The Issue of Post-Merger Integration Boundary Management: A Sociomaterial Perspective

The Issue of Post-Merger Integration Boundary Management: A Sociomaterial Perspective

Dragos Vieru (Teluq University, Canada)
DOI: 10.4018/978-1-5225-8933-4.ch001

Abstract

This study analyzes the interactions among individuals engaged in two information system development (ISD) projects aimed to support an organization created by the merger of previously independent entities. The literature on post-merger integration (PMI) suggests that new information systems (IS) that would span the boundaries of the previously independent firms need to be implemented to facilitate a specific level of integration. Yet, there is a lack of studies on the issue of post-merger boundary management during ISD projects. The authors draw on a sociomaterial perspective to analyze two ISD projects in a PMI context of a merger of three hospitals. In both projects, the final IS-enabled practices differed from the post-merger practices that had been planned by the new hospital management. The analysis suggests that post-merger practices were the result of dialectic processes of resistance to, and negotiation of, the two systems reconfiguration after their implementation.
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Introduction

Merging with, or acquiring, other companies is an important component of the growth strategies of many organizations in recent decades (Hitt, Harrison, & Ireland, 2001; Vieru & Rivard, 2014). In 2017 worldwide mergers and acquisitions (M&A) activity totalled 49,447 deals valued at US$3.6 trillion and for the fourth consecutive year had surpassed $3 trillion (Thompson Reuters, 2017). However, both academic and practitioner literatures show that historically, many of these organizations have struggled to realize the business benefits that justified this strategy (Graebner, Heimeriks, Huy, & Vaara, 2017).

The literature identifies three phases of a merger: courtship or pre-merger, merger decision and post-merger integration (Ellis, 2004). The first two phases comprise the strategic and financial analyses that determine the potential benefits or synergies; post-merger integration (PMI) constitutes the process of actual value-creation (Haspeslagh & Jemison, 1991). Post-merger1 integration represents the process of strategic and structural combination of merging parties (Faulkner, Teerikangas, & Joseph, 2012) and during which actual value creation will hopefully occur (Haspeslagh & Jemison, 1991). The literature stresses the importance of the choice of integration approach as being one of the most important strategic decisions to make in mergers and represents a critical determinant of the post-merger outcomes (Zollo & Singh, 2004; Reus, Lamont, & Ellis, 2016). All mergers do not imply the same degree of integration among the merging parties or the same degree of autonomy retained by each (Marks & Mirvis, 2001; Zollo & Reuer, 2010).

Research on PMI reveals that when organizations try to manage differences among the merging parties, they face the conundrum of integration versus autonomy (Haspeslagh & Jemison, 1991). A number of researchers have addressed this issue by proposing four ideal-types of integration approaches based on strategic and organizational dimensions (Ellis, 2004). At one extreme, the status quo is preserved in each organization. At the other extreme, one party requires the others to adopt its practices, norms and culture. It may also happen that organizations are gradually combined by enforcing operational interdependence and a common culture, or that an organizational structure and work practices are implemented that are new to all parties. There exist four ideal-type PMI approaches (Haspeslagh & Jemison, 1991; Marks & Mirvis, 2001). Preservation refers to a situation where the demarcation lines between the merging organizations remain intact. Absorption occurs when one party imposes its work practices, norms and culture on the other parties. Symbiosis is the approach in which the merging parties gradually blend together by becoming increasingly interdependent and retaining the best aspects of each party. Transformation reflects the situation in which organizations are integrated by developing totally new work practices and a common organizational identity.

Depending on the PMI approach adopted, new corporate structures, rules and processes may need to be created and business functions may need to be reorganized (Wijnhoven, Stegwee, & Fa, 2006; Vieru & Rivard, 2015). It may even happen that the entire business, from product to market, will require reorganization (Vaara, 2002). Given the scale of the changes that employees from merging organizations sometimes have to experience, mergers are often beset by problems such as high levels of stress, job dissatisfaction, and resistance (Vaara & Monin, 2010). These problems have been associated with the difficult task of transforming sometimes significantly different norms, values and practices into a common set (Larsson & Finkelstein, 1999).

Key Terms in this Chapter

Sociomaterial Assemblage: Entanglements of humans and material (technology). Defined as the continuous mutual constitution of material artifacts, social actors and multiple institutional logics, continuously providing both opportunities and constraints for action.

Process Theory: It explains how a sequence of events that unfolds over time leads to some outcome. Process theory can provide explanations on how one micro-level event leads to, and affects, the ensuing one.

Performativity: The dynamic relationship between organizational actors and information systems and is reflected in organizational practices. It tries to answer the question: How do things constitute reality through actors’ practices?

Post-Merger Integration: The final part of a merger process, following the closing of the merger agreement itself, in which the assets, personnel, and business activities of the merging entities are combined. It constitutes the process of value-creation—actual net benefits (reduced cost per unit, increased income, etc.)—of the planned merger.

Enterprise Systems: Large and complex information systems, which manage large volumes of data and support organizations to integrate and coordinate their business processes.

Practices: Materially bounded and situated activities engaged in by members of a community that are centrally organized around shared practical understandings.

Sociomateriality: Perspective built upon the intersection of technology, practice and organization that has as main tenet the idea that materiality acts as a constitutive element of the social world and vice versa. While materiality is the property of a technology, sociomateriality denotes the enactment of a specific set of practices that combine materiality with institutions, norms, discourses, cultures, and other phenomena that can be defined as “social.”

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