Hill,
2005). The focus in this paper is the organizational change during the merger process and
hence the focus will be on the organizational and workgroup identity. The organizational
identity represents the characteristics that are associated with individuals’ membership inside
a group within an organization. Mergers usually force employees in one or both organizations
to abandon their old organizational identity, and adapt a new identity. The social identity
theory assumes that, in this process, employees will try to reach a positive position outcome
for their own group in the new organizational identity. This can create strong out-group1 or in-
group2 biases since the individual only focuses on their own positive outcome and not the
organizations and in turn generate inter-organizational relationship conflicts. The conflicts
may impose a shock for the employees’ in whom they feel denial and disbelief towards the
merger process. Furthermore, employees in lower status workgroups within the company who
do not accept that other workgroups have a higher legitimate status will likely have a more
negative reaction to the merger and will identify themselves less with the new organization
1 Out-group bias is the treatment an individual give to a non-member of a group.
2 In-group bias is the treatment an individual give to a member of a group.
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compared to the workgroups with higher legitimate status. On the other hand, high status
workgroups can also react negatively towards the merger since they could believe that their
superior status is threatened. Low status workgroups who believe that the merger has a
positive effect that can generate synergies for their organization will try to dis-identify with
their current identity and will adapt to the new identity even faster. This is a source of stress
which may lead to lower work motivation and higher job dissatisfaction (Seo & Hill, 2005).
These issues can be addressed and according to previous research (Terry & O’Brien,
2001), it is important to establish to what extent the employees are attached to their current
identities and institute arrangements to assure that the new identity is seen as more attractive.
The managers of the newly merged organization should try to develop an in-group identity
and do this by encouraging communication between the two groups in order to create a
supportive and positive environment. Furthermore, the organizational culture is rooted in its
symbols and values. Therefore, a new company name, logo, consolidation or termination of
brands and corporate value statements play a crucial role in shaping the new common
identity.
The variables that derive from social identity theory are relationship and workplace
identity. According to the theory these indicators explain how employees perceive their
situation at work. Communication is in this case important to see how managers have
succeeded in encouraging interaction between the employees to create belongingness among
them. Hence, we present the following hypothesis.
Hypothesis 1: Workplace identity, relationship and level of communication
are positively correlated to social identity theory during the operational
combination stage of a merger.
Social identity = workplace identity + relationship + communication Equation (1)
2.3 Role conflict theory
The role conflict theory implies that psychological tensions occur when individuals’
are involved in different roles that are not compatible with each other (Katz & Kahn, 1978).
The uncertainty about what is and what is not expected in a role might result in a conflict,
either interpersonal or intrapersonal. A group role is defined by the individuals’ expectations
of its own role inside a group.
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An organizational integration process implies interrupting the incumbent company
culture, structure, job arrangements to form new agreements. These transitions are often
neither done in a short-term perspective nor made distinctly, which often results in a long
period of managerial interventions in order to finalize the transactions between the two
organizations. In turn this results in role conflicts and ambiguity in the newly formed
organization (Seo & Hill, 2005).
Employees might experience role conflicts as an effect of new job requirements that
emerge from the merger. Correspondingly with the above, employees may also experience
role conflicts when they are not sure how to tackle the situation regarding how to remain loyal
to both old customers and old co-workers and at the same time implement the organizational
changes that are required by the merger (Seo & Hill, 2005). Furthermore, employees may also
feel threatened that they will lose their job because of the mergers since a more competitive
organization has been formed. This ambiguity is a source of stress which can lead to lower
work motivation and higher job dissatisfaction (Igbaria & Guimaraes, 1993).
According to previous research (Bastien, 1987; Mark & Mirvis, 1992), the above
mentioned issues can be addressed by bidirectional communication which implies active
organizational listening of sources for role conflicts and subsequent responses to the role-
related issues. Furthermore, strong managerial leadership can assist by clarifying and
developing the new roles for the employees in the merged organization. This may demand
that managers negotiate role expectations in one-on-one discussion with the employees.
The variables that derive from role conflict theory are preparation and understanding.
According to the theory these factors explain if employees experience ambiguity in their work
assignments or in other situations at their work place. The variable role conflict is in this
paper tested to which extent the firm has avoided role conflicts. Hence, we present the
following hypothesis.
Hypothesis 2: Preparation and understanding are positively correlated to role
conflict during the operational combination stage of a merger.
Role Conflict = preparation + understanding Equation (2)
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2.4 Acculturation theory
Acculturation is defined as the exchange of culture attributes between individuals or
groups. When the integration process between two groups has started the original culture of
one or both groups alters, but, the groups still remain distinct towards each other. In the
context of mergers, acculturation involves the overall combinations of corporate values,
beliefs and culture that define an organization (Kottak, 2005).
The acculturation process can occur in four different modes, deculturation,
assimilation, separation and integration (Berry, 1980). They are all applicable to the context
of mergers in order to explain the different ways which the two organizations adapt and
resolve conflicts with each other. First, deculturation implies that members of an organization
do not hold on to their old culture or replace it with a new one. Second, assimilation is when
members of an organization adopt the culture of the other organization in a merger. Third,
separation is when members of both organizations keep their original cultural identity and
refuse to adapt to the other organizations identity. Finally, the integration process implies that
there is some degree of organizational change in both companies. Which mode that will be
triggered in a merger process depends on the relative strength of factors that cause the need
for organizational integration, for example a horizontal or vertical integration, and the factors
that drive cultural differentiation, for example the strength of organizational identity and how
attractive the other culture is according to the other part.
According to Seo and Hill (2005), the acculturative issues will be high if the
individuals within an organization try to keep their own culture and the pressure for
organizational integration is strong and vice-versa. Acculturation conflicts have been referred
to as a culture clash (Elsass & Veiga, 1994) which arises when organizations first notice the
different ways of handling their operations. Culture clash can in worst case result in attacking
the other organization and defending their own. The reaction is even more likely when
organizations feel threatened by losing their familiar way of handling things.
These issues can be addressed by doing a cultural due diligence analysis in order to
assess information about a potential culture clash and with that information try to smooth the
progress of bringing the two cultures together (Marks, 1999). The analysis can provide
realistic assumptions of the cultural differences and activate proactive planning to address
these issues. Elsass and Veiga (1994) present actions to encourage and ease integrations
between the two organizational cultures. They primarily promote intercultural learning
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through presentations and workshops together with employees’ to create awareness regarding
these issues.
The variables that derive from acculturation theory are efficiency and communication.
Efficiency explains how the employees are able to perform in the new corporate environment.
Communication in this case explains if the managers have improved their communication
with the employees which is important to minimize problems surrounding acculturation
issues. Hence, we present the following hypothesis.
Hypothesis 3: Efficiency and communication are positively correlated to
acculturation during the operational combination stage of a merger.
Acculturation = efficiency + communication Equation (3)
2.5 An analytical framework
An analytical framework is developed in figure 1 in order to examine the relationship
between employee motivation and the three approaches; social identity, role conflict and
acculturation. Furthermore, those approaches are by themselves tested in order to examine the
relationship between those indicators that represent respective underlying theory. The
rectangles in the framework represent a variable that only have one indicator and the ovals
represent a variable with more than one indicator.
First, social identity derives the variables relationship, workplace identity and
communication and their relationship to social identity is tested in accordance with hypothesis
1. Second, role conflict derives the variables preparation and understanding and their
relationship to role conflict is tested in accordance with hypothesis 2. Third, acculturation
derives the variables efficiency and communication and their relationship to acculturation
theory is tested in accordance with hypothesis 3. Finally, the three variables social identity,
role conflict and acculturation all affect employee motivation. Hence, we present the
following hypothesis:
Hypothesis 4: Social identity, role conflict and acculturation are positively
correlated to employee motivation during the operational combination stage of
a merger.
Employee motivation = social identity + role conflict + acculturation Equation (4)
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Figure 1 Analytical framework
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3. METHODOLOGY
The four hypotheses will be tested on the professional service firm with data that have
been collected through questionnaires. The collected data will be of quantitative nature since
we want to reach statistical significance in our research and that requires a great number of
observations which is hard to obtain by conducting qualitative interviews. The questions used
in the questionnaires are inspired by Gulati and Teo (2008) and modified in order to fit this
paper.
This section starts by introducing the professional service firm and continues by
describing the operationalization of the quantitative study and the variables used in the
questionnaire. Finally, the statistical methodology that was used to analyze the collected data
is briefly described.
3.1 The professional service firm
To select an appropriate case firm the merger had to have taken place within the last
one and a half year and a physical fusion had to have taken place. The reasons for these
conditions are that the merger has to be in the operational combination stage at the time of the
survey. The goal was to get approximately 50 respondents in order to conduct a significant
analysis.
When a suitable firm had been chosen primary data was collected through a census3
(N=149) of the professional service firm. The research was conducted given the assumption
that the whole office should react to the changes in terms of company culture, vision and
goals. In February 2009 the two existing professional service firms merged and in September
2009 they started working together but in separate offices. They moved into a mutual physical
office in January 2010. With respect for the firm and the employees’ anonymity the specific
units and their activity is not presented in this paper.
The newly merged professional service firm employs 149 staff members, 109
originally belonged to one firm and 40 to the other firm, 82 are females and 67 are males. The
new firm has adopted the relatively larger firms’ name. The employees are divided into five
categories; IT, economy, human resources, market and professional service employees. The
professional service employees have an academic background and are divided into three
different departments. Two of the departments consist of three work groups each and one
3 A census is a survey of all individuals’ in the total population
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department consists of two work groups. The head of each department forms together with the
Chief Executive Officer (CEO), Chief Financial Officer (CFO), Head of IT, Human Resource
Manager and Marketing Director the senior management of the firm. During the survey the
classifications have been senior professional service employees’, professional service
employees’ and administrators. The reason for this is because the anonymity of employees
working in small work groups shall be protected. The firm employs 35 senior professional
service employees’, 67 professional service employees’ and 47 administrators.
The merger between the two firms was a product-extension merger and only a small
fraction of the employees left the firm after the merger took place. The reason for that few
employees left the firm is mainly because their competence is needed in order for the
professional service firm to widen its supply of services and reach their strategic objective.
This implies that the bias from employees that left the firms is small.
3.2 Quantitative study
During the development of the questionnaire similar studies were examined, for
example Gulati and Teo (2008), and important questions in comparable studies were adopted
and modified in order to suit this papers purpose. The questionnaire asks the respondents to
respond to each statement in terms of their own degree of agreement or disagreement. They
are instructed to select one of seven responses, for example: strongly agree (1), agree (2),
slightly agree (3), unchanged (4), slightly disagree (5), disagree (6), or strongly disagree (7).
The scale rating is known as a seven point Likert scale and is used in most of the variables
that are examined in this paper that have several answering alternatives in order to facilitate
the data processing. According to Cox (1980), the seven point Likert-scale has proven to be
superior to the nine point Likert-scale since the marginal utility you receive from the accuracy
is minimal and it adds the risk of confusing the respondent. The seven point Likert-scale
provides a neutral or unchanged alternative, which is important in this paper since the
employees might not have experienced any differences from their former workplace. To lower
the risk that too many answers were rated as neutral the seven point scale was chosen in front
of the five point scale (Cox, 1980).
The questionnaires were handed out in Swedish since the research was conducted on
respondents with Swedish as their mother tongue. The questionnaire is presented in Swedish
in table 1 in Appendix 2. In the end of the questionnaire the respondent was asked to answer
an open ended question whether they had any additional comments to the survey. The purpose
of this question was to get more specific information from respondents that want to stress
16
certain issues that the questionnaire did not mentioned. A pilot questionnaire was sent to two
respondents at the firm and the feedback lead to more suitable formulations. This reduced the
risk for ambiguity among the respondents and makes the data more reliable. All answers in
the survey are anonymous and a web-based questionnaire tool, www.netigate.se, was used to
collect data. This approach is easy to administrate, efficient and provides a distinct overview
of the respondents’ answers.
However, the methodology implies that any questions that arise from the respondents
during the filling out process will not be answered. This problem would be avoided during a
qualitative interview situation and also, technical problem may arise. In addition, a
quantitative survey only provides data and does not extend the research with detailed answers
(Kruger, 2003).
The employees had the opportunity to respond to the questionnaires during a period of
five working days. Additionally, a reminder was sent out after three working days. To avoid
the problem with respondents’ apprehending this email as junk mail and therefore ignoring it,
the CEO at the firm sent out the questionnaire. Other reasons that can affect the answering
frequency in a negative way are lack of time, lack of interest and confusion about the survey.
3.2.1 Statistical methodology
This paper does not aim to go in to technical details in the statistical methods used,
however, a short description about the statistical methodologies that are employed is
presented in Appendix 3 in the following order; Cronbach’s α (alpha), factor analysis,
Pearsons correlation analysis which all make the multiple regression analysis legitimate in
order to examine the relationship between the above mentioned equations. Each indicators
descriptive statistic are presented in the results section including mean, standard deviation,
minimum and maximum values. All the data from the questionnaires was analyzed with the
statistical software tool SPSS.
3.3 Variables
A detailed presentation of the variables and their indicators are presented in table 1 in
Appendix 2. The control variables used in the research are sex, age, time employed, work
category and if the work assignment has changes after the merger. The variables that have
been derived from the above mentioned theories are in this section presented in the following
order; workplace identity, relationship, communication, social identity, preparation,
understanding, role conflict, efficiency, acculturation and employee motivation.
17
3.3.1 Workplace identity
The purpose of this variable is to see if there is a difference in rang among the
employees within the professional service firm. The variable is measured by one indicator
which aims to measure the status of the respondents work group compared to other
workgroups within the organization (Workplace identity). This indicator is tested with a
three-graded scale with the answering alternatives higher, neutral or lower.
3.3.2 Relationship
The purpose of this variable is to see how the employees’ relationships have been
affected by the merger. This variable is divided into three indicators. The first indicator aims
to measure if the respondent’s relationship with co-workers has changes after the merger
(Relationship1). The second indicator aims to measure if the respondent’s relationship with
managers has changed after the merger (Relationship2). The third indicator aims to measure
the change in the respondents’ level of trust in the management (Relationship3). The
indicators are tested using a seven point Likert-scale where the alternatives for the
respondents range between much better (1) to much worse (7).
3.3.3 Communication
The communication variable is tested by dividing it into two indicators. The purpose
with this variable is to see if employees get sufficient information from their superiors. The
first indicator aims to measure in what way the managers’ communication with the
employees’ has been affected by the merger (Communication1). This indicator is tested using
a seven point Likert-scale where the alternatives for the respondents reach from Much better
(1) to Much worse (7). The second indicator aims to measure if the respondents are aware of
the underlying reasons for the merger (Communication2). This indicator is tested using a
seven point Likert-scale where the alternatives for the respondents range between strongly
agree (1) to strongly disagree (7).
3.3.4 Social Identity
The purpose of this variable is to measure how the merger has affected employee’s
social identity at the job site. This variable is divided into two indicators. The first indicator
aims to measure if the respondents are willing to accept the organizational changes caused by
the merger (Social identity1). The second indicator aims to measure to if the respondents see
themselves as a part of the new organization (Social identity2). Indicators one and two are
18
tested using a seven point Likert-scale where the alternatives for the respondents range
between strongly agree (1) to strongly disagree (7).
3.3.5 Preparation
The purpose of this variable is to see if the managers thought of the consequences
for the employees caused by the merger. The variable is measured by one indicator which
aims to measure how the respondents believe that their managers prepared them for the
merger (Preparation). This indicator is tested using a seven point Likert-scale where the
alternatives for the respondents range between very good (1) to very bad (7).
3.3.6 Understanding
The purpose of this variable is to see how well the respondents know what is
expected from them after the merger. The variable is measured using one indicator which
aims to measure the employees’ understanding for their work assignments (Understanding).
The indicator is tested using a seven point Likert-scale where the alternatives for the
respondents range between much better (1) to much worse (7).
3.3.1 Role Conflict
The purpose of this variable is to measure the respondent’s expectations about the
new work role and if the respondent is involved in different roles that are not compatible with
each other. This variable is tested using three indicators which aim to measure how the
managers listen to the employees opinions since the merger (Role conflict1). This is tested
using a seven point Likert-scale where the alternatives for the respondents reach from much
better (1) to much worse (7). The second indicator aims to measure which of five alternatives
is most important for the respondents after the merger. This is tested by making the
respondents grade five alternatives (Role conflict2). No alternative can have the same grade
and this is tested to see where the employees’ loyalties may lie in a conflict situation. The first
alternative is loyalty to co-workers from the former firm, the second alternative is loyalty to
customers from the former firm, the third alternative is to accomplish the changes caused by
the merger, the fourth alternative is loyalty to new customers and the fifth and final alternative
is loyalty to current co-workers. A third indicator asked if the respondents experience that the
risk of losing their job is higher after the merger (Role conflict3). This is tested using a seven
point Likert-scale where the alternatives for the respondents vary between strongly agree (1)
19
to strongly disagree (2). The question for the role conflict variable is formulated to see what
the professional service firm has done to prevent role conflicts from occurring.
3.3.2 Efficiency
The purpose of this variable is to measure the employees’ opinion on how the merger
has affected the organizations efficiency. This variable is divided into three indicators. The
first indicator aims to measure the respondent’s opinions on how the efficiency in the
organizational structure has been affected by the merger compared to the efficiency of the
firm previously to the merger (Efficiency1). The second indicator aims to measure the
respondent’s opinion on how the efficiency in the decision making process has been affected
by the merger compared to the efficiency of the firm previously to the merger (Efficiency2).
These indicators are tested using a seven point Likert-scale where the alternatives for the
respondents reach from much better (1) to much worse (7). The third indicator aims to
measure the respondent’s opinion on how well her work group performs compared to other
work groups (Efficiency3). This indicator is tested using a seven point Likert-scale where the
alternatives for the respondents range between very good (1) to very bad (7).
3.3.1 Acculturation
The purpose of this variable is to measure the respondent´s opinion about the
organizational culture that developed after the merger. This variable is divided into two
control questions and three indicators. The first control question asks if the respondents knew
the old professional service firms core values (Acculturation control1). The second control
question asks if the respondents know the current company core values (Acculturation
control2). The control questions are tested using a scale with a simple yes or no. The first
indicator aims to measure how the respondents relate to the new company values compared to
the old one (Acculturation1). The second indicator aims to measure the respondents opinions
about the response from managers when making an extra hard work effort in the new
organization compared to the situation before the merger (Acculturation2). The third and final
indicator aims to measure the respondents overall feelings about the new work environment
compared to the old one (Acculturation3). Indicators one, two and three are all tested using a
seven point Likert-scale where the alternatives for the respondents range between much better
(1) to much worse (7).
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3.3.2 Employee motivation
The purpose of this variable is to see to what extent the employees feel motivated to
work after the merger. This variable is divided into three indicators. The first indicator aims to
measure how the employees’ day-to-day operations have been affected by the merger
(Employee motivation1). The second indicator aims to measure how the merger affected the
employees’ work spirit (Employee motivation2). The third indicator aims to measure how the
respondent’ perceive co-workers work spirit compared to the situation before the merger
(Employee motivation3). These three indicators are tested using a seven point Likert-scale
where the respondents’ alternatives range between much better (1) to much worse (7).
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4. RESULTS
The final answering frequency counted to 71 or 47.6 percent of the firms’ total
population. From these respondents 38 (54%) were female and 33 (46%) were male.
Furthermore, 23 (32%) were senior professional service employees’, 29 (41%) were
professional service employees’ and 19 (27%) were administrators. The answering frequency
for females was 46.3 percent and males 49.3 percent. The answering frequency was for the
senior professional service employees’ 65.7 percent, professional service employees’ 43.3
percent and for the administrators 40.4 percent.
4.1 Quantitative results
In this section the results from all variables are presented. Each variable is presented
with mean, minimum and maximum value, standard deviation and total sum of indicator. The
sum of each indicator should be interpreted against the minimum value since the best possible
value is 1, for example strongly agree (1), multiplied with the number of respondents.
A factor analysis with indicators that represent the same variable was conducted in
order to identify indicators that have a low degree of explanation and thus be detached to
improve the statistical relationship on the contemplated variable. The detachments were also
supported by Pearsons correlation analysis. This only corresponded with two indicators which
are explained under part 4.1.8 Role conflict.
To measure the internal consistency of the indicators Cronbach’s α will be presented
after each variable that have more than one indicator. The lowest acceptable value is ought to
be 0.60 (Hair et al., 1998).
4.1.1 Control variables
As previously mentioned the control variables sex, age, time employed, work category
and if the work assignments has changed because of the merger is used by the study. A
statistical analysis has been made to test their effect on the other variables and no relationship
has been identified and henceforth it will not be used in further discussions.
22
4.1.2 Workplace identity
TABLE 1 Workgroup identity
Mean N Minimum Maximum Standard deviation Sum
Workplace identity 1.92 71.00 1.00 3.00 0.65 136.00
Table 1 indicates that the respondents believe that their work group status is equal to
other workgroups within the firm (Workplace identity), this is explained by a mean of 1.92.
The sum should be interpreted towards a minimum value of 71 since the question has been
answered by 71 respondents and the minimum value for the question was 1.
4.1.3 Relationship
TABLE 2 Relationship
Mean N Minimum Maximum Standard deviation Sum
Relationship1 3.71 63.00 2.00 6.00 0.94 234.00
Relationship2 3.94 63.00 2.00 6.00 0.80 248.00
Relationship3 3.73 63.00 1.00 6.00 1.08 235.00
Table 2 indicates that the respondents’ relationship to co-workers (Relationship1) and
managers (Relationship2) is unchanged compared to the situation before the merger which is
explained by a mean close to 4. The respondents’ trust in the senior management
(Relationship3) is unchanged, this is explained by a mean of 3.73. The sum of the three
questions should be interpreted independently towards a minimum value of 63 since the
question has been answered by 63 respondents and the minimum value for each question was
1. (Cronbach’s α=0.805)
4.1.4 Communication
TABLE 3 Communication
Mean N Minimum Maximum Standard deviation Sum
Communication1 4.15 68.00 2.00 6.00 1.00 282.00
Communication2 2.11 63.00 1.00 7.00 1.50 133.00
Table 3 indicates that the respondents’ communication with managers is unchanged
compared to the situation before the merger (Communication1), this is explained by a mean
of 4.15. The sum of Communication1 should be interpreted towards a minimum value of 68
since the question has been answered by 68 respondents and the minimum value for each
question was 1. The respondents have a clear understanding for the reasons to merge the two
23
firms (Communication2), this is explained by a mean of 2.11. The sum of Communication2
should be interpreted towards a minimum value of 63 since the question has been answered
by 63 respondents and the minimum value for each question was 1. (Cronbach’s α=0.68)
4.1.5 Social identity
TABLE 4 Social identity
Mean N Minimum Maximum Standard deviation Sum
Social identity1 1.94 63.00 1.00 6.00 1.12 122.00
Social identity2 1.87 63.00 1.00 6.00 1.08 118.00
Table 4 indicates that the respondents’ are willing to accept the organizational changes
and adapt to the new organization (Social identity1), this is explained by a mean of 1.94. They
also see themselves as a part of the new organization (Social identity2), this is explained by a
mean of 1.87. The sum of the two questions should be interpreted independently towards a
minimum value of 63 since the question has been answered by 63 respondents and the
minimum value for each question was 1. (Cronbach’s α=0.783)
The results from the multiple regression analysis in Appendix 3 table 3 indicate that
workplace identity and communication has a positive correlation to social identity and is
statistical significant, with an alpha value lower then 0.05. The variable relationship show low
positive correlation with social identity and is not statistically significant.
4.1.6 Preparation
TABLE 5 Preparation
Mean N Minimum Maximum Standard deviation Sum
Preparation 3.52 67.00 1.00 7.00 1.54 236.00
Table 5 indicates that the respondents’ are moderately satisfied with the way their
managers have prepared them for the organizational changes followed by the merger
(Preparation), this is explained by a mean of 3.52. The sum should be interpreted towards a
minimum value of 67 since the question has been answered by 67 respondents and the
minimum value for each question was 1.
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4.1.7 Understanding
TABLE 6 Understanding
Mean N Minimum Maximum Standard deviation Sum
Understanding 3.99 68.00 2.00 6.00 0.61 271.00
Table 6 indicates that the respondents’ understanding for their work assignments are
unchanged compared to the situation before the merger (Understanding), this is explained by
a mean of 3.99. The sum should be interpreted towards a minimum value of 68 since the
question has been answered by 68 respondents and the minimum value for each question was
1.
4.1.8 Role conflict
TABLE 7 Role conflict
Mean N Minimum Maximum Standard deviation Sum
Role conflict1 4,15 68,00 2,00 6,00 0,98 282,00
Table 7 indicates that the managers’ capability to take the respondents’ opinions in
consideration is unchanged by the merger (Role conflict1), this is explained by a mean close
to 4. The sum should be interpreted towards a minimum value of 68 since the question has
been answered by 68 respondents and the minimum value for each question was 1.
The question that asked the respondents’ to rank five alternatives (Role conflict2)
shows no clear relationship to the other indicators. The reason for this is most likely an
inappropriate coding of the indicator combined with a high level of variance between the
answers. The inappropriate coding resulted in misinterpretation of the question. The same
apply for the question that asked the respondents’ experience if the risk of losing their job is
higher after the merger (Role conflict3) shows no clear relationship to the other indicators.
The detachments were also supported by Pearsons correlation analysis. Therefore these
indicators are deducted from the variable role conflict and not presented in the table above.
The results from the multiple regression analysis in Appendix 3 table 6 indicate that
preparation and understanding has a positive correlation to role conflict and is statistical
significant, with an alpha value lower then 0.05.
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4.1.9 Efficiency
TABLE 8 Efficiency
Mean N Minimum Maximum Standard deviation Sum
Efficiency1 3.84 68.00 1.00 6.00 1.24 261.00
Efficiency2 4.12 68.00 1.00 7.00 1.22 280.00
Efficiency3 2.63 67.00 1.00 5.00 1.17 176.00
Table 8 indicates that the respondents’ believe that the efficiency in the new
organization is unchanged since the merger (Efficiency1), this is explained by a mean of 3.84.
The employees also believe that the efficiency in the decision-making process has been
unchanged by the merger (Efficiency2), this is explained by a mean of 4.12. The sum of
Efficiency1 and 2 should be interpreted towards a minimum value of 68 since the question
has been answered by 68 respondents and the minimum value for each question was 1. The
respondents’ believe that their own workgroups performance has been very good since the
merger (Efficieny3), this is explained by a mean of 2.63. The sum of Efficiency3 should be
interpreted towards a minimum value of 67 since the question has been answered by 67
respondents and the minimum value for each question was 1. (Cronbach’s α=0.711)
4.1.10 Acculturation
TABLE 9 Acculturation
Mean N Minimum Maximum Standard deviation Sum
Acculturation control1 1.10 63.00 1.00 2.00 0.30 69.00
Acculturation control2 1.22 63.00 1.00 2.00 0.42 77.00
Acculturation1 4.22 63.00 2.00 8.00 1.35 266.00
Acculturation2 4.00 63.00 2.00 7.00 1.06 252.00
Acculturation3 4.08 63.00 2.00 7.00 1.31 257.00
Table 9 indicates that most of the respondent’s knew both the old organizations core
values (Acculturation Control1) and the merged professional service firms core values
(Acculturation Control2), this is explained by that both questions has a mean close to 1.
Further, it explains that the respondents’ identify themselves with the new core values to the
same extent as before the merger (Acculturation1), this is explained by a mean of 4.22. The
respondents’ opinion on how an extra hard work effort pays of is the same as before the
merger (Acculturation2), this is explained by a mean of 4. The last question on acculturation
confirms that the respondents’ feel that the work environment on the new professional service
firm is equal to the work environment on the two separate firms (Acculturation3), this is
26
explained by a mean of 4.08. The sum of the five questions should be interpreted
independently towards a minimum value of 63 since the question has been answered by 63
respondents and the minimum value for each question was 1. (Cronbach’s α=0.709)
The results from the multiple regression analysis in Appendix 3 table 9 indicate that
efficiency and communication have a positive correlation to acculturation and is statistical
significant, with an alpha value lower then 0.05.
4.1.11 Employee motivation
TABLE 10 Employee motivation
Mean N Minimum Maximum Standard deviation Sum
Employee motivation1 3.76 63.00 1.00 6.00 1.20 237.00
Employee motivation2 3.65 63.00 2.00 6.00 0.99 230.00
Employee motivation3 3.68 63.00 2.00 6.00 1.13 232.00
Table 10 explains that the respondents’ feel slightly more motivated then prior to the
merger. The organizational changes have made the respondents day-to-day operations a little
better (Employee motivation1), this is explained by a mean of 3.76. Further, the respondents
work spirit has increased to some extent since the merger (Employee motivation2), this is
explained by a mean of 3.65. They also believe that their co-workers work spirit has slightly
increased since the merger between the two firms (Employee motivation3), this is explained
by a mean of 3.68. The sum of the three questions should be interpreted independently
towards a minimum value of 63 since the question has been answered by 63 respondents and
the minimum value for each question was 1. (Cronbach’s α=0.864)
The results from the multiple regression analysis in Appendix 3 table 12 indicate that
social identity, role conflict and acculturation have a positive correlation to employee
motivation and are statistical significant, with an alpha value lower then 0.05.
4.1.12 Open ended question
The administrative personnel in the merged organization feel that the amount of work
load has increased which have had a negative impact on their apprehension regarding the
merger. During a deeper look of how the administrative personnel have responded, it showed
that they are generally more dissatisfied about the merger compared to the other workgroup
categories. One of the employees describes the scenario accordingly:
27
“Just look in the dining room. The situation right now is that you eat together with the people
you work with, which is different from the situation before the merger. Everyone has so much
to do and are so stressed out that they become unsocial and don’t have the time for small talk.”
The open ended question have also identified that the employees from the relatively
smaller firm are more dissatisfied, compared to those from the larger firm, with the new
organizational culture and they feel less appreciated in the new organization. According to
two professional service employees’ from the relatively smaller firm, the new merged
organization is more results oriented and less caring then their former one which has
generated a less positive attitude towards the merger.
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5. ANALYSIS
5.1 Workplace identity
The results from this indicator implies that the employees apprehend themselves and
their co-workers as equals and equally important for the professional service firm. The result
also imply that the administrators and the senior management consider themselves as equal
important which indicates that the professional service firm is a flat organization. As the
theory stated, if an employee apprehend her own workgroup identity as higher or lower
compared to others this may cause positive or negative feelings towards the merger and to
other workgroups. However, the employees’ in the professional service firm apprehend
themselves as equally important in general which the theory does not explain any further. In
this particular merger, the overall effect on most studied variables has been relatively
unchanged compared to the situation before the merger and the flat organization might be one
of the main reasons for that outcome.
5.2 Relationship
The employees’ general opinion is that the relationship towards managers and co-
workers has been unchanged or even improved because of the merger. This could be an effect
of that employees’ act in order to reach a positive outcome for their own group in the new
organizational identity. This can create out-group or in-group biases since the individual only
focuses on their positive outcome and not the new organization. The results of the open ended
questions might be a result of this since the employees’ from the relatively smaller of the two
firms have experienced that they feel outside of the new organization. A continued
apprehension of this kind may generate a relationship conflicts between the groups since the
employees’ from the relatively smaller firm perhaps feel disbelief against the merger process.
In order to counteract on this, the management of the new organization should try to develop
an in-group identity and do this to encouraging interaction between the groups to support a
positive work environment.
5.3 Communication
The result indicates that the employees’ have not experienced a change of how the
management communicates with them compared to before the merger. This may also imply
that the management has been communicating more frequently then usually. This is because
29
mergers generally force the management to communicate more than usually in order to make
the employees’ to take an active interest in the merger. If this communication from the
management would have been equivalent as before the merger, or worse, the result from the
survey in this variable would most likely been more dissatisfied employees’.
Furthermore, the results also indicate that the management has been communicating
the underlying objectives for the merger. This accord with the above since the management
likely has been communicating more than before the merger in order to making the
employees’ feel informed and aware of the situation.
5.4 Social identity
The results indicate that the general opinion of the employees’ is willing to accept new
organizational changes and adapt accordingly even after the merger. This implies that new
changes can be made and that the employees’ feel relatively satisfied with their current social
identity and is ready to adapt to the managements decisions regarding future strategies. The
result also indicates that the employees’ feel that they are a part of the new organization.
Organizational culture is rooted in its symbols and values. Therefore, the newly
formed organizations name and corporate value statements play an important role when
shaping a new social identity after a merger. This is something that the professional service
firm has succeeded with. However, the employees’ from the relatively smaller firm have
expressed that they do not feel as a part of the new organization and thenceforth not as
satisfied with their social identity in the new firm. This might be caused by the fact that the
merged firm has adopted the relatively larger firms’ name. Furthermore, the administrators
also indicate that they are less satisfied with their social identity.
Social identity is according to the theory derived by workplace identity, relationship
and communication. This relationship was tested from the following hypothesis:
Hypothesis 1: Workplace identity, relationship and level of communication
are positively correlated to social identity theory during the operational
combination stage of a merger.
Workplace identity and communication has a positively significant relationship to
social identity during the operational combination stage in this merger. However, relationship
is positively correlated to social identity but is not significant and no assumption can be made.
This is particularly interesting since the merger most likely had different effects on each
30
employee and generated no general opinions about this. As noticed in the open ended
questions the administrators and the employees’ that originated from the relatively smaller
firm were more dissatisfied then the rest of the employees and that might be a reason for the
insignificant result. Therefore, hypothesis 1 is not rejected or confirmed.
5.5 Preparation
The results indicates that the employees are moderately satisfied
with how their managers’ has prepared them for the upcoming merger this is likely because
they received sufficient amount of information of how the merger affects them. The
management has clarified roles for the employees in the merged firm, which has according to
the results worked out well. This implies that the employees do not experience any ambiguity
caused by inadequate preparations from the managers.
5.6 Understanding
The result indicates that the employees understanding for their own work
responsibilities are unchanged compared to before the merger. This probably derives from
that the employees work assignment is similar to their assignments on the former
organizational constellation. This can be explained through that this merger was a product-
extension merger and that the reason for the two firms to merge is to diversify their supply of
services. Therefore, any major changes in the employees work habits would be irrational
since they should focus on their competences rather than trying to develop new ones. This
implies that the employees do not experience any ambiguity caused by misunderstanding
when working with their day-to-day operations.
5.7 Role conflict
The result indicated that the managers’ capability to take the employees opinions in
consideration is unchanged compared to before the merger. This can be derived from that the
work units from the two firms have been incorporated and the employees’ continues to report
to the same managers as they did before the merger. This is an example of an integration
process which implies interrupting the incumbent company culture, structure, job
arrangements and form new agreements. In this mode, managers’ ability to listen to the
employees opinions regarding the merger may prevent role conflicts from occurring. These
transitions are according to the role conflict theory neither done in a short-term perspective
31
nor made distinctly which makes managerial interventions important to finalize the
transactions between the two organizations.
Role conflict is according to the theory derived by preparation and understanding.
This relationship was tested from the following hypothesis:
Hypothesis 2: Preparation and understanding are positively correlated to role
conflict during the operational combination stage of a merger.
Preparation and understanding has a positive significant relationship to role conflict
during the operational combination stage in this merger. The degree of role conflict in the
firm is moderate affected by the extent the employees were prepared for the organizational
changes caused by the merger and to which extent they understood the underlying strategic
objectives to merge with the other firm. This implies that a higher degree of
preparations and understanding of the merger generates less role conflict on the work place.
Prior to the merger, the management in both firms needs to prepare the employees’ for the
organizational changes that will occur and establish a deeper understanding for the underlying
objectives of the merger. Therefore, hypothesis 2 is confirmed.
5.8 Efficiency
The result indicates that the employees apprehend that the efficiency in the new firm is
unchanged compared to the situation before the merger. Both when it comes to the general
efficiency in the organization and the efficiency in the decision making process. This can be
explained by the fact that the work assignments for the employees are similar as before the
merger and that they report to managers. Furthermore, the employees believe that their own
workgroups performance has been good since the merger took place. Both of these aspects
indicate that no significant culture clash has occurred during the merger which
would have discouraged an effective work environment.
5.9 Acculturation
The results indicate that the firms’ employees are aware of both the old organizations
core values and the new organizations core values. Further, it explains that the employees
identify themselves with the new core values to the same extent as before the merger. This
can be explained by that the firms’ company cultures have integrated through
the integration process, according to the acculturation theory, which implies that there is some
32
degree of organizational change in both companies. The reason for this is that the employees
from both firms see each other as equals and benefits from separate parts of both
cultures. This can also be an indication for why the employees’ feelings towards the general
work environment at the firm are similar to their feelings for their work environment on the
two separate firms.
However, the open ended question identified that some employees from the relatively
smaller firm are more dissatisfied with the new organizational culture and feel less
appreciated in the new organization. Furthermore, they have also apprehended the new
organization as more result oriented and less caring. This implies that the managers should
have been more thorough when integrating the two firms through interventions and
workshops together with employees’ to create awareness regarding these issues.
The general opinion on how hard work is rewarded is the same as before the
merger which indicates that the companies’ cultures before the merger has been similar in
how they have awarded their employees for the extra hard work effort.
Acculturation is according to the theory derived by efficiency and communication.
This relationship was tested from the following hypothesis:
Hypothesis 3: Efficiency and communication are positively correlated to
acculturation during the operational combination stage of a merger.
Efficiency and communication has a positive significant relationship to acculturation
during the operational combination stage in this merger. Acculturation is highly affected by
the level of efficiency in the new organization compared to the old organization and is
moderate affected by the communication in the firm. This implies that the management
should take the given opportunity to redistribute for example reporting responsibilities in
order to make the new organization more efficient and therefore increase the level of
acculturation. Therefore, hypothesis 3 is confirmed.
5.10 Employee motivation
The results indicate that the employees’ feel slightly more motivated then prior to the
merger. The organizational changes have made the employees day-to-day operations
somewhat better. Further, the employees work spirit has to some extent increased due to the
merger and they also believe that their co-workers work spirit has slightly increased since the
merger between the two firms.
33
To effectively motivate employees after a merger, managers need to deal with each
person one at a time and ask questions, listening to and working together one-on-one. To
some extent, managers at the professional service firm have helped people to find satisfaction
in their work and therefore increase their motivation. However, the results from the open
ended question have pointed out that the employees’ from the relatively smaller firm and the
administrators feel less motivated which does not accord with the general opinion. That these
minorities feel less motivated may result in that the employees from the relatively larger firm
show higher work effort and persistence in their work and that the gap between the groups
increases.
Employee motivation is according to the theory derived by social identity, role conflict
and acculturation. This relationship was tested from the following hypothesis:
Hypothesis 4: Social identity, role conflict and acculturation are positively
correlated to employee motivation during the operational combination stage of
a merger.
Social identity, role conflict and acculturation have a positive significant relationship
to employee motivation during the operational combination stage in this merger. Therefore, it
is important for the professional service firm to take those variables into consideration when
formulating future strategies and when trying to improve the organizational climate. This is
because positive employee motivation is widely proven to enhance value for the organization.
The higher degree of social identity, role conflict and acculturation within the firms’
employees’ the higher the employee motivation will be. Therefore, hypothesis 4 is confirmed.
34
6. CONCLUDING DISCUSSION
This paper has examined how employee motivation is affected during the operational
combination stage of a merger between two relatively small Swedish professional service
firms. This was done through a quantitative study conducted by examining the relationship
between employee motivation and three approaches; social identity, role conflict and
acculturation. Those approaches were first by themselves tested in order to examine the
relationship between their respective indicators that represent respective approach.
First, workplace identity and communication has a positive significant relationship to
social identity in this merger. However, relationship is positive correlated to social identity
but is not significant and no assumption can be made. This is particularly interesting since the
merger most likely had different effects on each employee and generated no general opinions
about this.
Second, preparation and understanding has a positive significant relationship to role
conflict in this merger. The degree of role conflict in the firm is moderate affected by the
extent the employees were prepared for the organizational changes caused by the merger and
to which extent they understood the underlying strategic objectives to merge with the other
firm.
Third, efficiency and communication has a positive significant relationship to
acculturation in this merger. Acculturation is highly affected by the level of the new
organizations efficiency compared to the old organization and is moderate affected by the
communication in the firm.
Finally, the main result of this study is that the three approaches have a positive
significant impact on employee motivation. Therefore, it is important for the professional
service firm to take those variables into consideration when formulating future strategies and
when trying to improve the organizational climate.
Furthermore, the questionnaire revealed significant differences in two groups in the
organization, the administrators in the firm and the employees from the relatively smaller firm
of the two in the merger. The administrators are generally less satisfied with the merger,
compared to the other work categories, since they apprehend that their relationship with co-
workers and managers has been affected in a slightly negative way. The employees’ from the
relatively smaller firm feel less appreciated in the new work environment. This has lead to
lower work motivation for these employees. Therefore, the management of the professional
service firm should allocate resources in order to recompose their motivation.
35
However, this does not accord with the general opinion which is that the merger has
had relatively small positive or unchanged effect on the employees on all the investigated
variables.
A limitation of the study is how the questionnaires were formulated since the wrong
coding was used in two indicators that could have been useful but had to be deducted from the
questionnaire. General conclusions cannot be made from this case study, however, other
similar product-extension mergers can apprehend these results as guiding.
Finally, a recommendation for future studies is to conduct a horizontal study in the
same merged company in order to see the changes in employee motivation and if the variables
relationships change over time and during different stages of the merger.
36
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39
APPENDIX 1
TABLE 1 Effects of different sources of problems in different integration stages of merger and acquisitions
Impact of Stressors in Each Phase of M&A Integration
Stressor Underlying Theory Premerger Initial Planning and Formal Combination Operational Combination Stablization
Uncertainty Anxiety theory Medium-large
Large-medium
Small Small
Loss of identity Social identity theory Small Large-medium Medium-small Small
Intergroup conflict Social identity theory Small Medium-large Large-medium Small
Perceived unfairness Organizational justice theory Small Medium-large Medium Medium-small
Acculturation stress Acculturation theory Small Medium Large Medium-small
Job environment changes Job characteristics theory Small Small Medium-large Medium-small
Role conflict and ambigutiy Role conflict theory Small Small Large-medium small
Prolonged uncertainty Anxiety theory Small Small Small-medium Small or high
Source: Seo & Hill (2005)
40
TABLE 2 Underlying theories in understanding the human side of mergers and acquisitions
Underlying Theories Sources of Problems Predicted Outcomes Related Prescriptions
Anxiety theory Uncertainty and anticipated negative impact on career and
job.
Low productivity Top-down communication; social support; participation
in decision making; training managers to empathize
Prolonged anxiety and uncertainty Self-centered behaviors and listen to employees; golden parachutes
Mental and physical illness Ongoing communication; speeding up transition
Lack of motivation
Social identity theory Loss of old identities
(organizational, professional, work group)
Sense of loss, anger, and grief Disengagement efforts (grieving meetings); proactively
assessing strength of existing identities and framing
Interacting with other organization’s members Denial and refusal of change new identities to be more appealing
Intergroup bias and conflict
Acts of noncomliance
Creating a new identity; fostering cross-organizational arrangements
and activities
Acculturation theory Contact with or adjustment to different Acculturative stress and Cultural due diligence; fostering multiculturalism;
organizational culture resistance facilitating intercultural learning; heightening
Interorganizational tension awareness of thinking and behaviors that cause
and conflict culture clash to develop
Culture clash
Role conflict theory Ambiguous and conflicting roles Low productivity Two-way communication; leadership of role
Low job satisfaction clarification
Job characteristics theory Changes in post-M&A job
Environments
Job satisfaction and commitment Post-M&A job redesign; employee involvement in job design;
job transfer training
Absenteeism/turnover
Organizational justice theory Perceived fair treatment of surviving
And displaced employees
Psychological withdrawal
Turnover
Fair and objective human resource management; equal
Participation in decision making; treating employees with dignity and respect
Source: Seo & Hill (2005)
41
APPENDIX 2
TABLE 1 Variables and Questions
Variable Question Type
Q1) Har dina arbetsuppgifter i någon grad förändrats i samband med sammanslagningen? Yes/No
Workplace identity Q2) Min arbetsgrupps status, i jämförelse med andra arbetsgruppers status, är Higher/Neutral/Lower
Q3) Markera det alternativ som du anser bäst stämmer överrens med respektive påstående 7 point likert scale
Understanding Q3.1) Min förståelse för mina arbetsuppgifter har sedan sammanslagningen blivit Where 1 is "Mycket bättre" and 7 is "Mycket sämre"
Communication1 Q3.2) Mina chefers kommunikation med mig har sedan sammanslagningen blivit
Role conflict1 Q3.3) Mina chefers förmåga att ta hänsyn till mina åsikter har sedan sammanslagningen blivit
Efficiency1 Q3.4) Effektiviteten i den nya organisationen har sedan sammanslagningen blivit
Efficiency2 Q3.5) Effektiviteten i beslutsprocessen i organisationen har sedan sammanslagningen blivit
Q4) Markera det alternativ som du anser bäst stämmer överrens med respektive påstående 7 point likert scale
Efficiency3 Q4.2) Jag anser att min arbetsgrupps prestation efter sammanslagningen har varit Where 1 is "Mycket bra" and 7 is "Mycket dåligt"
Preparation Q4.3) Mina chefers arbete med att förbereda mig inför sammanslagningen har varit
Role conflict2 Q5) Gradera de fem följande alternativen beroende på hur viktiga de är för dig Grade alternatives 1 to 5
Lojalitet till mina medarbetare från min tidigare arbetsgivare innan sammanslagningen Where 1 is the most important
Lojalitet till mina klienter från min arbetsgivare innan sammanslagningen
Genomföra de förändringar som sammanslagningen kräver
Lojalitet till mina nya klienter
Lojalitet till mina medarbetare som börjat på arbetsplatsen efter sammanslagningen
Q6) Markera det alternativ som du anser bäst stämmer överrens med respektive påstående 7 point likert scale
Communication2 Q6.1) Jag har full förståelse för vilka orsaker som låg bakom sammanslagningen
Where 1 is "Stämmer helt" and 7 is "Stämmer inte
alls"
42
Social identity1 Q6.2) Jag är beredd att acceptera nya organisationsförändringar och anpassa mig därefter
Social identity2 Q6.3) Jag ser mig själv som en del av den nya organisationen
Role conflict3 Q6.4) Risken att förlora jobbet är större efter sammanslagningen
Acculturation control1 Q7.1) Jag kände till min arbetsgivares ledord innan sammanslagningen Yes/No
Acculturation control2 Q7.2) Jag känner till nya bolagets ledord Yes/No
Q7.3) Markera det alternativ som du anser bäst stämmer överrens med respektive påstående 7 point likert scale
Acculturation1 Q7.3.1) I jämförelse med min arbetsgivare innan sammanslagningen kan jag relatera till nya bolagets ledord Where 1 is "Mycket bättre" and 7 is "Mycket sämre"
Acculturation2
Q7.3.2) I jämförelse med min arbetsgivare innan sammanslagningen uppskattas en arbetsinsats utöver det
vanliga på nya bolaget
Acculturation3
Q7.3.3) I jämförelse med min arbetsgivare innan sammanslagningen tycker jag överlag att arbetsklimatet på
nya bolaget är
Q8) Markera det alternativ som du anser bäst stämmer överrens med respektive påstående 7 point likert scale
Relationship1 Q8.1) Min relation till mina kollegor har sedan sammanslagningen blivit Where 1 is "Mycket bättre" and 7 is "Mycket sämre"
Relationship2 Q8.2) Min relation till mina chefer har sedan sammanslagningen blivit
Relationship3 Q8.3) Mitt förtroende för företagsledningen har sedan sammanslagningen blivit
Q9) Markera det alternativ som du anser bäst stämmer överrens med respektive påstående 7 point likert scale
Employee motivation1 Q9.1) De organisatoriska förändringarna har gjort att mitt vardagliga arbete blivit Where 1 is "Mycket bättre" and 7 is "Mycket sämre"
Employee motivation2 Q9.2) Sammanslagningen har gjort att min inställning till arbetet har blivit
Employee motivation3 Q9.3) Jag uppfattar att sammanslagningen har gjort att mina kollegors inställning till arbetet har blivit
43
APPENDIX 3
Statistical methodology
The statistical methodology that has been employed in this paper is presented in the
following order; Cronbach’s α alpha, factor analysis, Pearsons correlation analysis and finally
multiple regression analysis.
To analyze the collected data and measure the internal consistency of the indicators
received from the questionnaire Cronbach’s α will be used to examine the reliability on those
variables with more than one indicator to see to what extent each question measure the
considered variable. Each variable with more than one indicator will have a α value after the
variable is presented. The value of Cronbach’s α are presumed to present a positive value
between 0 and 1 were the lowest acceptable value is ought to be 0,60 (Hair et al., 1998).
Thenceforth, to complement Cronbach’s α a factor analysis is employed which is a
widely used statistical technique (Chatterjee et al., 1991). The main purpose of the factor
analysis is to identify a relative small number of factors or underlying dimension that can be
used to represent a relationship in a variable. This implies that if one indicator lowers the
significance of one variable it will be deducted from the variable. This is also known as the
Principal Components Analysis (Chatterjee et al., 1991).
Subsequently, the variables with acceptable multiple indicators are transformed into
one new variable by adding the data together and dividing the data with the number of
indicators and hence present the mean of the indicators into a new variable.
In addition, the statistical relationship between the indicators is also tested with
Pearson’s correlation analysis which is a measure of the linear dependence between two
variables, giving a value between +1 and -1 (Chatterjee et al., 1991). This is done to observe
how the indicators correlate with each other. If there is a high correlation between two
variables there might be multicollinearity in the multiple regression, which implies that the
coefficient estimates may change erratically in response to small changes in the model or data.
If this occurs, a Variance Inflation Factor (VIF) test will be done in the multiple regression
analysis to see if the variables have a high correlation with each other within the multiple
regression. If the VIF value is less than 5 it is acceptable (O’Brien, 2007).
Thenceforth, a multiple regression analysis is conducted in order to observe the
statistical relationship between several independent variables and one dependent variable
44
(Chatterjee et al., 1991). The dependent variable in the equations in each equation above is on
the left side of the equal sign and the independent variables are on the right side.
Results
In this Appendix three kinds of tables are presented in order to see the statistical
relationship between the variables, the three tables are; Model Summary, ANOVA and
Coefficients. The more important values for this analysis are the R2, Sig., β and VIF
values.
Before each multiple regression analysis was conducted a Pearsons correlation matrix, see
Appendix 4 table 1, with the transformed variables is analyzed in order to determine if the
relationship between the transformed variables are positive or negative. All significant
correlations show positive linear relationships.
Results for hypothesis 1
Hypothesis 1 assumed that workplace identity, level of communication and
relationship is positive correlated to social identity during the operational combination stage
of a merger. The results from the survey indicate that communication has a positive
significance on social identity (β=0.514; p<0.05) as does workplace identity (β=0,230;
p<0.05). The variables workplace identity, communication and relationship explain 45.1
percent (R2=0.451) of the variance for the variable social identity and the model generally
show high significance, see Sig. table 2. The VIF values are close to 1 which indicates that
there is no tendencies of multicollinearity between the variables (reference value VIF<5).
Social identity = workplace identity + relationship + communication Equation (1)
TABLE 1 Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
dimension0
1 .672a .451 .424 .75881
a. Predictors: (Constant), workplace identity, relationship, communication
TABLE 2 ANOVAb
Model Sum of Squares df Mean Square F Sig.
1 Regression 27.957 3 9.319 16.185 .000a
Residual 33.972 59 .576
Total 61.929 62
a. Predictors: (Constant), workplace identity, relationship, communication
b. Dependent Variable: Social identity
45
TABLE 3 Coefficientsa
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
Collinearity
Statistics
B Std. Error Beta Tolerance VIF
1 (Constant) -.537 .508 -1.058 .294
Relationship .067 .158 .051 .428 .670 .650 1.539
Communication .479 .114 .514 4.205 .000 .623 1.605
Workplace identity .362 .167 .230 2.162 .035 .822 1.216
a. Dependent Variable: Social identity
´
Results for hypothesis 2
Hypothesis 2 assumed that preparation and communication is positive correlated to
role conflict during the operational combination stage of a merger. The results from the
survey indicate that preparation is positive correlated and has a high significance on role
conflict (β=0.271; p<0.05) as does understanding (β=0.260; p<0.05). The variables
preparation and understanding explain 17.6 percent (R2=0.176) of the variance for the
variable role conflict and the model generally show a high significance, see Sig. table 5. The
VIF values are close to 1 which indicates that there is no tendencies of multicollinearity
between the variables (reference value VIF<5).
Role conflict = preparation +understanding Equation (2)
TABLE 3 Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
dimension0
1 .420a .176 .151 .911
a. Predictors: (Constant), understanding, preparation
TABLE 5 ANOVAb
Model Sum of Squares Df Mean Square F Sig.
1 Regression 11.379 2 5.689 6.853 .002a
Residual 53.129 64 .830
Total 64.507 66
a. Predictors: (Constant), communication, preparation
b. Dependent Variable: Role conflict
46
TABLE 6 Coefficientsa
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
Collinearity
Statistics
B
Std.
Error Beta Tolerance VIF
1 (Constant) 1.870 .739 2.530 .014
Preparation .174 .075 .271 2.317 .024 .938 1.066
Understanding .418 .188 .260 2.222 .030 .938 1.066
a. Dependent Variable: Role conflict
Results for hypothesis 3
Hypothesis 3 assumed that efficiency and communication is positive correlated to
acculturation during the operational combination stage of a merger. The results from the
survey indicate that efficiency has a positive significance on acculturation (β=0.418; p<0.05)
as does communication (β=0.287; p<0.05). The variables efficiency and communication
explain 41 percent (R2=0.410) of the variance for the variable acculturation and the model
generally show a high significance, see Sig. table 8. The VIF values are close to 1 which
indicates that there is no tendencies of multicollinearity between the variables (reference
value VIF<5).
Acculturation = efficiency + communication Equation (3)
TABLE 4 Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
dimension0
1 .641a .410 .391 .77440
a. Predictors: (Constant), communication, efficiency
TABLE 8 ANOVAb
Model Sum of Squares df Mean Square F Sig.
1 Regression 25.048 2 12.524 20.884 .000a
Residual 35.982 60 .600
Total 61.030 62
a. Predictors: (Constant), communication, efficiency
b. Dependent Variable: Acculturation
47
TABLE 9 Coefficientsa
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
Collinearity Statistics
B Std. Error Beta Tolerance VIF
1 (Constant) 1.778 .375 4.743 .000
Efficiency .421 .130 .418 3.247 .002 .592 1.690
Communication .265 .119 .287 2.223 .030 .592 1.690
a. Dependent Variable: Acculturation
Results for hypothesis 4
Hypothesis 4 assumed that social identity, role conflict and acculturation are positive
correlated to employee motivation during the operational combination stage of a merger. The
results from the survey indicate that acculturation has a positive significance on employee
motivation (β=0.249; p<0.05) as does social identity (β=0,327; p<0.05) and role conflict
(β=0.271; p<0.05). The variables social identity, role conflict and acculturation explain 40
percent (R2=0.400) of the variance for the variable employee motivation and the model
generally show a high significance, see Sig. table 11. The VIF values are close to 1 which
indicates that there is no tendencies of multicollinearity between the variables (reference
value VIF<5).
Employee motivation = social identity + role conflict + acculturation Equation (4)
TABEL 10 Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
dimension0
1 .632a .400 .369 .78224
a. Predictors: (Constant), role conflict, social identity, acculturation
TABLE 11 ANOVAb
Model Sum of Squares df Mean Square F Sig.
1 Regression 24.057 3 8.019 13.105 .000a
Residual 36.102 59 .612
Total 60.159 62
a. Predictors: (Constant), role conflict, social identity, acculturation
b. Dependent Variable: Employee motivation
48
TABLE 12 Coefficientsa
Model Unstandardized
Coefficients
Standardized
Coefficients
t Sig.
Collinearity Statistics
B Std. Error Beta Tolerance VIF
1 (Constant) .910 .519 1.751 .085
Acculturation .248 .121 .249 2.042 .046 .682 1.466
Social identity .322 .114 .327 2.838 .006 .765 1.307
Role conflict .276 .110 .271 2.507 .015 .868 1.153
a. Dependent Variable: Employee motivation
49
APPENDIX 4
TABLE 1 Pearsons Correlation Matrix
Workplace identity Understanding Role conflict Preparation
Employee motivation Relationship Acculturation Social identity Efficiency Communication
Workplace identity
Correlation 1
Sig. (2-tailed)
Understanding Correlation .265* 1
Sig. (2-tailed) .029
Role conflict Correlation .076 .327** 1
Sig. (2-tailed) .538 .006
Preparation Correlation .126 .248* .336** 1
Sig. (2-tailed) .311 .043 .005
Emplotee motivation
Correlation .514** .509** .415** .322* 1
Sig. (2-tailed) .000 .000 .001 .010
Relationship Correlation .347** .182 .490** .295* .510** 1
Sig. (2-tailed) .005 .153 .000 .019 .000
Acculturation Correlation .174 .157 .364** .489** .506** .590** 1
Sig. (2-tailed) .172 .220 .003 .000 .000 .000
Social identity Correlation .451** .363** .162 .422** .492** .428** .484** 1
Sig. (2-tailed) .000 .003 .205 .001 .000 .000 .000
Efficiency Correlation .389** .320** .341** .507** .701** .485** .602** .551** 1
Sig. (2-tailed) .001 .008 .005 .000 .000 .000 .000 .000
Communication Correlation .396** .350** .481** .616** .443** .578** .554** .634** .639** 1
Sig. (2-tailed) .001 .005 .000 .000 .000 .000 .000 .000 .000
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed)