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Published in: Management International Review 3/2012

01-06-2012 | Research Article

Does National Context Affect Target Firm Employees’ Trust in Acquisitions?

A Policy-Capturing Study

Authors: Prof. Günter K. Stahl, Chei Hwee Chua, Assoc. Prof. Amy L. Pablo

Published in: Management International Review | Issue 3/2012

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Abstract

  • In this study, we test the assumption that the way target firm employees respond to a takeover is contingent on their national origin.
  • The antecedents of target firm member trust in the acquiring firm management were examined in a cross-national sample of German and Singaporean employees using a policy-capturing design.
  • Five factors hypothesized to affect target firm member trust after a takeover were found to be significant influences on employees’ trust judgments in a decision-making simulation: (i) combining firms’ collaboration history, (ii) mode of takeover, (iii) whether it was a domestic or cross-border acquisition, (iv) degree of autonomy removal, and (v) attractiveness of the acquiring firm’s human resource policies and reward system. Further analyses suggest that the relative importance of these factors in predicting target firm employees’ reactions to a takeover varies depending on their national origin.
  • We conclude that companies engaged in cross-border acquisitions need to consider contingencies in the cultural and institutional contexts in which the acquired firms are embedded and adapt their approaches for integrating them accordingly.

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Footnotes
1
We recognize that the “cultural” and “institutional” contexts are overlapping since the normative and cultural-cognitive components of the institutional environment are conceptually close to culture (Scott 1995; Kostova 1999).
 
2
The Singaporean model defies easy categorization (like most Asian economies), partly because governance structures differ substantially between government-linked and non-government-linked companies. However, corporate governance practices in non-government-linked companies show the influence of the Anglo-American ‘shareholder’ model (see Governance Primer Asia 2001).
 
3
The Host Economy Transnationality Index is calculated from the average of the four shares: FDI inflows as a percentage of gross fixed capital formation; FDI inward stocks as a percentage of GDP; value added of foreign affiliates as a percentage of GDP; and employment of foreign affiliates as a percentage of total employment. The reported statistics are UNCTAD estimates for 2005—latest year available.
 
4
Since the mid-1990s, corporate governance has changed dramatically in Germany. However, changes in the corporate landscape and firm governance have not undermined employee codetermination, collective bargaining institutions, and labor-management-relations in Germany (see Jackson et al. 2004).
 
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Metadata
Title
Does National Context Affect Target Firm Employees’ Trust in Acquisitions?
A Policy-Capturing Study
Authors
Prof. Günter K. Stahl
Chei Hwee Chua
Assoc. Prof. Amy L. Pablo
Publication date
01-06-2012
Publisher
SP Gabler Verlag
Published in
Management International Review / Issue 3/2012
Print ISSN: 0938-8249
Electronic ISSN: 1861-8901
DOI
https://doi.org/10.1007/s11575-011-0099-7

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