The effect of merger on employee views of corporate reputation: Time and space dependent theory
Introduction
Relationship management is a key to success in business-to-business (B2B) markets and can involve extensive interactions between employees and customers (Barnes, 1997, Weitz and Bradford, 1999). Maintaining a positive disposition among employees, in other words managing their attitude towards the company and maintaining a positive internal reputation, is consequently important (Cannon & Perreault, 1999). For example, a negative employee view of corporate reputation will lead to employee dissatisfaction and turnover (Davies, Chun, daSilva, & Roper 2003). A key contact employee's leaving can be a catalyst for the customer to re-evaluate its relationship with the firm (Anderson & Robertson 1995; Duboff & Heaton 1999) making that relationship vulnerable (Bendapudi & Leone, 2002).
While there is considerable research into customer loyalty and retention, insights into the internal causes of customer disaffection, particularly in a B2B context, are rare. One source of employee disaffection and turnover is a major organisational change such as a merger or acquisition, our empirical context here. To address the literature gaps, our paper takes an inductive theory building approach through an exploratory, quantitative study (e.g., Bugelman, 1994, Eisenhardt and Bourgeois, 1988). We identify the origin of emotional detachment by considering employee proximity variables; if the employee worked remotely or in head office (space), how long they had been employed (time), and in which job role/function they were involved. Our central argument is that while the proximity variables affect employee views of their company's reputation to a certain extent, the interaction between background and time, and the interaction between time and space, are the most significant factors influencing the level of emotional detachment of employees during the post-merger phase.
Section snippets
Corporate integrity, warmth, empathy
Reputation concerns the associations stakeholders make with any entity (Brown & Dacin 1997). There are a number of ways of assessing corporate reputation including what has been labelled as corporate character (Keller 2003), defined as the collective qualities expressed in terms of human characteristics that distinguish an organization (Davies et al. 2003). There are a number of aspects of corporate character potentially relevant to a positive climate in a post-merger situation: Integrity, do
Sample and data collection
To test our propositions and develop our theory we researched the aftermath of the acquisition by an American company (Company A) of a German firm (Company B). Our study of the 160 employees of the British subsidiary of the merged company (referred to as AB hereafter) began 18 months after the merger. 107 questionnaires were distributed and collected personally in the company's head office to maximise response rate. 53 questionnaires were sent by post to those working remotely (sales and mobile
Results
Table 2a provides descriptive statistics for the categorical variables and Table 2b correlations for all continuous measures. Internal consistency reliabilities for the latter equal or exceed the generally acceptable level of 0.7 and are reported on the diagonal. There were significant correlations between and across the four character dimensions (empathy, warmth, conscientiousness and integrity) and the emotional outcome variables, satisfaction, emotional attachment and job security.
While all
Warmth and empathy: key character factors
Corporate integrity, empathy, warmth and conscientiousness were identified from the literature as likely to influence employees during post-merger integration. The generally low scores for satisfaction (2.82) and emotional attachment (3.12) were associated with warmth (friendly, open, straightforward) and empathy (reassuring, concerned, supportive) or rather the lack of both. Employees rated AB particularly low for concerned, supportive and reassuring (average scores 2.84, 2.89 and 2.58
Conclusion, implications and further study
The origin of employee disaffection with a merger is not homogenous. It can vary by background, which of the merging companies one is from and whether an employee has joined post-merger. Employees from the acquiring company should not be presumed to be more favourably disposed towards a merger. While corporate integrity and conscientiousness are important, warmth and empathy are particularly relevant when two sub-cultures are likely to be competing and we would expect this finding to apply in
Rosa Chun is Professor of Business Ethics and Corporate Social Responsibility at Manchester Business School, England. Her research focuses on corporate reputation and virtue ethics. Her work has appeared in the Harvard Business Review, Journal of the Academy of Marketing Science (JAMS), Journal of Business Ethics, International Journal of Management Reviews, and Corporate Reputation Review.
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Rosa Chun is Professor of Business Ethics and Corporate Social Responsibility at Manchester Business School, England. Her research focuses on corporate reputation and virtue ethics. Her work has appeared in the Harvard Business Review, Journal of the Academy of Marketing Science (JAMS), Journal of Business Ethics, International Journal of Management Reviews, and Corporate Reputation Review.
Gary Davies is professor of Corporate Reputation at Manchester Business School in England where he teaches Strategy, Reputation Management and Crisis management. His current research focuses on reputation and his work has been published in the Journal of the Academy of Marketing Science, The Journal of International Business Studies, Harvard Business Review, Industrial Marketing Management, the Journal of Business Research, the Journal of Advertising Research, Long Range Planning, the European Journal of Marketing and in 15 books and monographs.
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