Enhancing post-acquisition organisational performance: the role of leadership.

Vasilaki, Athina (2009) Enhancing post-acquisition organisational performance: the role of leadership. PhD thesis, Middlesex University.

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Abstract

One of the issues that post-acquisition integration fails to achieve the intended benefits is attributed to poor leadership (Covin et al, 1997; Graebner, 2004; Haspeslagh and Jemison, 1991; Javidan et al, 2004; Nemanich and Keller, 2007; Marks and Mirvis, 1998; Pablo, 1994; Sitkin and Pablo, 2004). These studies point to the fact that effective leadership will lead to the harmonisation of the post-acquisition integration process and that in turn will yield enhanced acquisition performance. However, the association between leadership and post-acquisition performance is not clear, as it is a phenomenon that has not been studied thoroughly and the existing studies indicate conflicting results. Moreover, this association is often complicated by various influences such as the intended level of integration of the two entities, as well as a range of contingency factors such as the motives of the acquisition, acquisition experience, size and relatedness (Birkinshaw et al, 2000; Chatterjee et al, 1992; Datta, 1991; Weber, 1996). Therefore, against this background the main aim of this study is to investigate the relationship between leadership and post-acquisition organisational performance. The objectives of this study arc; (a) to extend the literature on leadership-performance relationship in dynamic environments by empirically investigating the extent to which leadership influences performance in the context of acquisitions, (b) to establish how leadership styles act as a determinant of performance under different acquisition conditions. In meeting this objective the companies that were selected were from both the service and manufacturing industries and had engaged in both domestic and cross-border acquisitions, (c) to establish the extent the relationship between leadership style and performance is contingent upon the degree of integration adopted by the acquiring firm. In meeting this objective this study seeks to further integrate the study of leadership with the literature on the acquisition process. In order to meet these objectives a thorough review of the literature on the post-acquisition integration process was carried out. This review revealed that there are four schools of thought in the literature. After a critical assessment, it was concluded that this study will focus on the process school of thought but will also draw from the organisational behaviour school of thought and the culture school. This enables for a multidisciplinary assessment of the predictors of performance and the role that leadership plays in this context. Established constructs were used to assess the predictors and performance was measured by employing both financial and non-financial indicators overcoming limitations that were present in the literature. This mixture of indicators will allow for a more coherent assessment of performance moving away from the traditional finance literature that has dominated M&A research. The study's variables are: the motives for the acquisition, relatedness (organisational. strategic and organisational culture fit), relative size, previous acquisition experience, transfer of resources, capabilities and knowledge, leadership styles and post-acquisition organisational performance. To identify potential respondents for participation in the study certain criteria were established. The total population that met these criteria was 764. The response level consists of 139 acquisitions (18.7%) and is satisfactory. In order to investigate this relationship multiple and hierarchical regression analyses were used. To meet the second objective the sample was split into two sub-groups according to their industrial classification and market/geographic relatedness. To meet the third objective the sample was divided according to the degree of integration between the acquiring and the target organisation. Finally, backward deletion regression was used to find out the most significant determinants of post-acquisition organisational behaviour in different settings. The results from testing the first objective indicated that leadership has an important role in managing the post-acquisition integration process and enhancing post-acquisition organisational performance. Moreover, following Bass's (1985) classification of leadership styles further investigation of what attributes constitute an effective leader in the post-acquisition integration process were assessed. The results from testing the second and third objective indicated that in different settings different emphasis on leadership will be placed. It was found that in domestic acquisitions leadership does not emerge as a predictor of performance whereas, in cross-border acquisitions leadership has a significant role in achieving higher results. Similarly, in manufacturing firms there were other significant predictors of performance and not leadership, whereas, in service firms leadership was the most significant predictor. The reasons for these differences arc explicitly analysed in the implications of this study. This research contributes to the existing body of knowledge in four distinct areas. It covers the gap in the literature regarding the role of leadership in enhancing post-acquisition organisational performance. It extends and further contributes to the understanding of the process school of thought in acquisitions. It also provides an integrated model of measuring post-acquisition organisational performance combining both financial and non-financial indicators. Finally, it contributes to the literature on the relationship between leadership and performance in dynamic environments. Few studies have focused on this relationship and most of them have been conducted in stable environments (Bass et al, 2003; Nemanich and Keller, 2007) and not in dynamic processes such as an acquisition. This study has successfully placed the study of leadership within the literature on the acquisition process.

Item Type:Thesis (PhD)
Additional Information:

Dissertation submitted in fulfilment of the Degree: Doctor of Philosophy.

Research Areas:Middlesex University Schools and Centres > Business School > Leadership, Work and Organisations
Masters and Doctorates > Theses
ID Code:8031
Deposited On:25 Jul 2011 06:54
Last Modified:19 Jul 2014 05:09

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