Post-Acquisition Integration: Using Network Strategies to Resolve Identity Conflicts
Shao-Tzu WuOrganizational identity theory is a cornerstone of management literature. Organizational identity represents a shared understanding of the central, distinctive, and enduring characteristics of the organization among its members (Albert & Whetten, 1985; Dutton & Dukerich, 1991). When organizations face identity threats which basically question insiders’ self-perceptions, the feelings of hostility are inclined to escalate (e.g., Northrup, 1989). Moreover, it is not easy for conflicting parties extricate themselves from this conflict trap which endangers organizations’ survival (Fiol, Pratt, & O’Connor, 2009). However, how do firms resolve identity conflicts? Although there is considerable consensus on the importance of resolving identity conflict, I still do not comprehend what pushes people to rethink the nature of their identities and further modify their identities to terminate identity conflicts.
In the past decades, many studies empirically test the relationship between explanatory variables and acquisition performance. In spite of this, researchers still encourage future research to pay more attention on the integration process and clarify casual ambiguity between integration decisions and outcomes (Datta & Grant, 1990; Hitt, Harrison, Ireland, & Best, 1998; Hoskisson, Hitt, Johnson, & Moesel, 1993). As a result, I attempt to understand the strategy of a newly merged firm which faced serious identity conflicts in the post-acquisition period and had better be spun-off, but it, surprisingly, resolved identity conflicts and successfully integrated into the group.
Because the identity literature seldom examines how social interaction facilitates a firm’s abilities to trigger identity changes and to free conflicting parties from identity conflict trap, I undertook the investigation inductively, adopting an interpretive approach. Interpretive approach can help me build theoretical arguments by inferring from what people (who were there during times of identity conflict and experiencing the transition) said and what archival data showed. To avoid any problems owing to retrospective data (e.g., post-event rationalizations), I corroborate informants’ accounts by different informants’ statements or alternative sources. As a result, I collected not only interview data but also self-report data and archival data. All data collection was longitudinal. The self-report data covers 7 years. The archival data spans 9 years, from the announcement of acquisition to the end of this research project.
I investigate how an acquired firm uses network strategies to resolve identity conflicts and successfully integrate into a business group. I found that connection transition helped the acquired firm develop not only some congruent values, which represented that this merged firm had some shared methods of behaving and helped it win others’ recognition, but also some distinctive values, which represented that this merged firm had something for others to learn from it and attracted potential partners to actively build connections with it. Gradually, this merged firm resolved identity conflicts and further became a role model.