The Impact of Mergers and Acquisitions on the Sales Force

Abstract

This research draws from the psychodynamic perspective of social identity theory to examine the causal effect of mergers and acquisitions involving a mismatch of external images on the sales force. Study 1, a natural longitudinal experiment, shows that a merger with a poorer-image firm immediately dilutes salespeople's organizational identification (OI), which in turn impairs their performance. As sense makers, salespeople who are more tenured experience stronger OI dilution, whereas those who perceive a high level of social inclusion experience weaker OI dilution. As sense givers, managers who emphasize the firm's strategic intent in their communication buffer the OI-dilution effect, whereas those who emphasize the firm's organizational culture aggravate the effect. Study 2, a scenario-based experiment, further demonstrates that the OI-dilution effect is stronger than the OI-enhancement effect from merging with a better-image firm. Furthermore, both studies confirm that the adverse effect of mergers and acquisitions that involve a mismatch of external image stems from image uncertainty rather than job uncertainty.