The Application of Positive Organizational Scholarship (POS) to Mergers & Acquisitions (M&A) Integration

My interest in positive organizational scholarship (POS) is primarily in the application of this work to the integration of mergers & acquisitions (M&A). Prior research on M&A is overwhelmingly negative, and includes the widespread use of death imagery (e.g., the death of identity and of social structures associated with M&A integration), an emphasis on employee downsizing and turnover, and a focus on anxiety and fear.

For example, a Fortune article from the mid-1980s begins with the suicide note (“Don’t go down the cellar…”) of an economist downsized as a result of M&A. Further, as Jane Dutton recently observed, the M&A literature is predominantly negative even in an area where one might expect a glimmer of positivity¾namely, in the use of marriage metaphors to describe the process of joining two organizations. Much M&A work which uses the marriage metaphor either draws upon the imagery of an arranged marriage (with the emphasis on the coercive use of power), or moves quickly to the propensity for divorce in corporate marriage.

The success rate for M&A integration is also quite negative. Failure rates of 75% or higher are commonly cited.

With this in mind, research questions, which are of interest to me include:

• Is it possible to develop an approach to M&A integration which draws on POS? More broadly, is it possible to  construct the M&A process as, at least in part, a positive experience?
• If so, how might this be accomplished without ignoring the possibility that some of those affected by M&A might    experience pain or loss?

What are some elements which might be included in such an approach? For example, what is the role of positive emotion (Isen, 2000), positive illusions (Taylor, et al., 2000), hope, and functional conflict (Amason, 1996)?

Can such positive elements be built into a theory of M&A which also addresses the practical emphasis on the realization of synergies expected from M&A? That is, can a positive approach be developed which produces strong bottom-line results?

What kinds of OD interventions or other approaches might lead to the positive social construction of the combining organization by those involved?

As noted above, there is very little in the M&A literature to assist in this inquiry, and my thinking about these ideas is at an early stage. However, some elements of a more positive approach to M&A integration are proposed below.

Reasons for M&A

A starting point for developing a more positive approach to M&A integration is to consider the reasons for M&A. Five such reasons (Bower, 2001) are presented below along with the primary strategy employed and the potential human impact.

As shown above, a predominantly negative human impact is expected only in the case of M&A activities for which the primary reason is overcapacity, and for which the primary strategy is the consolidation of facilities. Since this was a common scenario in the 1980s and early 1990s, it is not surprising that the literature from this era reflects the predominantly negative impact expected from this type of M&A.

More recently, M&A has frequently been pursued for at least four other reasons, each of which focuses on a strategy which presents at least the possibility of positive impacts. Examples of these positive impacts might include expanded career opportunities, interesting professional challenges, higher levels of profitability and personal income, and many others.

Positive Organizational Scholarship and M&A Integration

Several areas of inquiry offer potentially fruitful avenues to begin the development of a more positive approach to M&A integration:

• The impact of positive emotion (Isen, 2000) on optimism, creativity, the ability to integrate information, task perceptions, job satisfaction, and physical health.
• The impact of positive illusions (Taylor, et al., 2000)¾that is, the social cognitive propensity to expect (perhaps unrealistically) positive outcomes¾on mental/physical health and well-being, the ability to cope with adversity, and the ability to cope with stressful situations.
• The impact of functional (or cognitive) conflict (Amason, 1996) on the quality of decisionmaking, satisfaction with the decisions which are made, and M&A integration performance.

The impact of appreciative inquiry and other whole systems OD interventions which present the opportunity to “get the whole system in the room” (Weisbord, 1987) to quickly initiate M&A integration efforts in a manner which is inclusive of a number of viewpoints. During the conference, I would be happy to report the results of appreciative inquiries I have recently conducted with two groups of OD professionals which explored their positive M&A experiences.

My goals for this conference are:

• to further develop my thinking in this area;
• to get feedback on the potential merits of this line of inquiry;
• to network and share resources to further the collective development of POS; and,
• to develop relationships which might lead to collaborative efforts to develop projects consistent with the theme of POS.

References

Amason, A.C. (1996). Distinguishing the effects of functional and dysfunctional conflict on strategic decision making: Resolving a paradox for top management teams. Academy of Management Journal, 39(1), 123-148.
Bower, J.L. (2001). Not all M&As are alike ¾ and that matters. Harvard Business Review, 79(3), 92-101.

Isen, A.M. (2000). Positive affect and decision making. In M. Lewis & J.M. Haviland-Jones (Eds.), Handbook of Emotions. New York: Guilford, 2nd Edition.

Taylor, S.E., Kemeny, M.E., Reed, G.M. and others (2000). Psychological resources, positive illusions, and health American Psychologist, 55(1), 99-109.

Weisbord, M.R. (1987). Productive workplaces: Organizing and managing for dignity, meaning, and community. San Francisco: Jossey-Bass.