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Ambiguity and communication in cross-cultural acquisitions: towards a conceptual framework.

Mergers and acquisitions (henceforth called acquisitions) are complex phenomena known to have high failure rates (e.g. Larsson, 1990; Napier, 1989). Cultural clashes between two merging companies have been one of the most common explanations (e.g. Buono and Bowditch, 1989). Culture is a complex phenomenon built on many dimensions. Some researchers contend that corporate culture researchers often use too simplistic an approach in studies when they consider culture to be consensual among all members (Martin, 1992, p. 5; Martin and Siehl, 1982). To them, cultural ambiguity, rather than full understanding and consensus, is an important element for the study of organizational cultures. Viewing corporate culture from only a consensus perspective "creates predictable blindspots in understanding an inability to appreciate the insights of those who view culture through other (perspectives)" (Martin and Meyerson, 1991, p. 94). Thus, in this paper I argue that studying acquisitions through a different perspective, a cultural ambiguity frame, helps us to understand the complexity of these phenomena better and perhaps prevent some undesirable outcomes. Communication is particularly emphasized as a useful device to negotiate meaning out of the acquisition ambiguities.

Cross-cultural acquisitions are an excellent case in point to illustrate this argument. To be acquired by another company is often a frightening experience for the organizational members involved (e.g. Marks and Mirvis, 1985). The present and the future become uncertain and ambiguous. In the turmoil caused by the acquisition, management neglects communicating with employees about the acquisition or provide ambiguous communication, and workers' anxieties produce many unanswered questions. Instead of getting information from informed parties, workers attempt to reduce the ambiguity by providing answers themselves and will listen to rumours, which, quite often, come up with "worst scenario" answers. Rumours often have the effect of adding fuel to the workers' anxiety rather than reducing it (e.g. Mirvis and Marks, 1986; Sinetar, 1981). Research indicates that insufficient information causes uncertainty and ambiguity (Kahn et al., 1964) and that many post-merger problems develop from lack of sufficient information (Marks, 1982). This situation is likely to be exacerbated in cross-cultural acquisitions, where it is not only the corporate culture that can create obstacles, but also differences in national culture and language. Thus, besides the difficulties in understanding and dealing with a new culture at several levels, the parties involved must also try to communicate, perhaps using a foreign language or speaking with someone who is not using their mother tongue.

Therefore, the objective of this paper is to examine the role of ambiguity and communication difficulties in the context of cross-cultural acquisitions. The amount and consistency of the information shared between the acquiring and the acquired companies are important in creating meaning out of the uncertainty and ambiguity in these acquisitions. After a short discussion about theories of ambiguity and their relationship to communication and organizational culture, a conceptual framework is developed to integrate theories of acquisitions, ambiguity, and communication. Culture clashes can be looked on as a function of different values which create ambiguities. Communication, in turn, is used to mediate the different values in order to prevent the clashes.

Acquisitions and organizational culture

Many acquisitions suffer from cultural clashes. To date, the literature has explained cultural clashes in terms of "value" similarities and differences. To make acquisitions work, research has focused on finding fits between the combining companies (Jemison and Sitkin, 1986; Lubatkin, 1983; Salter and Weinhold, 1981), for example, similarities in management styles (Marks, 1982) and corporate culture (Nahavandi and Malekzadeh, 1988). There is an underlying assumption that to reach the best outcome of the acquisition, the two companies should be integrated (Shrivastava, 1986) to make them as similar as possible by attaining a mutual corporate culture. Haspeslagh and Jemison (1991) do not fully prescribe integration in all acquisitions, however. They mean that different degrees of integration should be used depending on the nature of the acquisitions. Unfortunately, the acquired company is often forced to adapt to the acquiring company's culture and routines (Napier et al., 1989), which may lead to difficulties in their adaptation to the parent company.

The view that an acquired company should be assimilated into the acquiring company's culture is probably grounded in today's existing organizational theories which do not account for cultural differences within the organization (see Fine's (1991) discussion about communication and multi-culturalism). Within one organization there exist many different cultures derived from the people working in the organization, different cultures that can be due to differences in ethnicity, gender or nationality, In these }organizational theories, organizational culture is viewed as something that homogenizes the organization and its members (Martin and Meyerson, 1991). Thus, when two cultures are brought together, the existing theories often seem to assume that one of the two should assimilate into the other existing organizational culture to make the new organization work (e.g. Berry, 1980; Nahavandi and Malekzadeh, 1988). However, an | organizational culture rarely has values and assumptions that are shared by all organizational members. Instead it may consist of different subcultures that may have quite conflicting assumptions about reality (Martin and Meyerson, 1991; Schein, 1993).

More specifically, Martin and Meyerson (1991) consider that three perspectives may be used to study corporate culture: the integration perspective, the differentiation perspective, and the ambiguity perspective. The first perspective is called integration because it emphasizes consistency among cultural manifestations, for example events and artefacts, and organization-wide consensus among cultural members, as discussed above. Using this view in acquisitions would mean that the members of the combining companies deny the differences between them. However, it is more likely that it is the top management denying the differences, forcing the two companies to become one with a homogenous culture. The top management does not want to face the ambiguities that may occur because of cultural differences, and therefore they deny them.

The differentiation perspective has also been used in acquisition research. It stresses the inconsistency and lack of consensus in the corporate culture and views culture as either harmonious or conflicting. Much of the failure found in acquisitions has been explained by cultural clashes (e.g. Buono and Bowditch, 1989). Cultural clashes are explained as when the two merging companies refuse to find similarities in their corporate cultures. Instead they emphasize the differences. The differentiation perspective does not deny ambiguity as the integration perspective does. It emphasizes subcultures and the differences between them, for example the difference between marketing culture and engineering culture, and does not even acknowledge sources of organization wide agreement (Martin and Meyerson, 1991). "Subcultural differentiation 'fences in' these clear differences in perspective. Each subculture becomes an island of localized lucidity; ambiguity lies only in the interstices among the subcultures. The differentiation paradigm [perspective] channels ambiguity as swift currents create channels around islands" (Martin and Meyerson, 1991, p. 112). When it comes to acquisitions, the subcultures are represented by the two merging companies. Instead of denying that differences exist between their cultures, they focus on the differences. Within each company they emphasize consensus, while the differences will occur in the interaction between the two companies.

The third perspective, ambiguity, considers that cultural manifestations are not clearly consistent or clearly inconsistent with each other. The corporate culture is, instead, viewed as fragmented, consisting of many subcultures with both different and shared values. When the two corporate cultures meet, the ambiguity is acknowledged and sometimes even made the focus of attention. A culture viewed from an ambiguity perspective cannot be characterized as being either in harmony or conflict. Instead, individuals share some viewpoints, disagree about some, and are ignorant of or indifferent to others (Martin and Meyerson, 1991). This can be a very fruitful view for understanding cultural encounters, particularly in cross-cultural acquisitions where ambiguity and uncertainty can easily occur because of difficulties in communication. People with different cultural backgrounds bring different meanings, values, and assumptions into workplace-related conversations. These are differences that often lead to misunderstanding and breakdowns in communication and can threaten a common orientation to organizational goals (Fine, 1991; Limaye and Victor, 1991; Schein, 1993).

Ambiguity and communication

According to Feldman (1991, p. 146), ambiguity occurs in an organization when there is "no clear interpretation of a phenomenon or set of events". This is a rather general definition accounting for many situations in the organization's activity. Meyerson (1991) takes this definition further by positing that individuals' interpretations of an event can vary radically. Further, she says that ambiguity can exist within the organization as a whole as well as within individuals' own cultural experience. Thus, ambiguity can exist in many different interpretations of a phenomenon or set of events in an organization. Consequently, different individuals in the organization can experience different types of ambiguity at different times.

Ambiguity in organizations has been identified and labelled many times (Cohen and March, 1974; Kahn et al., 1964; March and Olsen, 1976). In summary, a theme for all these types of ambiguities is the absence or insufficiency of information and communication. In fact, many researchers define ambiguity as the lack of information. For example, Kahn et al. (1964) define ambiguity as "the lack of clear, consistent information" (p. 23). Frost et al. (1991) also connect ambiguity with communication, stating that it is presumably resolvable by the provision of more information. The definitions indicate the relationship between organizational ambiguity and the information communicated. Communicated information could be a way to decrease ambiguity in certain situations, but false or dubious communication can instead create and increase ambiguity.

If communication is used to homogenize the differing cultures in acquisitions without regard to multiculturalism in the organizations, uncertainty and ambiguity may arise. The fact that organizations are multi-cultural or, in Martin and Meyerson's (1991) terms, ambiguous, must be recognized in the communication (Fine, 1991) in order for the different cultures to understand each other. Communication over cultural boundaries may facilitate the understanding of each other's culture (Schein, 1993). If you understand another culture, you will more easily acknowledge it. Thus, communication could be a help towards acknowledging multiple cultures within an organization and to facilitating the co-operation among the cultures. Most important is that communication should be used to produce and negotiate meaning for the individuals involved (Davis and Jasinski, 1993).

Communication could also be used to manage change in an organization. Young and Post (1993, p. 36) found in a study that communication was important to make employees less resistant to change. Moreover, their results indicate that the initiative for communication must come from top management and that it should be continuous throughout the change period. It is important that there is no discrepancy between action and words; too often "the implicit messages that managers send contradict the official messages as conveyed in formal communications". Thus, communication is an important tool to manage a change such as acquisition (e.g. Schweiger and DeNisi, 1991), but it must be consistent to avoid confusion. Inconsistent communication could be detrimental during the first phases of the acquisition process as many form their opinions about the acquiring company early in the process.

In summary, then, ambiguity has often been overlooked in acquisition and organization research. If an integration perspective is used in acquisitions, the two companies will be forced (more or less) into one, homogeneous culture. The denial of any differences and ambiguities is likely to lead to unsolved difficulties. Overcoming problems during an acquisition lies in acknowledging the differences. Figure 1 illustrates an acquisition from an integration perspective, where the differences between the two merging companies are denied.

In this perspective, the acquired company is "forced" into the acquiring company's culture. Management from both firms view the two companies, and their members, as being very similar in culture and thus believe the merger will work without friction. However, in spite of the similarities there are differences between the two cultures, differences that are denied and may cause obstructions in the co-operation between the two companies.

In the differentiation perspective, the differences between the two companies are observed. However, the differences are channelled into different subcultures, most likely into the two merging companies, where each company represents one homogenous culture. When differences are channelled the corporate combination will result in cultural clashes, clashes that occur when the two companies interact (Martin and Meyerson, 1991, p. 112, "ambiguity lies in the interstices among the subcultures"). An extension of this is that the two subcultures exist side by side in the organization, with no further integration and little interaction. A result will be that the acquisition does not attain the expected synergy effects. This reasoning is illustrated in Figure 2.

Yet, it is argued that to understand cultural encounters fully, one must take both ambiguity and communication must be taken into consideration [ILLUSTRATION FOR FIGURE 3 OMITTED]. Such encounters may bring up ambiguities and uncertainties for the parties involved because of miscommunication owing to different cultural backgrounds. To make two cultures work together, the solution should not be to try to homogenize them, but to acknowledge the ambiguity in values and assumptions. Communication should be used as a way to produce and negotiate meaning out of the encounter. In this model, the differences between the two companies are acknowledged in a positive way. The acquired company is not forced to adapt fully to the parent company. It is, instead, allowed to maintain its differences within the framework of an overall corporate culture. This view improves on the two others in that the differences do not have to lead to cultural clashes. Cultural differences must not always be seen as something negative to the acquisition (Larsson, 1993). Moreover, in this perspective, communication is continuously used to reduce the uncertainties and ambiguities. The arrows indicate that it is a two-way communication, between acquiring and acquired company, and that the communication continues throughout the whole acquisition process.

This framework will be used to reinterpret previous acquisition research, where ambiguities will be acknowledged and communication is viewed as important for creating meaning out of these ambiguities.

Ambiguity, uncertainty and communication in acquisition literature

It is not a bold conclusion to draw from present research that acquisitions, especially in the integration phase, can have severe effects on managers and employees. Common reactions among merging organizational members are ambiguity and anxiety. Buono and Bowditch (1989) argue that the ambiguity and uncertainty occur at different levels in the company depending on what acquisition phase the company is facing. Managers and other employees may react to the acquisition quite differently (e.g. Mirvis and Marks, 1986, Walsh, 1989). Marks and Mirvis (1985, p. 50) call these reactions the merger syndrome. According to them, the syndrome is caused for executives by "a combination of uncertainty and the likelihood of change, both favourable and unfavourable, that produces stress and, ultimately, affects perceptions and judgements, interpersonal relationships and the dynamics of the combination itself". This might not sound like a purely executive reaction but something that could be valid for all people involved. Whether a person is a manager or an employee in the acquired company, it is likely that the acquisition causes stress, ambiguity, anxiety, disorientation, and confusion for every individual (e.g. Buono and Bowditch, 1989). These feelings occur as the acquisition unsettles ordinary life conditions and spreads a feeling of uncertainty (Sinetar, 1981).

Some research indicates that top management is the most exposed to the effects the acquisition might cause (e.g. Walsh, 1989). They adopt a crisis management orientation, thereby centralizing decision making and reducing their accessibility to employees and other colleagues. The effect of this abdication is to lessen the flow of communication between the most important parties: management and employees (Mirvis and Marks, 1986). However, an important aspect of the managers' behaviour, crisis management, is that the subordinates' reactions are affected by their supervisors' actions (Mirvis and Marks, 1986). The employees watch their supervisors carefully and interpret their actions and reactions, using them as guidelines for their own actions. Further, both management and staff reactions affect not only internal matters in the organization such as relations between hierarchical levels and working morale, but also workers' efficiency, sales figures, and possibly quality of work and production.

Some writers feel that one of the worst things the acquiring management can do is to wait and see, to take no action after the acquisition (e.g. Pritchett, 1985; Schweiger and DeNisi, 1991; Schweiger et al., 1987). An acquisition has great impact on the employees and managers in the acquired company; therefore it must be managed carefully. If nothing at all happens, that may cause much anxiety and ambiguity in the acquired company. A well-known phrase is "We contemplate no changes in personnel" (Austin, 1970). The intention of this statement is to avoid worries and anxiety among the staff. While the intention might be good, the effect is often the opposite. After being acquired, people usually expect some changes to take place in the organization. If the top management then declares that nothing will happen, the employees will believe management has something to hide. Haspeslagh and Jemison (1991) say that both managers and employees in acquired firms are too smart to believe nothing will be changed. Such behaviour from the top management could undermine their credibility (Buono and Bowditch, 1989). To leave the new subsidiary totally alone after the acquisition could also lead to increased anxiety and ambiguity. This type of ambiguous statement may not only cause confusion and insecurity among the employees; it could also cost unrealized synergy from the combination of the two companies.

Buono and Bowditch (1989) contend that the outcome of the acquisition is determined by employees' expectations of the corporate combination. The outcome is defined not only in terms of performance but also in employees' feelings of ambiguity and disappointment. To some extent, employee expectations are built on pre-merger information that comes either through the rumour mill, from top management announcements, or other official information channels. To be able to succeed in the integration, the acquiring company must clearly express their intentions before the integration, even before the acquisition starts.

One way to minimize the ambiguity could be through open communication from the managerial level to lower levels - both between merging companies and within the acquired company. According to Schweiger and DeNisi (1991), the only way for managers to deal with employee's anxiety seems to be to communicate with them as soon as possible. Further, they say that it is not actual changes after an acquisition that are stressful to the employees but their uncertainty about the future. No communication leaves the employees with great uncertainty about the future, and the lack of full and frank communication usually lead to rumours and other informal communications (e.g. Mirvis and Marks, 1986; Sinetar, 1981). These start early in the acquisition process when pieces of information leak out about the negotiation. So to reduce both the rumours and the anxiety, communication should start early in the merger process (Marks, 1982; Shrivastava, 1986).

Schweiger et al. (1987) found in a study that almost all the people interviewed were concerned with the shortage of timely and accurate information regarding the future for both employees and the company. Marks (1982) says that most post-merger problems develop from the lack of sufficient information - problems that could be avoided by communication with acquired personnel throughout the whole acquisition process. Sinetar (1981) also argues for communication throughout the process, which means it should start as early as the pre-merger phase (Shrivastava, 1986). Haspeslagh and Jemison's study (1991, p. 173) suggests that the integration should be preceded by a stage-setting period that creates a solid ground for the coming integration. There are many activities going on during this period, but all of them have one common theme: managers "need to communicate and then communicate again", even though they themselves do not have sufficient information (e.g. Mirvis and Marks, 1986). Rather than causing the staff to believe they are failing to communicate because of hidden agendas, such as layoff plans, they should simply admit to having insufficient information at the present time. Moreover they should continuously communicate new information to make the employees feel more included in the process.

The integration can be facilitated by ensuring that the managers who will be responsible for running the acquired business participate in analysis, decisions, and negotiations (Jemison and Sitkin, 1986; Shrivastava, 1986). The value of the acquisition can be destroyed after the initial activity f senior managers tend to move on to other activities. When the managers move on, they delegate the integration tasks to managers who were either not involved in the initial stages (Haspeslagh and Jemison, 1987;1991) or not involved at all in the negotiations (Schweiger and Walsh, 1990). The negotiating managers may be sold on the deal, but they never make the effort to sell it to the people below (Pritchett, 1985). In the acquisition process, the negotiation phase and the integration phase are interactive, and the issues arising during these processes need to be considered together (Haspeslagh and Jemison, 1991). This co-ordination could be obtained if middle and operating managers are involved early in the process (Jemison and Sitkin, 1986), but, in addition, other employees should be kept informed. If the people who are supposed to run the everyday activities of the companies are involved at all stages, the full value of the acquisition should be realized because of their cumulative knowledge and experience.

Obviously, many acquisition researchers are aware of ambiguities and uncertainties in the acquisition process. However, mergers and acquisitions are still often interpreted from a perspective dominated by the advantages of similarities rather than the acknowledgement of differences. Some ambiguity categories and the conceptual framework developed earlier will now be used, to interpret events that occur in acquisitions. To provide an alternative interpretation compared with earlier research, the ambiguity perspective will now be applied, together with ambiguity categories on situations arising from acquisitions.

Application of the ambiguity perspective on acquisitions

Martin and Meyerson (1991, p. 120) suggest that the ambiguity perspective may be the most likely one for viewing organizations in merger situations because it is easy to avoid acknowledging ambiguity in those circumstances. The difference between ambiguity in acquisitions from ambiguity in general is that while most ambiguity researchers discuss ambiguity on an individual basis, ambiguity in an acquisition is also experienced on a collective basis. Compared with current ambiguity theories, what may make ambiguity different in acquisitions is that in acquisitions, almost all organizational members experience some kind of ambiguity. The ambiguity differs, slightly of course, from individual to individual, but there is usually a common (collective) pattern among all individuals (Meyerson, 1991). Not everybody experiences negative ambiguity; some people might see the acquisition as an opportunity. The situation, however, remains an ambiguous event even though it may be perceived by some as positive (Sinetar, 1981).

The alternative interpretation of traditional acquisition research is summarized in Table I and discussed below. The left hand side shows the traditional literature's explanation of why the acquisition may have failed while the right hand side gives possible sources of the failure. The different ambiguity categories used are partly taken from ambiguity theories (Cohen and March, 1974; Kahn et al., 1964; March and Olsen, 1976). Others have been developed by the author based on earlier acquisition research. The source for the outcome may, of course, differ from case to case. For example, that planned changes are not realized is often explained by the acquired employees' resistance to change. This experienced resistance may not be resistance per se. The employees may simply be confused about the purpose of the acquisition owing to vague or contradictory statements in the pre-acquisition phase; what has been called ambiguity of purpose (Cohen and March, 1974). This resistance created by pre-acquisition ambiguity in turn affects the employees' attitude towards the acquisition and the acquiring management.

Kahn et al. (1964) discuss how people's attitudes often change under conditions of conflict and ambiguity. This phenomenon has been found in previous acquisition studies (e.g. Haspeslagh and Jemison, 1991). As noted above, it is common for the acquiring management to contend that no changes will take place after the acquisitions (Buono and Bowditch, 1989; Haspeslagh and Jemison, 1991; Levinson, 1970). Most people know that is an unrealistic statement; they believe that some changes will always take place when a company has been acquired, and in fact they do. This somewhat contradictory behaviour from the new management tends to undermine the new management's credibility (Buono and Bowditch, 1989). The pre-acquisition phase and the initial time period during integration of the two companies are important for setting people's attitudes towards the acquiring company. The negotiating and implementing managers of the acquiring. company must be careful of what they say and how they act - in brief, what they communicate; people often build their impressions on these first encounters. All this could be called ambiguity of communication - ambiguity created by vague or contradictory communication. However, as the pre-acquisition phase is vital for the succeeding phases, it will be called pre-acquisition ambiguity. The resistance could also occur at later stages of the acquisition, where the likely source would be ambiguity of communication.

Ambiguity of communication may also occur in international acquisitions, as the interpretation of what is communicated can vary owing to the cultural context. Haspeslagh and Jemison (1991) found, in one of their studies, that the sent information, after it had been decoded, was not interpreted the way the sender intended. Managers of one nationality from the acquiring company gave orders that employees of another nationality in the acquired company interpreted as mere suggestions.

If the acquiring management is unclear in its directions, the purpose of the acquisition and its relation to the newly acquired company will be ambiguous. The people working in the acquired company may ask themselves questions such as: "What is expected of us?" "Where should we go from here?" "What do they want us to do?" Working in a company without clearly articulated goals can make it difficult for the members to make decisions. The employees expect the managers to define their goals. If the management does not know what is expected of it, it is difficult to decide where to lead the business (Marks and Mirvis, 1985; Sinetar, 1981). Martin and Meyerson (1991, p. 112) state that the experience of ambiguity can bring behavioural paralysis. It is difficult for the involved personnel to know which action would be appropriate and what the consequences of their actions might be. Instead, the result may be inaction. If employees believe that the acquiring company has no goals for them and their positions will likely be eradicated, it is unrealistic to expect the activity in the acquired company to be constructive and future-oriented.
Table I

Interpretation of acquisition research

Traditional M&A literature            Alternative interpretation
explanations of (failure) outcome     ambiguity perspective from an

Resistance to change                  Pre-acquisition ambiguity
(e.g. Buono and Bowditch, 1989)       Ambiguity of communication
                                      Ambiguity of purpose

Misunderstandings                     Ambiguity of communication
(e.g. Haspeslagh and Jemison, 1991)

Inactivity from the acquired party    Ambiguity of purpose
(e.g. Buono and Bowditch, 1989)

Crisis management                     Ambiguity of power
(e.g. Mirvis and Marks, 1986)

Unwillingness in making decisions     Ambiguity of understanding
(e.g. Sinetar, 1981; Marks and
Mirvis, 1985)

Unwillingness to abandon old          Ambiguity of experience
(e.g. Larsson et al., 1996)

Changes in reward system              Ambiguity of success
(e.g. Larsson et al. 1996)

Top-management turnover               Ambiguity of organization
(e.g. Walsh, 1989)

After an acquisition is announced, the objectives of the acquired company often become unclear. Employees of the acquired company may not be aware of the new objectives because they are unfamiliar with the new parent organization. The new management might not express their objectives clearly enough, or they might have a motive for not expressing them at all (Austin, 1970; Schweiger and DeNisi, 1991; Schweiger et al., 1987). The objectives may not even be clear for the acquiring company, or they might want things to settle down before they start to discuss objectives. What is important is that they make certain the acquired company is interpreting any communicated information in the way it was intended. Even though the top management in the acquiring company may believe it has expressed itself clearly about its purpose and objectives, the acquired management might misperceive its intentions. Again, this leads to ambiguity of communication. The acquired company might not have sufficient knowledge about the acquiring company's intention with the acquisition. If these intentions are not communicated to the affected parties, their futures could appear very ambiguous. For all they know, the intention could be to sell the company again, keeping only some valuable assets. This ambiguity makes planning for the future and day-to-day work activities very difficult for the members of the acquired company.

Top-management in the acquired company may adopt a crisis-management orientation because of unclear power relations between the acquiring and acquired companies. Ambiguity of power may occur if, because of the acquisition, the old management or previous owner leaves the company (Walsh, 1989), making it unclear who the leader is and who gives instructions. This situation could be compared to the divided loyalties that can occur in role conflicts (Kahn et al., 1964). Both the individuals and the companies are faced with two role senders, which could lead to loyalty conflict. The first role sender is the old organization with its routines, norms, etc. which provides employees with familiar guidelines for their daily work. The second role sender is the new organization and its management that might give new directives. The role sender conflict puts the employees in the acquired company in a loyalty conflict situation. The new owner demands that employees follow certain routines while at the same time employees do not want to abandon their old organization for a new, unfamiliar one.

The acquiring top-management may experience unwillingness from the acquired managers to make decisions. In such cases, there may be an ambiguity of understanding, that is when there are competing ideas of what is appropriate for the organization to do (Feldman, 1991; March and Olsen, 1976). Differing technologies and work environments could create difficulties in making connections between organizational actions and their consequences. Such difficulties can, in turn, make the situation difficult to interpret for the members of the acquired company. After a company has been acquired, the control of the business may no longer be in the hands of the people working in the acquired company. The boundaries between responsibilities and authority often become unclear. Therefore the acquired management does not know if it is supposed, or even allowed, to make decisions. It is also more difficult for it to predict the outcomes of its decisions as the new owner might interfere and give counter orders or maintain a different opinion.

Unwillingness from the acquired company to give up old practices may have its roots in the ambiguity of experience. When everything is new, as in after an acquisition, it might be unclear what experiences count. Are the acquired company's old experiences valuable and useful, or should they change and adapt to "their" way? This ambiguity could be relieved if the strategic motive behind the acquisition is clearly communicated. If, for example, the company is acquired because of its special capabilities, and the integration approach is to preserve those capabilities (Haspeslagh and Jemison, 1991, pp. 145ff), then the acquired company will know that its previous experiences are valuable.

Changes in the reward system may cause ambiguity of success. For people working in the company, success is generally recognized in one or two ways (Cohen and March, 1974). First, success is recognized by promotion and second, by accepted operational measures of organizational output. What success features could be ambiguous in an acquisition? Rewards could change to fit the new owner's policy, but different kinds of behaviour could be rewarded, compared to what was valued before the acquisition. Before people learn about which behaviour is rewarded and how it is rewarded, their motivation could be diminished because they do not know if they are going to be rewarded at all. People could also feel "cheated" on promotions and other such rewards they thought were likely in the old organization. Also, how organizational success is measured can change after the acquisition. If new accounting and financial reporting principles are introduced, the instruments for measuring success will change. If these principles change, it could be difficult to compare post-acquisition performance to pre-acquisition performance.

Top-management turnover could be related to difficulties caused by ambiguity of organization. March and Olsen (1976) refer to fluid participation among organizational members in decision making. The participants may change after the acquisition, as people might leave or join the company. For example, middle managers, who will run the business after the acquisition, are rarely involved in the acquisition negotiation and the integration planning process. It is the owner, or at least top management, who does all the negotiation and planning, and who often leaves the company after the selling is done (Haspeslagh and Jemison, 1987; Jemison and Sitkin, 1986; Pritchett, 1985; Shrivastava, 1986). The knowledge and information they gained during the negotiations and planning are not always passed on to remaining managers. As mentioned earlier, absence of old management may itself be a cause for ambiguity (ambiguity of power). So, when they leave the company they take with them both their cumulative knowledge about the acquired company as well as their knowledge of the acquisition process itself.


Looking at these examples of acquisition situations from an ambiguity perspective, communication seems to run like a theme through them all. The origins for many of the ambiguities seem to lie in unclear or nonexistent communication. Moreover, communication seems to be least present during the early phases of the acquisition, when the attitudes towards the acquisition and the acquiring company are formed. Thus, if communication had been the focus throughout the whole acquisition process, many of the ambiguities may have been less severe or avoided entirely. Moreover, ff differing cultural backgrounds had been acknowledged, some of the ambiguities may also have been avoided if they occurred owing to misunderstandings in the communication. The conceptual framework presented in this paper provides us with a new perspective to look at mergers and acquisitions - a perspective that can explain, to some extent, why so many acquisitions do not meet the management's expected outcomes. The framework is not yet fully developed; when it is, it may lead us one step closer to recognizing why merging companies that appeared to be a good fit could not realize their goals.

The author especially thanks Professor Marta Calas and Professor Michael Lubatkin for helpful comments on earlier versions of the paper

References and further reading

Austin, D.V. (1970), "Merger myths: we contemplate no changes in personnel", Mergers and Acquisitions, Vol. 5 No 5, pp. 20-1.

Berry, J.W. (1980), "Acculturation as varieties of adaptation", in Padilla, A.M. (Ed.), Acculturation - Theory, Models and Some New Findings, Westview Press, Boulder, CO.

Buono, A.F. and Bowditch, J.L. (1989), The Human side of Mergers and Acquisitions, Jossey-Bass, San Francisco, CA.

Cohen, M. and March, J.G. (1974), Leadership and Ambiguity - the American College President, 2nd ed., Harvard Business School Press, Boston, MA.

Davis, D.K. and Jasinksi, J. (1993), "Beyond the culture wars: an agenda for research on communication and culture", Journal of Communication, Summer, pp. 141-9.

Feldman, M.S. (1991), "The meanings of ambiguity: learning from stories and metaphores", in Frost, P.J., Moore, L.F., Reis Louis, M., Lundberg, C.C. and Martin, J. (Eds), Refraining Organizational Culture, Sage, Newbury Park, CA.

Fine, M. (1991), "New voices in the workplace: research directions in multicultural communication", The Journal of Business Communication, Vol. 28 No. 3, Summer, pp. 259-75.

Frost, P.J., Moore, L.F., Reis Louis, M., Lundberg, C.C. and Martin, J. (Eds) (1991), Refraining Organizational Culture, Sage, Newbury Park, CA.

Haspeslagh, C. and Jemison, B. (1987), "Acquisitions: myths and reality", Sloan Management Review, Winter, p. 53-8.

Haspeslagh, C. and Jemison, B. (1991a), Managing Acquisitions - Creating Value through Corporate Renewal, The Free Press, New York, NY.

Jemison, D.B. and Sitkin, S.B. (1986), "Acquisitions: the process can be a problem", Harvard Business Review, March-April, pp. 107-16.

Kahn, R.L., Wolfe, D.M., Quinn, R. and Snoek, J.D. (1964), Organizational Stress: Studies in Role Conflict and Ambiguity, John Wiley & Sons, New York, NY.

Larsson, R. (1990), Coordination of Action in M&A. Interpretive and Systems Approach towards Synergy, Lurid University Press, Lund.

Larsson, R. (1993), "Barriers to acculturation in mergers and acquisitions: strategic human resource implication", Journal of European Business Education, Vol. 2 No. 2, May, pp. 1-18.

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Author:Risberg, Anette
Publication:Leadership & Organization Development Journal
Date:Jun 1, 1997
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