Does Tolerance Lead to Better Partnering?

Abstract

Many mergers and acquisitions stumble due to the postmerger integration process. The authors examine the relationship between organizational tolerance and market reaction to merger announcements. Tolerant organizations are those that value plurality and diversity and because of these values may have easier merger integration. The authors test this hypothesis with a sample of 200 acquiring firms and find evidence that organizational tolerance explains a significant portion of the variance in market reactions to merger announcements.