Master Thesis A qualitative study on resistance to change and its impact on organizational harmonization in M&As. Authors: Franklyn Nunoo-Mensah & Hugo Johnning. Supervisor: Richard Nakamura Master’s Thesis in International Business and Trade Spring 2024 Graduate School, School of Business, Economics and Law, University of Gothenburg, Sweden Acknowledgment This study would not have been possible without the support of those who participated and shared their insights and knowledge. We extend our gratitude to the respondents of the four case companies whose willingness to share insights and experiences with the authors provided the basis for this study. We are also thankful to Richard Nakamura, our supervisor, for his valuable insights and direction throughout the duration of this study. His expertise in this field has been instrumental in shaping this research. Finally, we extend our gratitude to the Graduate School and the University of Gothenburg for giving us access to a wide range of material to aid this study. 1 Abbreviations M&As – Mergers and Acquisitions SMEs – Small and Medium-Sized Enterprises MNE – Multinational Enterprises PMI – Post Merger Integration GDPR – General Data Protection Regulation NDA – Non-Disclosure Agreement List of Figures and Tables Figure 1 - Conceptual Framework - Page 21 Table 1 - List of Participants Interviewed – Page 32 Table 2 - Summary of Empirical Findings for Company 1 – Page 67 Table 3 - Summary of Empirical Findings for Company 2 – Page 67 Table 4 - Summary of Empirical Findings for Company 3 – Page 68 Table 5 - Summary of Empirical Findings for Company 4 – Page 68 2 Abstract M&As are regarded as a strategic approach to achieve corporate growth. Many M&A ventures have failed to achieve the desired results, which highlights the complexities surrounding M&As and why many of such failures have been recorded over the years. The focus has been on the financial and strategic reasons for these failures which have left other significant areas such as the integration process uninvestigated in the effort to understand M&A failures. To investigate the importance of the PMI process to the performance of M&As, this study explores employee resistance to change in the acquisitions and the key traits and approaches of managers in managing the PMI process successfully. This study has adopted a qualitative research strategy with a multiple case study of four SMEs that have been acquired by larger MNEs in both domestic and international contexts. Findings showcase that employee perceptions of change are developed over time. While negative employee perceptions influence resistance, it is usually fueled by how changes are managed. In the case of SMEs acquired by MNEs, employee attachment to acquired company culture can influence their resistance to changes when the acquired companies embark on major changes too quickly. Furthermore, the study found that for managers to effectively manage the integration process they need to have a good knowledge and understanding of changes, be clear and transparent in their communication, and have good interpersonal relations which builds employee trust in managers. Keywords: Small and Medium Sized Enterprises (SMEs), Organizational Change, Multinational Enterprises (MNEs), Resistance, Organizational Culture, Post- Acquisition Integration 3 Table of Contents Abstract ................................................................................................................................................... 3 1. Introduction ........................................................................................................................................ 7 1.1 Background ................................................................................................................................. 7 1.2 Problem Discussion ..................................................................................................................... 8 1.3 Purpose & Research Questions ................................................................................................ 10 1.4 Delimitations .............................................................................................................................. 10 1.5 Disposition ................................................................................................................................. 10 2. Literature Review ............................................................................................................................. 12 2.1 Resistance to Change in M&As ............................................................................................... 12 2.1.1 What is Resistance to Change .............................................................................................. 12 2.2 Sources of Resistance to Change .............................................................................................. 12 2.2.1 Resistance to Change Emanating from Organizations’ Systems. ......................................... 13 2.2.2 Resistance to Change Emanating from Individuals. ............................................................ 14 2.3 Factors That Contribute to Resistance In M&As. ................................................................. 15 2.3.1 Attachment to Acquired Firm Organizational Culture ......................................................... 15 2.3.2 Role of Managers ................................................................................................................. 16 2.3.3 Managers Communication Approach ................................................................................... 17 2.4 Leadership Traits/Qualities in Resistance to Change. ........................................................... 18 2.4.1 Organization Theory ............................................................................................................ 18 2.4.2 Contingency Theory of Leadership ...................................................................................... 20 2.5 Conceptual Framework ............................................................................................................ 21 2.5.1 Summary of the Conceptual Framework ............................................................................. 21 2.5.2 Employee Reactions to Changes Related to M&As ............................................................ 22 2.6.3 Manager Traits / Approach ................................................................................................... 23 2.6.4 Knowledge and Understanding of the Changes ................................................................... 23 2.6.5 Transparency, Honesty, and Clarity in Communication ....................................................... 24 2.6.6 Interpersonal Relations ........................................................................................................ 25 2.6.7 Trust ..................................................................................................................................... 25 Chapter 3: Research Methodology ...................................................................................................... 27 3.1 Research Strategy ..................................................................................................................... 27 3.1.1 Abductive Research Approach ............................................................................................. 27 3.2 Research Design ........................................................................................................................ 28 3.3 Sampling and Selection ............................................................................................................. 29 3.4 Data Collection .......................................................................................................................... 30 3.4.1 Primary Data Collection....................................................................................................... 30 3.4.2 The Interview Process .......................................................................................................... 31 3.4.3 Archival Data Collection ...................................................................................................... 32 3.5 Data Analysis ............................................................................................................................. 33 3.6 Quality Criteria of the Study ................................................................................................... 34 3.6.1 Reliability ............................................................................................................................. 34 3.6.2 Validity ................................................................................................................................. 34 4 3.7 Ethical Considerations .............................................................................................................. 35 3.8 Criticism of Methods ................................................................................................................ 36 Chapter 4: Empirical Findings ............................................................................................................ 38 4.1 Case Descriptions ...................................................................................................................... 38 4.2 Case One .................................................................................................................................... 38 4.2.1 Background of the Company ............................................................................................... 38 4.2.2 Perception of Changes ......................................................................................................... 38 4.2.3 Changes to The Organizational Culture ............................................................................... 39 4.2.4 Knowledge and Understanding of Changes ......................................................................... 40 4.2.5 Communication .................................................................................................................... 41 4.2.6 Trust ..................................................................................................................................... 42 4.2.7 Support and Interpersonal Relations .................................................................................... 43 4.3 Case Two .................................................................................................................................... 44 4.3.1 Background of the Company ............................................................................................... 44 4.3.2 Perception of Changes ......................................................................................................... 44 4.3.3 Changes to The Organizational Culture ............................................................................... 46 4.3.4 Knowledge and Understanding of Change .......................................................................... 47 4.3.5 Communication .................................................................................................................... 48 4.3.6 Trust ..................................................................................................................................... 49 4.3.7 Support and Interpersonal Relations .................................................................................... 50 4.4 Case 3 ......................................................................................................................................... 51 4.4.1 Background of the Company ............................................................................................... 51 4.4.2 Perception of Changes ......................................................................................................... 52 4.4.3 Changes to the Organizational Culture ................................................................................ 53 4.4.4 Knowledge and Understanding of Change .......................................................................... 55 4.4.5 Communication .................................................................................................................... 56 4.4.6 Trust ..................................................................................................................................... 57 4.4.7 Support and Interpersonal Relations .................................................................................... 57 4.5 Case 4 ......................................................................................................................................... 59 4.5.1 Background of the Company ............................................................................................... 59 4.5.2 Perception of change ............................................................................................................ 59 4.5.3 Changes to the Organizational Culture ................................................................................ 61 4.5.4 Knowledge and Understanding of Changes. ........................................................................ 62 4.5.5 Communication .................................................................................................................... 63 4.5.6 Trust ..................................................................................................................................... 64 4.5.7 Support and Interpersonal Relationship ............................................................................... 65 4.6 Summary of Empirical Findings ............................................................................................. 66 Chapter 5: Analysis .............................................................................................................................. 68 5.1 Discussions of Findings ............................................................................................................. 68 5.2 Perception of Changes .............................................................................................................. 68 5.3 Changes to Organizational Culture ......................................................................................... 70 5.4 Knowledge and Understanding of Changes ............................................................................ 72 5.5 Communication ......................................................................................................................... 74 5.6 Trust ........................................................................................................................................... 76 5 5.7 Support from Managers and Interpersonal Relations with Employees ............................... 78 Chapter 6: Conclusion ......................................................................................................................... 80 6.1 Findings and answers to the research questions .................................................................... 80 6.2 Theoretical and Practical Implications ................................................................................... 83 6.3 Recommendations for Future Research .................................................................................. 83 7. References ........................................................................................................................................ 85 8. Appendix ........................................................................................................................................... 95 6 1. Introduction 1.1 Background Companies pursue growth through two main ways: organic and inorganic growth (Kumar and Sharma, 2019:1). Organic growth involves internal efforts that do not alter the company's structure or business model. In contrast, inorganic growth is an external mode of corporate growth, that is facilitated by joint ventures, mergers, and acquisitions (M&As) (Kumar and Sharma, 2019:1, Buckley et. al, 2018:547). Over the years, M&As have become a source for achieving rapid growth (Kumar and Sharma, 2019:2). While this has become a popular source of corporate development and restructuring (Cartwright & Schoenberg, 2006:1), research has shown that the success rates of M&As are low (Appelbaum et. al, 2017 Part 1:87). While the focus of these failures has been on the financial and strategic reasons (Hassan et. al. 2018:716), researchers have acknowledged that this is inconclusive (Sarala et. al, 2017:307), (Renneboog & Vansteenkiste, 2018:650). Buono and Bowditch (1989:300) recognize that mergers and acquisitions do not only bring changes to organizations but also result in life changes and disruptions for the members of the organizations involved. Given the substantial changes associated with M&As, resistance could occur during the post- merger integration (PMI) period (Warrick, 2022:434). Resistance to change may come from both managers and employees (ibid:435). For employees, this often emanates from uncertainties and questions concerning job security, changes to employment, and changes in organizational culture to fit the culture of the acquirer (Bruner, 2004:891). Managers, who are change agents (Warrick, 2022:436), may influence resistance due to their leadership style, or approaches in the management of changes. Change agents often introduce changes with limited communication, and involvement, and may show little concern for those affected. In some instances, change agents may even initiate changes with questionable motives, which undermines trust in them and the change process (Warrick, 2022:438). This implies that resistance to change is not always a rejection of change itself, but also a response to the anticipated consequences or expected effects linked to change, such as potential status loss, salary reduction, or a decrease in comfort (Dent & Goldberg, 1999:26). 7 Consolidating companies through M&As involves the convergence of distinct organizational identities, which can lead to challenges (Kansal and Chandani, 2014:209). These challenges may arise due to changes in leadership, structure, strategy, and culture (Warrick, 2022:434). The disparities in cultures can pose difficulties for the integration process. According to Buckley et. al (2018:494), there is a contrast between national and international business, and they argue that international businesses face greater challenges because they operate in multiple cultural settings. Relatedly, international M&As involve cultural differences, which can hinder cross-cultural integration (Cui, et. al, 2016:397). This is a result of the involvement of different individuals and teams of the organizations which are set in different cultural conditions (Cui, et. al, 2016:397). As further highlighted by Cui, et. al, (2016:397), the differences in cultural values may contribute to misunderstandings or goal incompatibility and can lead to mistrust. 1.2 Problem Discussion A Merger is a strategic initiative that brings together distinct companies into a collaborative agreement to establish a new entity while losing their respective legal identities in the pursuit of shared objectives (Shafique, 2017:75; Hossain, 2021:5). On the other hand, Hassan et. al (2018:709) indicate that acquisitions involve one company purchasing another company to assume ownership, leading to the acquirer taking over the management and control of the acquired company (Kumar & Sharma, 2019:5). Companies engage in M&As for various reasons, one primary rationale behind M&As is to leverage the strengths of the entities involved to foster growth by expanding market share and enhance profitability through the collaboration of resources (Hossain 2021:6). Moreover, different studies explain the financially motivated reasons behind M&As. According to Rosenzweig's (1993:371) value creation theory, the pursuit of value is a key driver for M&As. Although researchers have emphasized the use of M&As as a strategy to facilitate corporate growth (Bauer & Metzler, 2014:269; Steigenberger, 2016:408), the integration process is characterized 8 by complexities, which can be challenging for management (Larsson & Finkelstein, 1999:9; Thelisson, 2021:33). This has been evident in many cases of M&A failures over the years, notably; Daimler - Chrysler, eBay - Skype, America Online - Time Warner (Kumar and Sharma, 2019:184), Enron, which embarked on series of diversification as a growth strategy following the merger between Huston Natural Gas and InterNorth (Healy and Palepu, 2003:5). Extant research on M&As has attributed these failures to different reasons. According to Hossain (2021:12), analysis of extant M&A literature indicates that failures are quite common in cross-border M&As and he argues that the reasons why M&As fail include difficulty with integration, poor strategic fix based on huge differences between the acquirer and acquired, lack of proper financial records, inadequate due diligence, overly optimistic projections of the target company, lack of transparency, culture clash and negotiation errors. According to Appelbaum et. al (2017:88), M&As are a source of intense changes for organizations, and the difficulties involved in integrating two separate companies is a constant reality that modern companies must deal with (Van Dijk & Van Dick, 2009:158). It has been demonstrated that the success of M&As is connected to management's ability to in an effective manner, integrate individuals from different organizations and cultures, while also addressing and minimizing their concerns (Appelbaum et. al., 2017:7). Furthermore, the survival of the newly created organization is dependent on management’s ability to manage the interdependencies by facilitating interaction within the firm and developing mechanisms that promote stability (Borys & Jemison, 1989:239, 244; Pablo, 1994:805). Appelbaum et. al (2017:88) acknowledge the importance of the members of the organization in the process of organizational change. They emphasize that the effectiveness of management in integrating members of the organization and their cultures as well as addressing employee concerns plays a crucial role in achieving successful outcomes in M&As. While existing knowledge on the reasons for M&A failures seems to be abundant, there appears to be a notable gap in the knowledge about unexplored aspects of resistance to change in connection with acquisitions, and how that can impact the integration process. Therefore, there is a need to develop an empirical understanding of how employees' perceptions of change contribute to resistance in the 9 acquired company, and how managers effectively manage the Post Acquisition Integration, particularly, in acquisitions of SMEs by Multinational Companies. This could prove vital in gaining further understanding of the reasons why M&As fail to realize their intended success. 1.3 Purpose & Research Questions The purpose of this study is to investigate how resistance to change impacts the harmonization process in M&As. We aim to contribute to extant literature on resistance to change in M&As, and how companies can successfully deal with resistance that emanates from M&A-related change situations. Specifically, we seek to understand how employees and managers deal with the changes that come with acquisitions and understand how that could affect the integration process. To get an understanding of the above areas for this research, the main research question and a sub question have been formulated: ❖ How do employees' perceptions of change contribute to their resistance to changes in the acquired company? o How do managers effectively manage the PMI and what traits /approaches are key to the process? 1.4 Delimitations This research investigates how resistance to change impacts the harmonization process in M&As and is narrowed in focus by exclusively investigating SMEs that have been acquired by MNEs. It is however important to mention that the limited scope of this study could affect the applicability of the findings to companies and industries which are outside the focus of our research. 1.5 Disposition The study consists of 6 chapters presented below. Following the chapters, the reference list and appendix will be outlined. Chapter 1 - Introduction This chapter will present the background and set the direction of this study. This will be followed by 10 the problem discussion. The research questions and purpose of the study will be outlined as well as the delimitations of the study will be discussed in this chapter. Chapter 2 - Literature Review The chapter will present a review of the literature and theoretical framework on Leadership Theory, Organization Theory, and relevant literature on mergers and acquisitions, and resistance to change. The findings in this part of the study will serve as a foundation for the upcoming chapters. Chapter 3 Research Method The third chapter will address the research methodology and explain the research design and research strategy. The methodology part will cover a detailed description of our data collection methods, data analysis, quality criteria, and ethical considerations for this study. Chapter 4 – Empirical Findings The case discussion chapter will present empirical findings from four cases of Acquisitions. Chapter 5 - Analysis In the Analysis chapter, the empirical findings of the study will be analysed in connection with extant literature and the theoretical framework. Chapter 6 - Conclusion The final part of the study will present answers to the research questions, contribution to theory, recommendations for future research and limitations. 11 2. Literature Review 2.1 Resistance to Change in M&As 2.1.1 What is Resistance to Change Resistance to change embodies the reluctance or opposition that individuals or groups exhibit when confronted with changes in established processes, structures, or strategies (Erwin and Garman, 2009:40). Similarly, Peiperl (2005) in Burnes (2015:348) defines resistance as “active or passive responses on the part of a person or group that militates against a particular change, a program of changes or change in general”. According to Warrick (2022:433), resistance is one of the main reasons why change efforts do not achieve the desired results. Gonzalez et. al (2021:146) indicate that addressing resistance to change depends on how an organization and its actors interpret it. In this regard, they acknowledge that resistance can be looked at in two ways; either positive or negative. According to Agboola and Salawu (2010:237), resistance to change is an obstacle to organizational performance and managers must pay particular attention to it. The perspective of resistance as being negative is common in extant literature on resistance to change (Thomas and Hardy, 2011:323). In contrast, other authors such as Waddell and Sohal (1998:545) have highlighted some positive aspects of resistance to change, where it is considered a valuable resource for organizational improvement. For instance, Waddell and Sohal (1998:545) argue that resistance plays a significant role in drawing attention to certain aspects of change that may be inappropriate, and management will have the opportunity to correct them. 2.2 Sources of Resistance to Change Resistance to change is known to originate from many different sources (Liu & Fehling, 2005:361). Extant literature on resistance to change has investigated the sources of resistance to change and has argued that it emanates primarily in two ways; from the individuals (Erwin and Garman, 2010:42, Warrick, 2022:435) or the organization (Lewin 1947; Dent and Goldberg, 1999:26). 12 2.2.1 Resistance to Change Emanating from Organizations’ Systems. The term resistance is credited to Kurt Lewin, who introduced it as a systems concept (Dent and Goldberg, 1999:25). Lewin (1947) argues that changes in behavior only occur when the field changes, either by a decrease in the power of restraining forces or an increase in the power of the driving forces (Burnes, 2015:99). However, while human behavior can be predicted (Jost 2015:609), individual or group behavior is a product of complex systems (Burnes, 2015:100). As argued by Kotter (1995:64), the process of change involves the removal of obstacles, which could be how the organization works and not necessarily stemming from the individual’s perception or lack of support for the changes. Kotter (1995:64) further argues that employees may often possess a clear understanding of the new vision and would be willing to contribute to its realization. For instance, the organizational structure and strategies may make it difficult for changes to be embraced. This leads to organizational members choosing between the new vision or their self-interests (Erwin and Garman 2010:40). Warrick (2022:435) examined resistance to change by comparing two companies. The first company, labeled as productive, is made up of skilled labor, trusted and respected leaders who care for employees and prioritize creating a positive work environment. The second company barely focuses on the bottom line, led by untrustworthy leaders, and demonstrates little regard for employees. According to Warrick (2022:435), the former organization would have less resistance to change as compared to the latter which is linked to the systems concept that argues that resistance can emanate from the way an organization is managed. Furthermore, (Burns and James, 1995 in Warrick, 2022:436) argue that for resistance to be reduced in organizational change, there is a need for organizations to develop structures and systems that are attractive to employees. The idea of change resistance as per Warrick (2022:436) focuses on organizational management of the change and argues that the inability of organizations to manage change creates a negative attitude which can be interpreted as resistance. Additionally, Coch and French (1948:529) developed the literature on resistance to change in the context of Lewin (1947) to extend an understanding of how organizational systems contribute to resistance. They aimed to identify and reduce the forces that acted to increase resistance and promote 13 those that acted to reduce it (Coch and French 1948:529, Burnes, 2015:99). Their study highlights the importance of considering the context in which change takes place and how that influences resistance in individuals (Burnes, 2015:100). 2.2.2 Resistance to Change Emanating from Individuals. According to Zander (1950) in Burnes (2015:101), resistance to change occurs due to the tendency of individuals to protect themselves from change. Additionally, Shimoni (2017:259) indicates that traditional scholars in organizational development have seen resistance to change as emanating from individuals, which follows the natural assumption that people resist change (Dent and Goldberg, 1999:25). Jenssen (2013:213) identified that employees perceive change as a threat to the status quo which leads to anxiety and fear of not matching up to the expectations. Any threats to employees' values and ways of creating meaning in their existence are likely to produce attempts to justify and defend their way of thinking (Jenssen, 2013:214). The aspect of Jenssen (2013:214) argument regarding resistance from managers points to the performance of leaders (change agents) which links resistance to poor change management by leaders. Furthermore, Warrick (2022:435) argues that individuals will resist change if self-interest is threatened. Similarly, Heracleous (2004:177) as cited in Erkama (2010:161) indicates that organizational actors can actively shape or manipulate issues by employing selective approaches to protect and maintain their routinized or comfortable ways of perceiving issues. Moreover, Liu et. al (2006:362) argue that resistance to change is primarily a behavioral manifestation and not a structural property of social systems. They argued that the concept of resistance exists regardless of how resilient the structures of companies are, thus focusing on the individual factor in understanding why resistance to change occurs. Carpenter, Geletkanycz, & Sanders, (2004:752,771) argue that leaders' characteristics influence the choices and decisions they make, and this could influence employee attitudes and beliefs (Oreg and Berson, 2011:628). Shimoni (2017:266), using the Habitus approach to understanding resistance to change studied two managers who worked for a company owned by two groups. In the study, it was found that while the two managers' psychological traits such as inner unease, self-esteem, and inner 14 un/quiet were assumed to be the reason for their resistance to change, the main reason for their poor performance was attributed to an existing power struggle between the two business groups that owned their companies. This appears to validate the systems concept by Lewin (1947). However, the traits of managers in this regard cannot be completely overlooked. 2.3 Factors That Contribute to Resistance In M&As. M&As involve complex strategic initiatives that organizations undertake to achieve various goals, such as market expansion (Kumar and Sharma, 2019:2), synergy creation (Liu & Fehling, 2005:361), and enhanced competition (Rodriguez-Sanchez, et. al 2018:643). These are known to bring a significant change to the companies involved, which is often met with some resistance (King et. al, 2020:63). Resistance has been identified by extant research as a primary reason for M&A failures (King et. al, 2020:63). In view of this, the PMI process is very important to the performance of M&As (Dorling, 2017:937). Resistance in the PMI process is influenced by several factors when merging companies synchronize their operations and connect their distinct corporate identities (Shroeder, 2012 in Dorling, 2017:941). 2.3.1 Attachment to Acquired Firm Organizational Culture When addressing cultural dynamics and their implications on M&A performance, particularly in cross-border M&As, there has been a focus on the cultural distance between the companies involved (Ye et. al, 2023:12). This is related to the national cultures of the companies rather than the distinct organizational cultures (Ye et. al, 2023:12). Webber and Tarba (2010:205) have suggested that the transfer and integration of resources during the PMI may encounter challenges due to cultural differences. These challenges can lead to conflicts, communication issues, and resistance among employees and have the potential to affect the performance of the M&A (Weber and Tarba, 2010:205). They argue that the evaluation of corporate culture integration can be a difficult task. Idris et. al (2015:594) found that there is a positive correlation between corporate culture integration and the performance of M&As based on the dimensions of organizational leadership and the management of employees. To connect the concept of culture dynamics and how that can contribute to resistance in 15 M&As we refer to (Veblen, 1989:203) who argues that resistance to change may emanate from individuals' acceptance of the status quo and the lack of desire to change the usual way of doing things. The heightened resistance is a result of individuals' allegiance to familiar systems and the recognition that changes necessitate adjustments that often demand more effort to adapt. These adaptation processes are typically perceived as uncomfortable by individuals (Veblen, 1989 in Jost 2015:608). Additionally, Sarala et. al (2019:308) argue that individuals involved in M&As have other bases of identification that focus on their organizations. Based on the group identity theory, it is understood that people order themselves and others into social categories (Tajfel, 1974:69), which in the context of M&As leads to the creation of a pre-acquisition identity (Sarala et. al, 2019:309) and the more individuals continue to identify with their respective groups, there is the tendency for such identities to stand in the way of M&A integration. Similarly, role theory suggests that individuals are shaped by their social environments and internalize the norms and values of their social communities. This leads them to conform to the expectations and dictates of these social systems they identify with (Biddle, 1979:4). This is attributed to the belief that individuals within an organization may see the merger or acquisition partner as an outsider (Sarala et. al, 2019:309). Likewise, according to Jost (2015:609), individuals are deeply embedded in social groups and are often strongly attached to these groups. Consequently, altering attitudes and behaviors toward these groups can seem akin to stepping away from the familiar confines of their social environment. This, however, leads to the argument that organizational members often have to reconstruct their organizational identity to develop a sense of belonging to the newly formed venture (Liang et. al,2022:60). 2.3.2 Role of Managers Managers' role as change agents involves supervising changes in M&A situations and shaping employees' intentions to resist organizational change (Oreg and Berson, 2011:628). Based on their work, Oreg and Berson (2011:628), argue that understanding employee resistance to change cannot be complete without considering the strong impact leaders have and how their attributes and leadership approach can influence a smooth PMI process. King et. al (2020:64) in their study to understand what 16 contributes to employee resistance in M&A integrations, it explored who manages the integration process in M&As and how that can influence resistance and affect the performance of M&As. As indicated by Balogun and Johnson (2004:523) in King et. al (2020:64), the distinction between top- level managers and middle-level managers is evident. While top-level management is involved in the overall integration planning, the responsibility of implementing the changes and dealing with employee fears associated with the changes usually lies with middle-level managers. However, the focus of this research is on managers who are in supervisory roles which means that they are involved in implementing the change strategies at the first line level. In view of this, the role of top-level management in this context will not be explored. 2.3.3 Managers Communication Approach Communication is known to help in the education, training, and transfer of knowledge in organizational change situations (De Leon, 2020:377). One of the primary roles of managers during M&As is effective communication. This involves the dissemination of information to subordinates during the integration process. Therefore, the ability of managers to keep a consistent flow of information is key to reducing employee resistance during change implementation (Appelbaum et. al, 2017:88). This is because it helps to foster transparency and build trust during organizational change (Rodriguez-Sanchez, et. al 2018:652). Rodriguez-Sanchez, et. al (2018:652) further emphasizes the need for managers to use frequent, clear, and honest communication, as this is a necessary strategy to prevent negative reactions from employees. Additionally, Rodriguez-Sanchez, et. al (2018:652) advocate for the use of bidirectional communication which encourages employees to ask questions and share their concerns. This approach not only fosters transparency but also contributes to building trust and increasing employee involvement in the change process (ibid). In the context of M&As, a common observation is a decrease in communication between managers and employees, which results in increased levels of doubt and distrust (Sinkovics et al., 2011:32). Appelbaum, et al., (2000:650) indicate that the post-merger integration period is characterized by centralized decision-making and reduced communication with employees. Managers are expected 17 to maintain strict silence about upcoming decisions, so they are careful not to reveal information ahead of complete implementation. The inability of change agents to be consistent in the flow of information and the communicative behavior of managers could lead to uncertainty (Ertuk, 2008:468). Sinkovics et.al (2011:42) sought to understand the role of emotions in M&As and focused on the impact of managers' communication and behavior on employee emotions and in the performance of M&As. They found that it is important for employees to have superiors who prepare them for the change and inform them about the negative implications rather than keeping them in the dark. This was further emphasized by the finding that there is a connection between managerial communication style (that fosters openness, honesty, and frequency) and employee positive or negative emotions (Sinkovics et.al, 2011:42). Similarly, De Leon (2020:377) contends that cultivating favorable and productive employee commitment to changes hinges significantly on their understanding of the proposed changes. This understanding is tied to the clarity and accuracy with which the changes are communicated. Since M&As are perceived as emotional events for employees, their attitudes and behavior during the PMI period are significantly shaped by the quality of managerial communication and support (De Leon, 2020:378). 2.4 Leadership Traits/Qualities in Resistance to Change. 2.4.1 Organization Theory According to McAuley et al. (2007:20), organization theory is defined as the study of the structure, functioning, and performance of organizations, as well as the behavior of groups and individuals within them. This definition highlights the importance of understanding organizational change, how these changes impact the behavior of organizational members, and the implications for effective management. Organizations are known to be complex systems and are composed of different human activities (Argyris, 2017:11). These complexities stem from the different personalities, groups, intergroup, norms, values, and attitudes (Argyris, 2017:11). Moreover, organizational members are individuals who are interdependent on one another for survival (McAuley et al., 2007:4). This implies 18 that many organizations related activities require people to interact in various ways and cooperate and coordinate their efforts with some sense of purpose (ibid). Regardless of the mutual dependency highlighted as a key characteristic of organizational stakeholders, these dynamics shape their goals, interests, and interactions within the organization (McAuley et al., 2007:13). For instance, during periods of organizational change, the organization typically has a defined set of objectives that are presumed to represent the collective goals of its members. However, due to the diversity of perspectives and mindsets among individuals, conflicts could arise because of the proposed changes (Bloomberg, 2020:157). These conflicts may stem from varying interpretations of the organizational goals and different expectations regarding how changes will impact individual roles and responsibilities. As a result, resistance to change may emerge as individuals seek to reconcile their personal interests and perceptions with the organizational objectives (ibid). The role of managers is crucial during organizational change implementation as they are expected to lead and facilitate the change process, influencing the behavior of their subordinates, to achieve desired outcomes (McAuley et al., 2007:20). Similarly, subordinates may be required to adapt to new roles and responsibilities as part of the change process. However, during this process, they may also exhibit resistance by displaying some degree of stubbornness. Regardless, they often show flexibility (McAuley et al., 2007:20), which signifies the potential for influencing positive reactions toward change adaptation. Waldo (1961:213) indicates that there appear to be conflicts between the needs of individuals within the organization and the organization itself. Moreover, these needs shape much of what takes place in organizations (Waldo, 1961:213). For example, individual needs tend to result in disruptions and frustrations among employees who tend to react and adapt in various ways. Managers are believed to have a good understanding of what to do, and their continuous intervention in organizational processes has the potential to influence changes in employee behavior (ibid). 19 2.4.2 Contingency Theory of Leadership The contingency model of leadership suggests that effective leadership is dependent on the interplay of various situational factors and categorizes leadership styles into two targets; one that focuses on tasks and the other on interpersonal relationships (Tokarski, 1997:114). The Contingency Model of leadership emphasizes the importance of assessing and adapting leadership styles based on the unique characteristics of the situation. It acknowledges that what works well in one context may not be as effective in another, and effective leaders can recognize and respond to these situations. To understand this model in the concept of resistance to change, we look at the two managerial categories highlighted by Miner (2005:234): Task, and Relationship-oriented managers. Highly task-oriented managers prioritize achieving goals and tasks over building strong relationships with their team members (Miner, 2005:234). According to Miner (2005:234), task-oriented managers are characterized by their independence and have a relatively lower concern for others’ feelings. They may be inclined to reject individuals with whom they cannot effectively accomplish tasks. This could mean that in situations where change requires a high degree of collaboration, communication, and employee involvement, a task-oriented manager may struggle to gain the support and commitment of their team. On the contrary, relationship-oriented managers are usually characterized by concern for interpersonal relationships and feel the need for the approval and support of subordinates (Miner, 2005:234). The quality of the relationship between a manager and their group members becomes evident in the acceptance and loyalty of the members toward their manager. Positive relations between a manager and group members contribute to the creation of a positive and conducive work atmosphere (Miner, 2005:236). For instance, Fiedler (1995:8) proposes that managers who exhibit hostile traits and frequently issue threats to subordinates are prone to promoting an environment where subordinates tend to experience heightened anxiety. This often leads to self-doubts and distractions from the job (Fiedler, 1995:8). According to Covin et al, (1997:31), having leaders who are respected and liked within the company is key to making their subordinates have trust in them and feel less stressed over organizational changes. 20 2.5 Conceptual Framework Figure 1 Conceptual Framework (Source: Designed by Authors) Figure 1 illustrates a conceptual framework that addresses employees' perceptions and reactions to changes during the PMI process. This framework identifies key factors related to managerial characteristics and approaches, the absence of which could lead to employee resistance. Moreover, a correlation exists between positive employee perceptions and the acceptance of change, as well as manager traits and approaches to managing an effective PMI. 2.5.1 Summary of the Conceptual Framework This framework anticipates employees' reactions and their subsequent perception of changes post-acquisition. We assume that when employees perceive changes to alter their interests they will be 21 met with resistance. We also suggest that the changes resulting from mergers or acquisitions may induce uncertainties among employees regarding their roles and overall affiliation with the organization. Consequently, employees may fear job loss or significant changes to their roles, leading to heightened stress levels and subsequent resistance to the changes. Moreover, the significance of organizational culture for employees in the acquired firm is highlighted. The potential changes to the work culture could induce discomfort among employees. This discomfort has been interpreted as stemming from an attachment to the norms and values of the acquired company. However, when employees perceive changes to be positive, it fosters smooth adaptation to changes. In this framework, middle-level managers serve as change agents and are tasked with interpreting and navigating changes made by the acquirer. Their traits and approach to management play a pivotal role in shaping employees' acceptance or rejection of these changes. Effective communication of changes, grounded in managers' knowledge and understanding of the changes, is important to the manager-employee relations PMI process. Understanding the potential stress employees face due to these changes, coupled with managers' ability to offer support and promote good interpersonal relations, is essential for earning employees' trust. As depicted, a lack of trust in managers may fuel resistance among employees. Nevertheless, managers who demonstrate these traits and utilize these approaches in overseeing the PMI process facilitate smooth integration. 2.5.2 Employee Reactions to Changes Related to M&As Acquisitions result in significant changes for both the acquired company and its members, and these changes can be overwhelming. According to Ford et. al (2008:363), change interrupts the normal patterns of organizations which results in the need for participants to create new patterns. During the change process, both change agents and change receivers grapple with questions and concerns (Ford et. al, 2008:363). Change agents ponder on the practical aspects of change implementation, while change recipients are primarily concerned about the implications of the change on themselves (Ford et. al, 2008:63). The extensive reorganization typical in M&As often generates threats and fear about job security among both employees and managers alike (Dorling, 2017:941). Sinkovics (2011:28,31) 22 describes the level of changes in M&As as highly emotional and can lead to anxiety, stress, and uncertainty. For instance, during M&As, companies involved often aim to use assets jointly to reduce costs (Rodriguez-Sanchez et. al, 2018:644). This approach may lead to the downsizing of overlapping activities such as a reduction in the workforce. Additionally, the prospects of changes to one's social life because of the M&A, such as the potential loss of social networks and colleagues (Astrachan, 1990 in Sinkovics, 2011:31), are equally sources of concern for employees going through organizational changes. This is articulated by Sinkovics (2011:31) as a potential source of anxiety that could spill over to the private lives of employees. Sinkovics (2011:28,31) further indicates that the magnitude of an employee’s resistance to change is determined by the individual’s perception of the severity of the threat associated with the change. This often leads to emotions such as aggression, rage, and bitterness among employees towards changes implemented by the acquiring company. These emotional responses can further fuel resistance and impede the integration process. 2.6.3 Manager Traits / Approach Changes associated with M&As are essentially unavoidable, and employees are known to anticipate changes during such transitions (Risberg, 1997 in King et al., 2020:64). However, the effective management of change necessitates managers to undertake two important roles, sensemaking, and sense-giving (Gioia & Chittipeddi 1991:434, King et al. (2020:64). The process of sensemaking involves where managers construct and reconstruct meaning by developing frameworks that will help them to understand the proposed changes (King et al., 2020:64). In parallel, sense-giving involves the influential aspect of guiding and persuading others to embrace changes (Clark, Gioia, Ketchen, & Thomas, 2010:6). 2.6.4 Knowledge and Understanding of the Changes The role of middle managers as change agents is very critical in the organizational change process as they serve as the link between top-level management and the frontline (Balogun and Johnson, 2004:523). This involves the interpretation of top-level management strategies at the front line (Luscher and Lewis, 2008:221). Implementing change strategies requires managers to first make sense of the 23 changes (sensemaking) and further communicate their understanding to subordinates in a way that provides them with a workable certainty (Luscher and Lewis, 2008:221) This enhances the process of sense-giving during change implementation. However, many middle-level managers may have difficulty in making sense of the change themselves (Isabella, 1990:23). 2.6.5 Transparency, Honesty, and Clarity in Communication Communication and the dissemination of information play an important role during the integration process (Schweiger and DeNisi, 1991:128). Effective communication from managers to subordinates not only influences change reception among employees but also contributes to enhanced performance (Kacmar et. al., 2003:764,770). Communication, in this context, extends beyond frequency; its content holds equal importance. For instance, Rodriguez-Sanchez, et al. (2018:652) highlight the importance for managers to employ communication strategies characterized by regularity, clarity, and honesty as this is a necessary strategy to foster a more receptive attitude from employees during change efforts. Moreover, the infrequency of communication during M&As often gives rise to uncertainties among employees. Surprisingly, it is often this uncertainty that results in stress among employees, rather than the changes themselves (Schweiger and DeNisi, 1991:110). In such scenarios, employees often find themselves relying on rumours and other informal channels of communication to mitigate uncertainties (Napier et al., 1989:110). However, these informal sources of information tend to emphasize negativity and disseminate inaccurate information, the effect of which may result in more anxiety (Rosnow, 1988:580). Regarding clarity in communication, Milner, (2005:236) uses task structure to explain why it is important to have clear and precise instructions in the sensemaking process. He argued that task structure is the extent to which rules, regulations, job descriptions, policies, and role prescriptions are clearly and unambiguously specified. This is because it is easier to lead in highly structured situations because structured tasks are enforceable (Milner, 2005:236). Milner, (2005:236) further indicates that task structure is presumed to exist when decisions are subject to clear-cut verifiability. Additionally, goals are clearly stated and understood, meaning multiple paths to attaining the goals are not present, 24 but only one correct answer or solution exists (Milner, 2005:236). Furthermore, Serban and Iorga (2016:372) highlight the importance of clear, transparent, and honest communication in organizational change endeavors, and argue that effective communication during this period should prioritize conveying the necessity for change over just the details. Emphasizing the need for change prevents individuals from losing sight of the primary objective. Consequently, this approach is believed to reduce fears associated with change and facilitates a climate that is conducive to acceptance and successful adaptation of the changes (Serban and Iorga,2016:372). 2.6.6 Interpersonal Relations Organizational changes, particularly those arising from M&As, are recognized for their major impact on companies (Ford, et. al, 2008:363). These include changes in personnel, strategic approaches, established job roles, and the identity of the organization. This level of change usually triggers intense emotions among organizational members (Bartunek, 1984:367). While the role of middle-level managers as interpreters of strategies set by top-level managers for the frontline has been acknowledged, Huy (2002:32) emphasizes that the closeness of middle-level managers to their employees means they are well-positioned to understand the emotional needs of their employees. As argued by Kotter (1995:64), positive work relations with others are crucial to organizational change efforts, which places a responsibility on supervisors to create an environment that is conducive for employees to respond and adapt to the changes (Fowlie & Wood, 2009:560). For example, Udod et. al (2020:2) emphasizes the ability of managers who portray emotional intelligence to influence employees to respond positively to challenges in organizations. Moreover, employee performance can be enhanced in a period of change when leaders value and respect the opinions, abilities, and personal emotions of their followers as it contributes to the assurance of support from their managers (Udod et. al, 2020:8). 2.6.7 Trust Trust is an essential interpersonal component in managing people (Morgan and Zeffane, 2003:58). The extent to which organizational members are willing to accept the uncertainties and 25 anxiety surrounding change can be linked to the level of trust they place in those implementing the changes (Cai et. al, 2018:1058). This implies that employees show less commitment to change and overall, the objectives of the organization if they do not trust those implementing them (Dorling, 2017:941). According to Warrick (2022:436), skilled change agents are characterized by their straightforwardness and transparency in communicating changes. This implies that such managers can be trusted by their employees to act in their best interest (Warrick, 2022:436). To emphasize the importance of trust in managers' ability to influence subordinates during organizational change, it is evident that trust is key in fostering a positive and receptive atmosphere (Warrick, 2022:438). When employees trust their managers, they are more likely to perceive changes as genuine, transparent, and aligned with their best interests (Rodriguez-Sanchez, et. al, 2018:652). This trust, in turn, creates a sense of psychological safety, which encourages employees to take on and put in the necessary efforts to navigate the challenges associated with the change process (Dorling, 2017:939). Therefore, it can be suggested that managers who build trust between themselves and their subordinates become effective change leaders, as their credibility and integrity significantly influence the commitment of employees to support organizational change. The presence of trust in an organization ahead of significant change is very important as highlighted by Erturk (2008:4) the lack of trust in an organization can stifle change efforts. 26 Chapter 3: Research Methodology 3.1 Research Strategy Bell et. al (2018:17) describe a research strategy as the approach a researcher adopts for a research project. The research strategy determines the research design and the choice of research questions as well as the methods a researcher adopts to answer these questions Bell et. al (2018:17). In essence, the research strategy serves as a guide that shapes the research process. This study investigates how resistance to change impacts organizational harmonization in M&As and it has adopted a qualitative research strategy. Given the study's focus on individuals and their influence on organizations, a qualitative research method was deemed the most appropriate approach. A qualitative research method is a research approach used to explore and understand social phenomena from the perspective of those involved (Bell et. al, 2018:356). Strauss and Corbin (1998:10) add that qualitative research is research that produces findings that are not arrived at by statistical procedure or other means of quantification. Indeed, qualitative research generates data grounded in individuals' realities by using data collection methods like observations, interviews, and document analysis (Bell et. al, 2018:393) to gain insights into the social issues under investigation. This method allows participants to share their perspectives and experiences in their own words. Moreover, the use of this approach can reveal underlying causes, bring to light hidden dynamics, and provide insights into people's interpretations and meanings of their experiences (Hakim, 2000:35). This is further based on the consideration that in business research there is a need to understand people and how they affect the operations of businesses over time (Greener, 2008:11). 3.1.1 Abductive Research Approach This study is grounded in an abductive research approach. The abductive research approach involves a mode of reasoning aimed at formulating logical assumptions and constructing theories to explain the social reality under study (Bell et. al, 2018:24). It therefore begins with a puzzle or surprise and seeks to explain it (ibid) such as the use of a conceptual framework. In highlighting the role of theory in this approach, the abductive approach involves the use of theory in generating a conceptual 27 framework which this study has adopted. Our conceptual framework was guided by the review of literature on resistance to change in the context of acquisitions. Therefore, we have focused on employee perception of changes and managers’ traits and approaches to management. The use of theory has shaped both the data collection approach and the strategy for analyzing empirical data for this research. Moreover, the theoretical framework has served as a guide to interpret the data obtained from interviews with respondents. The conceptual framework in this study has been developed through a review of existing literature and theoretical constructs. As highlighted by Dubois and Gadde (2002:559), incorporating theory into research not only helps to identify gaps in the literature, but also facilitates the development of a conceptual framework, and identifies the relationships between key variables. Additionally, drawing on relevant literature helps researchers in making sense of the empirical findings and interpreting their significance. (ibid). Furthermore, the literature review helped us to firstly gain more knowledge about the key concepts of the study. It also helped to identify variables that were used in developing the conceptual framework. Based on this, a semi-structured interview guide was prepared using relevant themes and questions, to get responses to interpret the assumptions and variables of the framework. Additionally, while gathering empirical data, we made constant references to the framework to ensure that the variables had been covered by the interview guide and made slight changes to the guide to ensure that the required responses were gathered for the study. Also, an analysis of the empirical data has been done with references to the variables of the framework and literature to enable us to make modifications to the initial assumptions based on the empirical data. 3.2 Research Design Research design addresses the framework for which the research will be carried out (Bell et. al, 2018:45). Additionally, a good research design helps to structure the research study by outlining the specific methods and procedures that will be used to collect and analyze data. It, therefore, encompasses the purpose of the study, the research questions, the group being investigated, data collection methods, 28 and methods of analyzing the data (Bell et. al, 2018:45). The research design offers criteria to evaluate the quality of research, which is categorized into the reliability, replicability, and validity of the research (Bell et. al, 2018:46). The nature of this research, as such, compares resistance to change in different organizational contexts hence a multiple case study design has been adopted to study different organizations that have been involved in acquisitions. Further to this, a comparative design was adopted by the authors since the study also focuses on comparing cases from different geographical settings and finding out if there are notable similarities or differences in the empirical data. The comparative design allows for exploring contrasting situations, which enables the identification of patterns, similarities, and differences across cases (Bell et. al, 2018:68). Thus, we used a multiple case study design to help understand the concept of resistance in different organizational contexts and different geographical contexts. Moreover, Bell et. al (2018:68) indicates that cross-cultural research in business is a major variable that influences organizational behaviour. Although this study will not focus on the national culture within the cross-border context, it is important to identify how they compare in the different geographical contexts of the population of this study. 3.3 Sampling and Selection Sampling in research involves the process of selecting a subset or a group from a larger population to participate in a research study (Greener, 2008:46). Qualitative research, as noted by Bell et al. (2018: 389), commonly employs purposive sampling, which involves selecting units based on the specific research questions. The relationship between the research questions and purposive sampling is that the research questions should indicate the type of population that is suitable for the study. Thus, the rationale behind using purposive sampling is to ensure that the case companies selected are relevant to addressing the research questions posed (ibid). To ensure that the relevant units are selected for this study, a selection criterion was developed. The reason for this selection was to gain the most relevant insights from respondents that help to answer the research question. The case companies in this study are mainly SMEs that have been acquired by 29 MNEs in both international and domestic acquisitions within the past 2 to 8 years. The reason is to compare companies in the relatively early stages of acquisition with those that have been acquired for a significant time. The respondents are made up of managers and employees of the case companies and have been involved in the integration process following the acquisition. The selection and sampling of participants contributed to gathering diverse views and experiences across different levels of the organizations under study. 3.4 Data Collection This study adopted the use of both primary and secondary data. As emphasized by Bell et al. (2018:11), the data collection process is a critical component of any research project. In this study, empirical data were primarily obtained through interviews conducted with respondents from the case companies. Secondary data were collected through a combination of company profiles and a systematic review and evaluation of scientific articles for the literature review and theoretical framework development. 3.4.1 Primary Data Collection The main source of empirical data has been interviews. This study adopted a semi-structured interview approach to gather empirical data from managers and employees of the case companies. The researchers developed an interview guide with key questions that were sent to the respondents ahead of the interviews. These questions were mostly open-ended and, as such, allowed respondents to answer freely. However, there were a few close-ended questions that mostly targeted the roles of the respondents, which set the tone for the more open-ended questions (Bell et al.,2018:211). Furthermore, the semi-structured interview approach provided interviewers with the flexibility to ask follow-up questions, allowing for clarifications of respondents' initial answers. Moreover, adopting this interview approach facilitated the exploration of other relevant areas that might have been less accessible through other methods. The selection of a semi-structured interview format, as highlighted by Greener (2008:89), offers an advantage due to its unstructured nature, allowing interviewees to steer the 30 conversation in directions of interest to them, thus yielding deeper insights as compared to more structured approaches. 3.4.2 The Interview Process The interviews were conducted by the two authors of this study. One of the interviewers moderated by asking the questions while the other took notes. The second author had the opportunity to ask follow-up questions after the last question had been asked or when necessary. This was usually a follow-up to a response from the interviewee. The moderator starts by first introducing the research topic and the research question, which seeks to give the interviewee the rationale behind the research in which they are participating (Bell et al.,2018:215). The interview guide was in two main categories, with one set of questions for managers and the other for employees with different sets of questions. However, there were additional questions that were asked during the interview that were not originally part of the interview questions. These were questions that followed initial responses given by participants. The interviews were conducted virtually over Microsoft Teams, which gave the respondents and the authors freedom and flexibility as there was no need to schedule on-site visits. The semi-structured interviews were conducted with 4 companies and a total of 18 respondents were interviewed on an average of 32 minutes per interview. 31 Table 1 List of participants interviewed. 3.4.3 Archival Data Collection The archival data utilized in this research mainly consists of information obtained from the case companies' websites. A significant portion of the archival data was sourced from scientific articles, accessed through a systematic review of academic journals such as The Scandinavian Journal of Management, Academy of Management Journal, and Journal of Economics and Business among others. Additionally, Gothenburg University's Library database, Google Scholar, and ScienceDirect databases were utilized for this purpose. The process of identifying relevant articles involved targeted searches using keywords such as: Keywords: *Resistance to Change *Employee Resistance *Manager Traits *Leadership Approaches *Mergers and Acquisitions 32 This means that carefully selected peer-reviewed articles from reputable sources have been selected to meet the validity and reliability criteria of the research, which aligns with the principles outlined by Bell et al. (2018:12). 3.5 Data Analysis Bell et al. (2018:518) acknowledge the challenges associated with analyzing data for qualitative research due to the large dataset, and the reliance on unstructured language, such as field notes and interview transcripts. Nevertheless, it is important to note that there are additional methods of analyzing data in qualitative research. This study thus adopts a thematic analysis approach to analyze data from interviews. To identify data from each interview, the recorded video files were labeled with distinct codes to ensure the respondents' anonymity was respected. The videos were then transcribed and analyzed using thematic analysis. The thematic analysis approach based on Ryan and Bernard (2003:89- 91) interpretation recommends that researchers pay attention to repetitions, typologies, metaphors, and analogies as well as transitions and similarities or differences between responses. This approach enabled us to identify expressions used by different respondents, such as trust, honesty, uncertainty, communication, and stress which were recurrent themes across many responses. These variables were interesting for our analysis as they are key elements of the conceptual framework of this study. This implies that the theoretical analysis has been continuously integrated with our data analysis. Additionally, the raw data was categorized into employee perception and manager traits and approaches in managing a smooth integration process while focusing on highlighting the similarities and differences in the responses of the participants. These two categories were further categorized into negative and positive perceptions and traits. This enabled us to connect the notable differences and similarities in experiences and analyze them in reference to the conceptual framework. 33 3.6 Quality Criteria of the Study To ensure that a research study meets the quality criterion, the study must meet the reliability and validity criteria (Bell et. al, 2018:362). However, in addition to these two, others equally help to assess the quality of a study, such as credibility, and trustworthiness among others (Bell et. al., 2018:363). This comes on the back of concerns as to whether the two mentioned criteria are suitable for assessing the quality of qualitative research, as it is argued to fit better for quantitative research (Bell et. al, 2018:362). 3.6.1 Reliability The reliability criteria of a study refer to the ability of the study to exhibit consistency, stability, and repeatability of measurements or findings (Greener, 2008:37). In other words, a study is considered reliable if it produces consistent results when the same methods are applied under the same conditions (ibid). Reliability is important because it ensures that the findings of a study are dependable and instills confidence in the fact that the results have been genuine (ibid). Adopting a qualitative approach, this study prioritizes reliability by maintaining consistency in the interview guide. Uniformity in this context means that all respondents who are employees have been asked the same questions in the employee interview guide and a similar approach has been replicated for managers with the manager interview guide. This is to ensure that differences and similarities in perspectives are captured and connected. This approach comes on the back of the knowledge that individuals are different and their experiences and insights in these contexts will differ (Guba, 1981:81). 3.6.2 Validity The validity of research refers to the degree of integrity of the conclusions of the research (Bell et. al, 2018:46). It therefore refers to the ability of a research study to measure up to what it intends to achieve. Greener (2008:37) indicates that good research methods should have face validity, construct validity, internal validity, and external validity. Face validity refers to the apparent suitability or relevance of a research method, as it appears to participants or observers. It ensures that the chosen method is easily understandable and sensible to those outside the research process. Face validity is 34 crucial as it enhances participants' willingness to engage in interviews or research activities, fostering cooperation and meaningful contributions (ibid). This has been applied in this study by selecting respondents who have genuine interests in the topic under study, as well as developing interview questions that are relevant to the findings of the research. Internal validity relates to causality and is usually in parallel to credibility (Greener, 2008:37). This is a key strength of qualitative research, and it focuses on the alignment between researchers' observations and the theoretical concepts they formulate (Bell et. al., 2018:363). Thus, this addresses the link between research questions and the data gathered and is therefore important for researchers to demonstrate that data gathered can be linked to the social reality that is being studied (Guba, 1981:80). This has been implemented in this study by referring to respondents for feedback and clarifications, as well as making connections to different theories through triangulation. Additionally, triangulation has been done by comparing responses from each company to identify patterns and similarities. External validity, as outlined by Bell et al. (2018:363), pertains to the extent to which research findings can be applied beyond the specific context in which they were obtained. Therefore, the emphasis lies on determining whether the conclusions drawn from the research can be extended and applied to different contexts or scenarios (Greener, 2008:38). However, applying external validity criteria to qualitative research poses challenges due to the reliance on case studies, which often involve smaller sample sizes (Bell et al., 2018: 363). Despite these limitations, although this research adopts a qualitative approach and responses have been gathered from a limited number of participants, the authors remain mindful of these considerations. Nevertheless, there is a strong belief that the insights gained from this study could contribute significantly to understanding the impact of resistance to change in the harmonization process of acquisitions. 3.7 Ethical Considerations In carrying out this research, ethical principles associated with research have been strictly upheld by the authors. In engaging participants for this research, ethical practices in line with Bell et al. (2018:110) have been considered. For instance, participation in the study has been discretional 35 following the explanation of the study objectives as such no participant has been coerced into taking part. Additionally, questions for the interview guide have been related to participants’ experiences within the context of the research and not questions that probe into their privacy. Furthermore, participants were fully aware and consented to video and audio recordings from the interview sessions after the authors explicitly asked. The videos from the interviews as part of keeping the anonymity of respondents were deleted following the completion of this study, as this was mentioned to the respondents at the beginning of the interviews. Finally, regarding anonymity, this gave the interviewees more security in being open with their responses, without concern for their identities. Names of companies and personal identities of respondents have not been displayed anywhere in the study as the authors resorted to giving unique code names such as “Company 1, Respondent 1”, “Company 2”, and “Respondent 2” to avoid using any of the names in the study. The authors also made sure that participants had the chance to review a draft copy of the transcripts from the interviews for comments and clarifications. These have been in respect of the provisions of the General Data Protection Regulations (GDPR) Articles, 4, and 5, and Chapter 3 on the rights of data subjects (GDPR, 2018). Clouding services such as Microsoft Office 365 OneDrive/SharePoint provided by the University of Gothenburg have been used in writing this paper and to store securely the main worksheet for this research. This is to ensure the contents of this research are stored on a secure platform. 3.8 Criticism of Methods Like every study, there are both positive and negative sides associated with the methods we have chosen for this study. Firstly, this study has investigated employee resistance to change in acquisitions within both domestic and international contexts. In relation to the case companies and the number of years that they have been in acquisition, we acknowledge the gap of 8 years in the case of one company and understand the possibility of that affecting the responses of participants given that, it is natural for people to forget details when a considerable time has passed. However, we also acknowledge that this periodic difference may be good in comparing the respondents' experiences in the initial stages of the acquisition to this stage where they have gone through the process over the 36 period. Secondly, this study has investigated companies in different industries, which can be seen as widely different in circumstances. We, however, acknowledge that there may be a huge difference in comparing the companies because of the differences in the fields. 37 Chapter 4: Empirical Findings 4.1 Case Descriptions 4.2 Case One 4.2.1 Background of the Company Case Company 1, until being acquired 8 years ago, was a Swedish company that had been operating in the clothing industry specializing in the manufacture of workwear. The company was acquired by a Swedish MNC with different companies under its group. The acquiring company is an experienced acquirer that targets growth through the acquisition of SMEs. Interviews have been conducted with four respondents, two of whom are managers and two employees. 4.2.2 Perception of Changes The respondents reacted to the initial announcement in different ways. When asked about the reaction upon learning about the acquisition, the manager said it was not a surprise. He indicated that there were signs that the owners wanted to sell the company. In anticipation of this transition, investments had already been made in various areas of the company. During the initial stages of the acquisition, there was a reluctance to make significant changes, however over time, hierarchical shifts became evident. Additionally, the departments started to interface with their overseas counterparts, and reporting structures changed accordingly. From the perspective of the manager, the changes were seen as positive, viewing them as beneficial for the company's growth and development. For both employee respondents, the announcement came as a surprise, sparking uncertainty about the forthcoming changes and their potential impact on them and the company. From an SME to being acquired by a large MNE, there were concerns about how much of the company would change. Respondent 3 acknowledged being uncertain about the acquisition and the potential changes but gradually came to recognize the potential benefits of being part of a larger company. Despite the initial reaction towards the acquisition, particularly for individuals accustomed to a smaller company environment, the recognition of future opportunities gradually emerged over time, and this seemed to allay the fears of some of the employees. Nonetheless, there was a notable turnover among 38 employees after the acquisition. Similarly, Respondent 4 initially found the changes surprising but eventually understood the strategic progression envisioned for the company. He emphasized the importance of alignment between personal mindset and organizational goals, ultimately choosing to continue with the company due to the potential for growth and development. In the case of both employees, it took some time until they gained an understanding of how the changes could be positive. Additionally, Respondent 4 experienced initial frustrations with the changes because of his personal preference of maintaining the status quo without the need for sudden changes. However, amidst this, there was also the mindset to first understand what the changes would imply for him before making any decision about continuous involvement with the company or not. To ascertain the impact of the changes on the respondents’ roles, employees conveyed diverse viewpoints. Specifically, the change in organizational structure necessitated an adjustment to a new organizational framework characterized by a lengthier decision-making process as compared to the previous structure. This shift also resulted in managers losing the autonomy to make certain decisions, which required more consultations. 4.2.3 Changes to The Organizational Culture Before the acquisition, the organizational culture at the acquired company appeared to be characterized by a strong sense of camaraderie, teamwork, and a family-like atmosphere. Respondent 3 emphasized the close relationships among colleagues and highlighted the tradition of group activities. This culture and shared experiences contributed to a cohesive and supportive work environment where employees felt a sense of belongingness and unity. However, the post-acquisition period saw changes to the existing culture which many employees found difficult to accept. In relation to the employees' attachment to the previous company, Respondent 3 mentioned a proposal to rename the brand during the initial stages of the acquisition. This proposal elicited dissatisfaction, and the respondent expressed that it could have potentially led to his outright resignation, indicating a major source of resistance from the employee. Respondent 4 acknowledged changes in the organizational culture, particularly in the operational structure and decision-making processes. While hierarchical changes were noted, the 39 employees’ frustrations primarily stemmed from the impact of the acquisition on the culture of middle- level managers' inability to make quicker decisions and implement them promptly. "We used to be a close-knit team, bonding through activities like annual trips to various cities. After joining a larger group, these trips were halted because organizing them for everyone became impractical. This change led to many employees leaving the company." Respondent 3. To understand the impact of changes on organizational culture, insights were gathered from Respondent 2, a manager from the acquiring company who oversaw the integration of Company 1. She emphasized that organizational culture is crucial and can be a significant hurdle during integration. Smaller companies face challenges as they shift from simple to complex processes and adapt to the culture of larger acquirers. For Company 1, moving from its entrepreneurial roots to the structured norms of a larger organization was particularly difficult. “I've been involved in different integrations as a project manager overseeing mergers and acquisitions. The challenges I've encountered differ from case to case, but one consistent factor is the significance of organizational culture” Respondent 2 4.2.4 Knowledge and Understanding of Changes All respondents agreed that their supervisors were knowledgeable about the post-acquisition changes. There were no doubts about the managers' understanding of the required actions. However, Respondent 1 noted concerns that some departments received less detailed briefings than others. However, like Respondent 1's remarks, Respondent 3 confirmed that in other areas of the company, there were discrepancies in knowledge across different parts of the organization, which were attributed to gaps in communication. Responses from Respondent 4 indicated that managers were fully aware of the changes but suggested that the demands of regular work and additional tasks during the integration period could have affected their ability to prioritize communication effectively. He indicated that while some 40 managers may have access to enough knowledge about the changes, their capacity to disseminate this information comprehensively was constrained by competing priorities and time constraints. 4.2.5 Communication Both managers indicated that their primary objective is to supervise the implementation of the goals of the acquirer in a way that is understood by the employees. This is usually done by effectively disseminating information downwards. Managers must ensure to convey information in a manner that assures employees of management's commitment to the changes and ultimately strive to promote awareness and comfort among the workforce. One key aspect of communication highlighted by Respondent 1 was the importance of communicating changes in a positive light during the integration process. Respondent 1 indicated that focusing on the potential long-term benefits of the changes is a way to encourage employees to embrace the changes and remain optimistic about the direction of the company. When the interviewers enquired about a key trait of the manager that helped in leading subordinates throughout the change, Respondent 1 emphasized transparency in communication and indicated that keeping employees informed about upcoming changes keeps them from feeling blindsided. He equally stressed that ensuring that communication channels are open for feedback to be addressed promptly, helped to promote a more inclusive decision-making process, which made the employees feel valued and heard. “Nobody likes to feel that their voices and opinions hit a brick wall”. (Respondent 1) In response to questions on how employees felt about the communication process during the integration process, the employee respondents argued that communication could have been more frequent and effective during the transition period. While Respondent 3 admitted that communication could have been more effective, Respondent 4 highlighted fluctuations in communication during the integration process and indicated that during the initial stages of the acquisition, employees were given frequent 41 updates. However, as time progressed, communication became inconsistent, leading to frustration among employees. Respondent 4 reiterated the significance of effective communication when asked what managers could have improved upon during the integration period. The employee expressed dissatisfaction with the quality of communication, citing instances where answers provided by supervisors were incomplete or unclear, leading to confusion and uncertainty. Additionally, he highlighted that a better approach would have ensured that employees remain well-informed about changes that directly affect their work. “You get an answer and when you go back to the desk or go back to the warehouse you do not know what the answer was. It was not super clear”. (Respondent 4) 4.2.6 Trust Respondent 1 highlighted the importance of having a good track record for the employees to be assured that managers have their best interests. Similarly, Respondent 3 highlighted the mutual trust that existed between himself and the manager and acknowledged that they were trusted to carry out their duties if they were doing the right things. “...obviously they know from your track record that you are not just telling them what they want to hear so that they can do the work.” Respondent 1 When asked about the level of trust in managers during the integration period, Respondent 3 admitted having enough trust in his manager. However, Respondent 4 expressed a sense of trust in the previous manager, with whom he had established a strong working relationship. However, following the change in manager after the acquisition, the respondent found himself navigating a learning curve. He was accustomed to working with a hands-on manager who communicated clearly and took prompt action. The transition to a new manager affected the trust in the manager's ability to handle the changes effectively. 42 4.2.7 Support and Interpersonal Relations Both Respondent 1 and Respondent 2 emphasized the importance of cultivating positive working relationships between managers and subordinates. Respondent 1 highlighted that it is a key factor in influencing a positive employee response to changes. Furthermore, he stressed that establishing a strong rapport with employees enhances their openness to change. Respondent 1 also indicated the varied impacts of changes on different employees and emphasized the importance of providing support and demonstrating an understanding of how changes affect employees. Additionally, he pointed out that withholding information or being less transparent can lead to increased resistance and frustration among employees. Overall, creating an environment where employees feel heard and valued can contribute to smoother transitions during periods of change and uncertainty. “If you have good relations with people, they are more willing to accept what you are telling them….” (Respondent 1) Similarly, the employee respondents recognized the support they received from their managers and the importance of interpersonal relationships. Respondent 3 highlighted the depth of his relationship with the manager and acknowledged that managers genuinely cared about their well-being. This relationship as mentioned by Respondent 3 facilitated access to information about the changes which made the process smoother. Respondent 3 also expressed gratitude for their leaders' efforts in advocating for employee rights, underscoring the significance of having supportive managers who championed their interests within the organization, especially during the integration period. However, Respondent 4 described the support and interpersonal relations from their managers during the integration period as neutral, falling somewhere between good and bad. Furthermore, Respondent 4 admitted that in some situations support from managers was somewhat lacking, and that led to some level of frustration towards the changes. 43 “Most of the time we are working with intelligent people who may not necessarily like you as a manager or a person but hopefully the information will win them over. But having a good working relationship with people helps, (Respondent 1) 4.3 Case Two 4.3.1 Background of the Company Case Company 2, prior to the acquisition, was a Swedish SME that had been operating for about 30 years. The company provides technological solutions for companies in the manufacturing and distribution industry in the Nordics, Europe, and the United States. The company was acquired by a Finnish Multinational Corporation (MNC) 3 years ago. In the aftermath of the acquisition, the company went through some structural changes in line with the structure of the acquiring company. Given that this company was acquired as a specific brand, much of the operations remained the same. However, notable changes in culture, organizational structure, and some other general changes have been discussed by respondents. The respondents from this company consist of five individuals with 4 of them being employees and 1 being a manager. 4.3.2 Perception of Changes After the initial announcement, respondents showed enthusiasm and apprehension about the acquisition and the possible organizational changes. From the manager’s perspective, it became apparent that showing support and retaining a positive outlook was essential for successfully navigating the change process. Managers must provide support, even in the face of personal concerns or convictions concerning the changes. This is because employees pay close attention to how managers react to changes in general. Transitioning from a smaller, family-oriented company to being acquired by a larger MNC offered Company 2 significant opportunities, including access to a broader network within the organization and a wide range of tangible and intangible resources. Despite these positive prospects, the acquisition also resulted in discomfort among some company members, leading to a sense of uneasiness due to uncertainties about the acquisition's implications for the company members. 44 Initial responses from all respondents were similar in that they expressed excitement about the potential advantages of being part of a larger organization, but they also acknowledged worrying about the impact of the changes on their roles. Respondent 6 expressed enthusiasm for the prospect of being in a larger company but acknowledged feeling uneasy and worried about potential changes to their duties because of the acquisition. Respondent 7 also acknowledged being surprised by the announcement and had doubts about the potential adjustments to their positions in the new company. Increased workloads, modifications to the organizational structure, alterations to the business culture, moving to new workspaces, and the adoption of new security and data protection procedures for both company-issued and personal devices were some of the changes that happened after the acquisition. When asked how they perceived the changes, the respondents expressed a range of opinions. While some noted that there were minimal changes initially, others found certain adjustments challenging to adapt. According to Respondent 5, many existing processes remained intact after the acquisition, but certain functions required alignment with those of the acquiring company, especially in finance, security, and legal departments. One notable change was the restructuring of pay grades, which was met with mixed reactions among the group. Overall, there was a general sentiment that the changes could have personal and organizational benefits in the long term. ….. “Regardless, this management is more open-minded and accessible, and there are still a lot of opportunities for people to grow, change roles or positions, and better their lives. Of course, pay grade has been difficult to accept because of the changes which is more difficult for all of us because we were used to the arrangements before the acquisition”. (Respondent 5) Employee responders emphasized how the changes had significantly affected their organizational structure. They notably called attention to the modifications made to the organizational hierarchy, even though they acknowledged that there had not been an excessive number of changes overall. A major observation in the change from the previous structure was that decision-making now needed several meetings and consultations across various levels before actions could be taken. 45 The respondents offered a range of viewpoints when asked how the changes affected their roles within the company. Respondents 7 and 9 mentioned that the adjustments caused a sudden increase in workload, which left them feeling overburdened. Due to the rise in responsibilities without a corresponding increase in staff, current workers were required to take on more work. For example, Respondent 7 reported having to deal with an unexpected surge of clients who needed help while making modifications to existing sales materials and website content to fit the strategy of the acquired company. According to three employee respondents, the firm has implemented heightened controls. Reactions to how they perceived these controls were different. Some were uncomfortable with the extra layer of supervision, but others understood and recognized it as a common practice in larger companies. Even though there was a feeling of being watched, one respondent acknowledged the value of these measures in preserving order in a bigger, more diverse workforce. Respondent 6 described his early demotivation because of perceived limitations on their freedom. “Perhaps before it felt a little bit more like a family, but it still feels the same way just that you feel that there is this big Daddy who is watching over you (Respondent 8)” 4.3.3 Changes to The Organizational Culture In the case of Company 2, the interviewers sought to find out the extent to which the culture of the acquired organization changed in the post-acquisition period and how the organization members responded to them. While opinions varied among respondents regarding the organizational culture changes, there was a prevalent acknowledgment that they had seen in the organizational culture after the acquisition. All the respondents acknowledged that the dynamics within the smaller company changed to conform to the principles of the larger acquiring company, which prioritized more structure. While welcoming the changes to their organizational culture, the respondents highlighted their attachment to certain aspects that had been nurtured over the years. Specifically, employee respondents 46 noted a change towards a larger company culture characterized by hierarchies and numerous meetings, yet they desired to maintain customary employee activities. They eagerly anticipated preserving these aspects without alteration. In relation to this culture change, Respondent 6 indicated that the feeling in the new company is one that appears to be cold and more corporate. Additionally, there were expectations among the respondents that changes to the organizational culture were imminent in the early stages of the integration process. One employee emphasized her commitment to the organizational culture the potential impact that could have on the integration process and how the other employees would see the company going forward. Respondent 9 expressed concerns over the potential impact of culture changes on employee retention within the company. There was concern regarding the possibility of individuals departing from the organization, citing a deeply ingrained culture, and loyalty among some of the employees. Central to these concerns was the challenge of preserving this culture of loyalty amidst the changes brought about by the acquisition. Additionally, there was uneasiness about the shift from a collaborative to a more structured work environment, and implementing a new corporate culture proved to be especially difficult. “The thing that scared me the most was the company culture and how much that would change. Because I think that we had a good culture here and I was really scared that that would change and so I tried together with others to keep that going into the acquisition” (Respondent 9). 4.3.4 Knowledge and Understanding of Change The level of trust in managers' competency during the integration process was consistent among the respondents, indicating a general absence of doubt regarding their managers' understanding and knowledge of changes. According to the manager, the acquiring company is an experienced acquirer with a well-defined strategy to facilitate a smoother transition. This approach influenced the extent of information accessible regarding upcoming changes. Furthermore, it was noted that the acquiring company was not too quick to implement changes but rather opted to retain a degree of autonomy in the acquired company while still requiring them to report to the central office for significant decisions. 47 Although the employee respondents had no reasons to believe that their supervisors were not on top of issues, there was a general admittance of instances where communication was cited as the challenge and not necessarily a lack of knowledge or understanding of the changes. Additionally, there were instances of conflicting information, but this as indicated by one of the employee respondents could be attributed to differences in opinions which occasionally led to conflicting information. Respondent 8 expressed confidence in the manager’s capabilities, noting that there were efforts to establish connections and foster inclusion within the company. 4.3.5 Communication From the manager’s statements when asked about how important communication is and how that transpired during the post-acquisition period, there was a clear emphasis on the importance of information sharing in the integration process. He highlighted the apprehension that people experience during changes and established that it is crucial to maintain transparency and provide employees with a sense of reassurance. Additionally, the manager admitted that uncertainty breeds anxiety, which prompts individuals to speculate and imagine scenarios when questions go unanswered. Although there was a requirement for confidentiality, by the signing of Non-Disclosure Agreements (NDA), there was a sense that employees were informed about ongoing developments. This ensured that they understood the situation and helped prevent disengagement. “It is extremely important to be informative and to give employees some level of comfort. Because it is always a threat if people have questions and do not find answers and don't know what is happening” (Respondent 5) The employee respondents recognized the significance of communication throughout the acquisition process. Nearly all respondents mentioned periodic meetings with representatives from the acquiring company in the initial stages of the acquisition, followed by subsequent communication with their managers during the integration period. While this sentiment was widespread among employees, there 48 were also expectations for more frequent and effective communication. Two employees acknowledged that the process seemed somewhat disorganized. Respondent 9 admitted to learning more by actively participating in the integration process rather than solely attending meetings. Additionally, there was a sense of uncertainty regarding whom to approach with certain questions. Respondent 8, for instance, confessed to not knowing the appropriate person to address certain concerns due to some positions being overseen remotely within the larger organization. “Before the acquisition, it was a smaller company everyone knew basically who to talk to and now it is a larger company with more people involved even people who you have not talked to before and that can make it a bit difficult.” (Respondent 8) 4.3.6 Trust “We are always a team. Just like a football game, you can never win the game on your own. You have to trust your team members and that is the only way to win the game. Trust is the foundation of running a successful company and that helps in times of changes because if you have built that trust before the changes then you will go through the changes without many problems because people trust each other” (Respondent 5). The manager acknowledged that trust is key to organizational change implementation and indicated that changes affect individuals differently, it was important to go into the process with an established level of trust among employees in managers. The result of which influences employees' acceptance or resistance to the changes. Several concerns were brought to the manager and such feedback was important and elevated to management level for action to be taken. The understanding of such difficulties by the manager and the trust that employees have in their manager to deal with their concerns influenced how they receive the changes. 49 Employee responses equally highlighted the significance of trust and how that shaped their experiences with the change process. There were, however, varying degrees of satisfaction regarding managerial trustworthiness during the integration process. Existing manager-employee relations are important to understand how trust will work out in the integration process. For the most part, trust that existed between managers and employees was acknowledged especially in the case where managers had not been changed after the acquisition. In a different light, the lack of trust could lead to employees having concerns about the manager's motivation for implementing changes. This was evident in the discussion with Respondent 9 who had concerns about the true motive behind their manager’s support for some changes. The impression was that the financial implications had become the major focus and not how the employees were taking the changes. The empirical findings highlighted how manager changes during the integration process could affect employees' trust in their managers' ability to manage the changes effectively. While one employee experienced a change in manager during the integration process, resulting in some disconnection, the remaining respondents retained the same manager as before the acquisition. Consequently, these employees expressed confidence in their managers' abilities to navigate the changes successfully. 4.3.7 Support and Interpersonal Relations Respondent 5 emphasized the role of an effective manager in supporting their subordinates in times of change and argued that understanding the dynamics of the group and taking note of the individual roles of the team members is crucial in the change process. The manager indicated that there were members within the group who played the role of informal leaders as such could influence others. According to Respondent 5, building interpersonal relations with employees includes an approach to empowerment, which centres on fostering a culture of idea encouragement, employee involvement, cultivating positive attitudes among employees, and maintaining confidence in their ability to navigate changes. Additionally, there was an emphasis on the importance of making employees feel included in the change process and ensuring consistent, transparent communication which shows support for employees through the change process. 50 “Coming from a smaller organization with a lot of room for many ideas and interactions to a bigger organization where there are many limitations and rules with which one must comply could be dramatic for people. But then again people are adjustable…….” (Respondent 5). Responses from employees highlight different challenges that were encountered in the integration period and how much support they felt was available to them. Difficulty with getting prompt feedback was a source of concern for some employee respondents. This lack of responsiveness led to feelings of uncertainty and undermined trust in the respective manager. Respondent 8 expressed uncertainty about whom to approach for support in the absence of their manager, which resulted in a communication breakdown. There was no indication of a clearly defined support structure within the organization. The acquisition resulted in a shift in management style, with the new approach being more hierarchical. While this change was deemed necessary to facilitate the adaptation to the new structure instituted by the acquiring company, it was viewed by some employees as less inspirational and potentially stifling to individual autonomy and initiatives. “I know that we have an HR department somewhere, but I do not know who or where. Previously you had this person you go to but now there is someone in a different branch or a different country”. (Respondent 8) 4.4 Case 3 4.4.1 Background of the Company Case Company 3 is a Swedish company that started operations in 2014 and was acquired 4 years later by a Finnish company. The acquisition by the larger Finnish company ushered in a series of changes in the organizational structure, culture, and operational systems which had different impacts on members of the organization. Interviews were conducted with five respondents from the acquired company, who are made up of two managers and three employees all sharing their perspectives on the different changes they experienced and how the managers handled the integration period post- 51 acquisition. However, one of the managers interviewed was brought in by the acquiring company to oversee the integration process, the other respondents were members of the company before the acquisition and have all been part of the integration process. 4.4.2 Perception of Changes The initial stages following the announcement were exciting times for most of the employees, as understood from the interviews with the three employees. Respondent 11 described a positive atmosphere, characterized by enthusiasm and excitement. She cited that the CEO's charismatic communication style highlighted the prospects for international growth and a customer-centric philosophy, contributed to a sense of optimism among employees. In addition to this, the potential benefits such as increased financial support for hiring and project expansions were widely received by the employees. Respondent 12, on the other hand, expressed initial detachment from the practical implications of the acquisition, as their ongoing project remained unaffected. However, he admitted that he felt a sense of identity disruption upon realizing the need to adapt to the new company and the potential effect of the changes on his affiliations with the acquired company. Respondent 13, admitting that there was no immediate concern about job security and acknowledging the potential benefits of accessing greater resources and expertise within the larger acquiring company. “By the time of the announcement I had worked for about a year and a half, and when you work for a company for a while you start to identify yourself with the name, logo or you feel that you are proud to represent the company towards the customer so when the announcement came, I felt a bit unsure” (Respondent 12). Regarding the notable changes experienced after the acquisition, the manager and employees indicated that there were not many changes initially. Respondent 11 indicated that the initial stages were characterized by business as usual, where employees continued their usual routines. However, after some time, they began seeing changes to structures, organizational reorganization, increased data security measures, and reporting structures. This was an observation that the other employee 52 respondents shared. Similarly, Respondent 10, reiterated the minimal changes in the initial stages. However, he perceived the process to be somewhat slower and admitted that it may have affected their readiness for the changes. Regarding the impact of the changes on the roles of respondents, there was a general indication among the employee respondents that the changes in structure led to more reporting lines. This was done differently before the acquisition. From the perspective of the managers, the changes resulted in changes to the decision-making structure. According to one of the managers, the previous company had a CEO who operated at the local office, which meant quicker consultations. However, the consequential impact of the restructuring on the decision-making process was that authority shifted away from the local office. This meant that the previous autonomy that managers had kept changing to more consultations higher up. As indicated by the manager respondent, they now had to go through different levels of consultations, and that led to a feeling of being further down the organizational hierarchy with decision-making authority increasingly becoming more distant from the local office. Two of the employees admitted not particularly experiencing any significant impact on their roles but more in terms of the implementation of a larger company structure. "At one point, there was a feeling that decisions were being made by people in Finland, leading to a sense of disempowerment and mistrust within the organization. It's unclear how this sentiment developed, but it has taken a long time to change. Even now, some people still hold onto that mentality."- (Respondent 10) 4.4.3 Changes to the Organizational Culture According to the manager respondents in particular there is no doubt that the acquisition brought about changes to the existing culture. However, the culture change was more related to distant culture as compared to the change in the organizational culture. It was particularly evident in the different approaches to decision-making and communication between the Swedish and Finnish companies. Respondent 10 highlighted the decision-making culture within Swedish organizations, where decisions often require reiterated discussion and clarification of the "why" behind each decision. 53 This contrasts with the Finnish approach, where decisions are typically made and executed swiftly without extensive deliberation. This cultural disparity led to some challenges, with some employees feeling a sense of disempowerment or mistrust, particularly when decisions appeared to be influenced primarily by the Finnish side. Respondent 11 further highlighted the organizational culture differences, noting the acquirer’s more hierarchical structure compared to the autonomy experienced in the smaller company setting of the acquired. The shift to seeking permission and adhering to established structures proved to be a significant adjustment for some managers who were accustomed to some degree of independence. The necessity to follow routines, even if not fully agreed upon, highlights the level of cultural adaptation that was required in the post-acquisition period. However, the organization still maintained its small company feeling, advocating that the changes were slow rather than instant. From the perspective of the employees, there has also been some impact of distant culture on the organizational culture. Despite efforts to maintain the acquired company culture, as noted by Respondent 13, differences in working cultures between Sweden and Finland remained apparent. He admitted that projects that required collaboration between consultants from both countries often resulted in clashes in the different work approaches. Nevertheless, attempts were made to adopt a sense of uniformity, although employees were keen to lean towards their local teams and departments instead. In contrast to this, Respondent 14 indicated that there were minimal negative changes within the Swedish offices, attributing his satisfaction to the preservation of the existing organizational culture. According to the employee, the similarities in the distant cultures of both companies were a significant factor in his decision to stay after the acquisition. However, there was a clear push from management to increase collaboration across different parts of the broader company, but this was not something that the employees interpreted as negative. “We jokingly say that we are Swedes and Finnish people are quite similar. The way of working is quite similar. Maybe Swedes are more open and quite pragmatic than the Finns are. It felt 54 like I was working with a Swedish team that wasn't speaking Swedish. It felt more relaxed when I started”. (Respondent 14) 4.4.4 Knowledge and Understanding of Change During the integration period, employee respondents had different opinions on their managers' knowledge and understanding of the changes and how this influenced how changes were implemented. Similarly, manager respondents shared their views on how much information they had about the changes and how that influenced a smooth transition for employees. From the perspective of the acquiring company, one of the manager respondents emphasized the importance of early collaboration and alignment between the acquiring and acquired company. It was further emphasized that the involvement of managers in the process should be done as much as possible to facilitate access to information and understanding of the process. Respondent 10 mentioned the importance of detailed business planning sessions to define common goals and ensure alignment among stakeholders. Both managers admitted being adequately informed about most of the changes and that largely influenced how they were disseminated down to the employees. Respondent 11 admitted that the CEO did a good job in disseminating information from the acquiring company as such there was a feeling of adequate information on the changes. Moreover, Respondent 11 highlighted the number of changes that were made in the initial stages which were not particularly many and indicated that most people continued their work as usual until later when periodic changes were made. According to the employees, they had continuous conversations with their managers throughout the integration process, which gave them little reason to doubt their managers' access to information or understanding of the changes that needed to be implemented. For instance, Respondent 13 expressed trust in the managers' knowledge and indicated that he felt the manager had been briefed enough regarding the changes, indicating confidence in the manager’s understanding of the changes. This was widely shared among the employees. “I had trust that they had been briefed about the changes so they could explain the most important 55 parts for us employees to feel confident about the changes that were going to be implemented” - (Respondent 13) 4.4.5 Communication During the interviews, communication was highlighted frequently by the respondents. Both Respondent 10 and Respondent 11 (managers) emphasized the importance of the initial face-to-face meetings following the announcement of the acquisition. This was done with representatives of the acquiring firm and the whole of the acquired company. This served to reassure employees and create a positive atmosphere within the group. Respondent 10 indicated that continuous communication through monthly meetings ensured that employees were kept informed about the progress of the integration and potential adjustments. Additionally, the inclusion of employees in the general monthly meetings helped to foster a sense of belonging among the employees. To ensure that the concerns and feedback of employees were heard and addressed, the managers again emphasized transparent communication where concerns were openly discussed during the monthly meetings, and progress on addressing these concerns was communicated. This strategy ensured that employees felt valued and that their voices were heard throughout the integration process. Similarly, employee respondents highlighted the frequency of communication during the integration period to update them on the status of changes and the way forward. As highlighted by the managers, employees reiterated the significance of the discussions where employee concerns and feedback were addressed in the monthly meetings. For instance, Respondent 14 indicated that continuous updates were provided throughout the integration process. This consistent communication was deemed essential for keeping employees engaged and preventing confusion or uncertainty. There is an indication that managers paid particular attention to communication during the integration period and that was key in the implementation process. Respondent 12 highlighted the transparency and clarity in how the vision of the new company was communicated, which effectively dispelled doubts about the 56 company's direction. This communication approach provided employees with assurance, enabling them to assess whether they were enthusiastic about being part of the company's direction. Another aspect of communication that stood out in the interviews was the communication strategy. As indicated by both managers particularly, Respondent 10, communicating the reason for the changes was equally important during the integration process. According to Respondent 10, this was a strategy that he adopted in communicating changes to employees. “One reflection is that at least for our team, the why was always super important. Why did we decide to do it this way, so it is not enough to say that hey we are now part of a bigger company we do it this way but the why part has always been important, and without that proper why part things would have been difficult.” - (Respondent 10) 4.4.6 Trust During the acquisition period, employees generally trusted their managers' ability to handle the changes and had some level of personal trust in them. However, a few employees had slightly different experiences regarding this trust. Respondent 12 expressed some level of trust in the manager's capability to navigate the changes, regardless of some disagreements on specific details. Similarly, Respondent 13 had no concerns about the manager's ability to handle the changes, attributing this confidence to the familiarity and comfort that existed within the company before the acquisition. In the case of the small company as admitted by Respondent 13, employees and managers had some personal relationship that resulted in trust. Respondent 14, despite experiencing frequent managerial changes, acknowledged the efforts made by the managers to keep employees informed and equipped with the necessary tools during the integration process. 4.4.7 Support and Interpersonal Relations The respondents' insights revealed that interpersonal relationships between managers and employees are crucial in influencing changes during the integration period. All respondents shared 57 different experiences of support and interpersonal relations with their managers throughout this period. From a manager's perspective, Respondent 10 emphasized the importance of strong personal connections between managers and employees, particularly in a small company setting. He admitted that his leadership style, characterized by dialogue, communication, and coaching, helped to build trust and facilitated the employees' adaptation to the changes. “I think this is a fundamental thing that needs to be in place to succeed in this and it is a common thing with this kind of company when it is entrepreneurial built…. It is a natural thing that happens that you build a strong connection with pretty much everyone. But without that strong personal connection, I think things would have been much more difficult.” - (Respondent 10) Respondent 11 equally shared a similar view on support and interpersonal relationships during the integration period and highlighted the significance of managers offering support to subordinates especially when some of the changes were perceived as challenging by some employees. Respondent 11 highlighted some efforts made by local managers to provide support to employees during changes. She admitted that some employees faced difficulty in understanding some parts of the technical changes and that necessitated an approach to spearhead some of the processes of getting the employees to adapt easily. She indicated taking up some of the tasks to reduce the burden on some of the employees in the initial stages of the integration process. The employees recognized the support and interpersonal relationships provided by the managers during the integration period. While there was a general acknowledgment of the support received from managers and the positive interpersonal relationships between managers and employees, maintaining some of these relationships was notably challenging due to periodic changes in managers. Respondent 13 reflected on the impact of frequent manager changes on relationship and trust building. Each change in manager disrupted continuity in communication and the trust-building processes, potentially affecting employees' comfort and their ability to adapt to changes. On the contrary, Respondent 14 credits the favourable integration experience to the relationships with the immediate 58 managers. These connections influenced a smooth adaptation to the changes and the overall decision to stay with the company. According to Respondent 14, the support and interpersonal relations between him and the managers contributed to a supportive and positive workplace environment. "We went through two or three managers within the initial two or three years. Naturally, it's more manageable to adapt to changes when you've established a longer-term relationship and trust with a manager. In such cases, discussions and communication might unfold differently compared to interactions with a new manager whom you are less familiar with."- (Respondent 13) 4.5 Case 4 4.5.1 Background of the Company This Danish SME was founded over 25 years ago and has since been building operational systems for the logistics industry. It was acquired 4 years ago by a larger Swedish MNC. The interviews were conducted with 4 people from case company 4. They consist of 1 manager and 3 employees. All case 4 respondents shared their opinions on the many changes they encountered, as well as how changes were managed during the integration period following the purchase. The personnel questioned in the research were all members of the firm before the acquisition and had all been part of the integration process. 4.5.2 Perception of change Upon receiving news of the acquisition, the respondents' initial reactions varied, reflecting a range of sentiments. Respondent 16 expressed feelings of uncertainty and nervousness regarding the company's future post-acquisition. In contrast, the announcement didn't catch the other two employees off guard, as there were expectations of an impending change. Respondent 17 pointed out that the company had other sister companies that had been sold previously, leading to a belief that an acquisition was imminent. Similarly, Respondent 18 mentioned that long-serving employees were informed by the 59 owners about their intention to sell the company before the process commenced, hence it didn't come as a surprise to them. Alterations to the organizational structure and changes to some technological systems were the notable changes that happened during the integration period. These changes had varied impacts on employees and their respective roles. Respondent 16 indicated that the changes had significant impacts on him and admitted being frustrated with how the changes were managed. There were challenges with the new IT systems because employees had a very short time to adapt to the new systems. Respondent 16 equally highlighted the frustration with the many meetings to make decisions as compared to the decision-making process before the acquisition which he described as easier. Respondent 17 on the other hand admitted to expecting some of the changes because of the size of the acquiring company. However, indicated that the additional layers of managers had impacts on budget approvals, and strategy even though the layers of managers in the previous company were shorter. Similarly, Respondent 18 corroborated the increased workload, particularly for the marketing department. However, she indicated that while there were adjustments to processes and systems, the integration plan allowed for a gradual transition without much disruption to day-to-day operations. “There is a lot of planning, and you can see the consequences of growing to a certain size. Previously, I could go talk to my boss. Now I don't even know my boss. It is some random guy sitting somewhere in the mother company that I have never met. It still feels artificial.” - (Respondent 16) In relation to how members of the company perceived the changes, there was a general sense of positivity among the manager and some employees, although they had concerns about the implementation. According to the manager's respondent, one significant change was the number of meetings that had to be scheduled for simple tasks to be carried out. This led him to question how that structure was important for their operations. For respondents 17 and 18, there was a clear indication of a positive perception of the changes, as they highlighted an understanding of the structure of a larger organization. However, in the case of Respondent 16, there was a clear indication of a negative 60 perception of the changes, and he was not impressed with the impact it had on his work. “I felt less ownership of what I do. Before when I worked in the previous company, I felt like I mattered more. Now I feel like a cog in a machine, and I am less inclined to put in more effort. I am not motivated to do that because it feels a bit impersonal. - (Respondent 16) “They have some nice plans for marketing, but it would be nice to get us involved and discuss how to do it in the right way. But if they tell you to do it this way or that way then that can be frustrating” (Respondent 18). 4.5.3 Changes to the Organizational Culture Responses from the participants addressed organizational culture and distant culture. There were important revelations to understand how the distant cultures of the two companies were perceived by the respondents and how that may have contributed to resistance. According to the manager, the owners decided to find a company with a similar culture to ensure a smooth transition. Regardless, he acknowledged differences in the culture of the acquirer as compared to the smaller acquired company. Although the merger was between companies with distinct national identities, he admitted that it was not a case of too much difference. " So far, we could recognize ourselves in their humor, mentality, and the values that we wished for the company. Of course, there are cultural differences. In general, we are satisfied… it could be different if it was a Spanish company." – (Respondent 15) There were diverse responses from the employees on how they perceived the cultural changes. Respondent 16 admitted feeling a sense of detachment from the organizational culture post-acquisition and indicated that it almost became an "us and them" feeling. In addition to this he cited his commitment to the small company culture which meant adapting to the new organizational culture was challenging. Regardless of this, Respondent 16 indicated that the day-to-day relations among colleagues remained 61 largely the same. Furthermore, Respondent 17 experienced few changes in the overall company culture and saw many similarities between the cultures between them and the acquiring company. Respondent 17 admitted that changes in the company structure were expected but considered the organizational culture to be quite similar. Respondent 18 on the other hand noted that there were some frustrations among employees, particularly in the marketing department, due to perceived micromanagement from the acquiring company's higher-ups. Furthermore, Respondent 18 admitted that the language barrier between the companies made it difficult to show her competences. She indicated that she had no problem doing that in the old company because they were aware and had worked with her for a long time. Despite admitting attesting to her competences, it became a challenge to express it during discussions with members of the acquiring company. 4.5.4 Knowledge and Understanding of Changes. Per the responses gathered from employees, there were varied opinions on how they trusted their managers’ level of knowledge and understanding of the changes after the acquisition, and how that influenced their acceptance or rejection of the changes. Respondents 17 and 18 shared similar experiences concerning their belief in their managers' understanding of the changes. Respondent 17 indicated that there was a feeling that managers understood the changes and demonstrated that they had enough knowledge about what needed to be done. This, he admitted made the process smoother. "They have handled a lot of disagreements when fitting all the details and figuring out how we should adapt to the changes before they reach us. So, when it reached us, you feel that it had been through a good process to make it easier for us to accept" – (Respondent 17) . Similarly, Respondent 18 had no reasons to doubt her manager's understanding of the changes and the amount of knowledge they had during the integration process. She indicated that the managers had been involved in the initial stages of the integration process and the discussions with the acquiring company and that showed in their interpretation of some of the changes. Due to this she had belief that the managers knew what they were doing. On the contrary, Respondent 16 had a different assessment of 62 his managers knowledge and understanding of some of the changes. When asked, Respondent 16 gave the following reply. "Yes, I felt that the managers did not fully understand these changes when we did it. There were a lot of discussions on why we did it which now I feel fell in place years afterward, and I think we are at a point where it makes more sense. But I feel if they had been prepped better and they understood the concepts, we would have been better off but the start felt so cumbersome. We spent so much time and did not produce anything. It reflected on us. We received it badly because they were not prepared well enough. " – (Respondent 16) 4.5.5 Communication In response to questions about how changes were communicated during the integration process, the respondents highlighted the importance of communication to the integration process. The manager highlighted that clear and transparent communication was key in his approach to managing the changes. According to him the discussions with employees were organized in periodic meetings where the agenda was to update employees on new decisions and equally gather concerns from the employees and forward them to upper management. Respondent 15 indicated the use of straight communication without sugarcoating words for employees. In addition to this Respondent 15 indicated that he focused on communicating the positive aspects of the changes and highlighted the potential opportunities that would come from the acquisition. " You could say that I had become the negotiator between the two cultures. We still have our local employee meetings where we discuss things like we used to and present decisions and strategies from the mother company" – (Respondent 16) From the perspective of employees, communication from the managers could have been better. Respondent 17 indicated that the managers did well by communicating various aspects of the changes during the integration period and indicated satisfaction with the communication process. In doing so he 63 mentioned the periodic meetings where regular updates were given to bring them up to speed. A slightly different experience from Respondent 18 indicated that while the communication process was satisfactory, it could have been more frequent to keep employees better informed. Respondent 16 expressed dissatisfaction with the communication process and indicated inadequate information and citing periodic delays in communication. According to Respondent 16, there were instances where plans changed abruptly without prior communication, and that led to confusion and dissatisfaction among some of the employees. "One thing was that the information flow was late. Perhaps the managers were not good at informing us or it might be that in the past we were half as many. " – (Respondent 16). 4.5.6 Trust In assessing the level of trust in managers to successfully implement changes during the integration period, the empirical findings from employee responses varied. Respondent 16 expressed a lack of trust in managers, he admitted having challenges in adapting to new processes, especially the technological changes that were instituted. The respondent indicated that the manager’s instructions were theoretical and lacked practical application. According to the employee, this led to a lack of trust in the manager’s ability to manage the integration process. In addition to this, Respondent 16 indicated a change of manager during the integration process and admitted that the departure of the manager further contributed to the difficulty in making sense of the changes. On the contrary, the remaining two employees reported a higher level of trust in their managers. Respondent 17 attributed it to the smooth execution of operational and technical changes to the mutual trust between the employees and the manager. Additionally, he indicated that his trust and confidence in the manager had grown over the period, especially because the manager was not changed after the acquisition, which provided continuity and stability throughout the integration process. Respondent 18 also indicated that they had grown in the company to trust each other and felt safe with the local 64 manager's implementation of the changes and that they believed in the ability of their managers to intervene amid the difficulties and frustrations. 4.5.7 Support and Interpersonal Relationship In the cases of smaller companies, there is usually an indication of good interpersonal relations between managers and their subordinates. From the perspective of the manager, interpersonal relationships are key in navigating difficult changes. The manager emphasized the importance of personal relationships within the organization, highlighting the positive impact of strong interpersonal relations on employee retention and support. This sentiment was shared in the response of Respondent 16, who highlighted the manager’s efforts to maintain a positive attitude and encourage employee engagement but indicated that he was unsure whether that was a success. Respondent 17 emphasized the manager's active engagement in facilitating a smooth learning process during the integration process by demonstrating a commitment to supporting employees. According to Respondent 17, this proactive approach to imparting knowledge and offering guidance was perceived as beneficial during the integration process. "They have been a good help in explaining these projects. He took on the role of learning the new processes and guiding us, and that was quite helpful throughout the process" – (Respondent 17). Similarly, Respondent 18 recounted receiving support from their manager during moments of frustration, particularly regarding marketing tasks. She emphasized that the manager's willingness to listen and address their concerns amidst the difficulties facilitated a smoother transition. "I was going to his office often because I was quite frustrated. The longer period that I had worked with the manager made it a bit easier. We needed to talk about things when something happened" – (Respondent 18). 65 4.6 Summary of Empirical Findings Table 2: Summary of Empirical Findings for Company 1 Table 3: Summary of Empirical Findings for Company 2 66 Table 4: Summary of Empirical Findings for Company 3 Table 5: Summary of Empirical Findings for Company 4 67 Chapter 5: Analysis 5.1 Discussions of Findings 5.2 Perception of Changes Acquisitions are regarded as major events that bring significant changes to the acquired companies and their members (Isabella 1990:12). Employees’ perception of changes starts from when acquisitions are announced and is known to generate different reactions from employees. Empirical findings from the four cases have highlighted different employee reactions after learning about the acquisitions, and how the ensuing changes were perceived. Insights gathered from respondents provide evidence to support the view that the initial stages of acquisitions are usually characterized by uncertainties and some anticipation depending on the nature of the acquisition. Uncertainties felt by employees emanate from the unknown impacts of changes. This corresponds with the argument by Sinkovics (2011:31) which highlights anxiety, stress, and uncertainty as emotional reactions employees feel because they do not immediately see changes as an opportunity and positive challenge. While extant literature on M&As stresses mostly negative and defensive reactions towards changes (ibid), there are instances where initial reactions towards acquisitions can be positive, which are characterized by excitement and anticipation for how changes will benefit organizational members (Ford and Harding, 2003:1134). However, these initial reactions are usually bound to change when the changes are implemented, and the impact is felt by employees (Sarala et. al,2019:310). Cases 2 and 3 are clear examples of such situations. As indicated by some respondents, the announcement of the acquisition was received with enthusiasm and excitement as well as the expectations that being part of a bigger organization would come with personal and organizational growth. The empirical findings have also revealed different types of changes that were experienced by the respondents throughout the integration period and how they were interpreted by employees. This is because changes affect the employees differently. There were situations where employees interpreted changes as negative based on personality traits of being naturally resistant to change. The literature on 68 resistance to change, including works by Dent and Goldberg (1999:25), acknowledges that it is natural for individuals to resist change. However, the empirical findings of this study appear to suggest otherwise. Employees’ personality traits, while acknowledged, did not necessarily lead to resistance, rather the way the changes were implemented led to employees being reluctant to accept changes. This aligns with Lewin's (1947) systems concept argument, which links employee resistance to organizational systems such as how the organization operates during the change implementation process. Organizational structures and strategies to implement changes have been identified as potential factors that hinder employees' acceptance of changes, a pattern that has been observed in the cases investigated. Hence the inability of organizations to manage change effectively creates a negative attitude toward change which could lead to resistance (Warrick, 2022:436). According to literature that discusses the process of change management, organizations must develop structures and systems that are people oriented and make implementation easier and smoother for employees (Burns and James, 1995 in Warrick, 2022:436). Furthermore, the empirical findings suggest that employees' perceptions of changes do not happen instantly, as they rather go through phases. This process bears resemblance to Isabella's (1990:12) four-stage model of change interpretation. Isabella studied managers in a medium-sized urban financial institution throughout different organizational events and found that interpretation of change events evolves through a series of stages which involves Anticipation; where change information is gathered; Confirmation, where the implications of changes start to become clear, Culmination; where pre- and post-change outcomes are compared and integrated, and Aftermath; where the consequences of changes are fully assimilated. In view of this, perception of change and how that leads to resistance or acceptance can be observed when change receivers have gone through these phases. We find similarities between our findings and the findings of this literature which highlights a process for the interpretation of changes Across all the cases, a similar pattern was observed among the employee respondents. When the employees learned of the acquisitions and the potential changes, their initial reactions were 69 characterized by uncertainties and anticipation (likened to Anticipation). This was followed by employees getting a clearer picture of what the changes would mean for them such as the impacts on the company structure, security implications, bonus restructuring, and access to a wider network and resources within the broader organization (likened to Confirmation). Then come the comparisons of the organization in the post-acquisition period and the organization before the changes were implemented (likened to Culmination). In the aftermath of the changes, employees decide whether changes have affected them to the point where they have to push back or embrace them and adapt to the new organization (likened to Aftermath). 5.3 Changes to Organizational Culture In investigating cultural dynamics and how they influence employee resistance in post- acquisition integration, two aspects were of focus: organizational culture and distant culture. The empirical findings highlight the role of organizational culture and how employee attachment to acquired company culture could lead to resistance. As seen in the cases examined, employees from the acquired companies expressed strong attachments to their organizational cultures. These attachment levels imply that perceived threats to the prevailing cultures can provoke resistance from employees who strongly identify with them, as it challenges their sense of belongingness and identity within the organization (Sarala et al., 2019:309) Case Company 1 experienced significant employee turnover within a year of the acquisition due to changes in a key social aspect of the company. The determination of the acquiring company to implement alterations to long-standing practices was not widely accepted, prompting pushback from many employees. The empirical findings indicate changes to the organizational culture across all four companies studied. For instance, changes in hierarchical structures impacted communication and decision-making processes differently, highlighting the structural differences between SMEs and MNEs. Kumar and Sharma (2019:188) found that organizations have unique working and organizational cultures, with notable differences between the cultures of acquiring and acquired companies. They cited differences between companies with stringent rules and those with a more 70 relaxed culture. If such acquirers impose their stringent regulations on an acquired company with a relaxed culture, employees could resent such changes. Similarly, there was a sense of attachment to the cultures across all the case companies and it was noted to have been challenging for employees to accept the new culture changes. Our findings show that attachment to organizational culture often runs deep, especially among long-tenured employees, and in smaller organizational settings (Dufour and Son, 2015:96), These findings align with the literature that identifies organizational culture as a critical factor influencing resistance to mergers and acquisitions. Cultural disparities between acquiring and acquired companies have the tendency to result in conflicts, communication challenges, and employee resistance (Weber and Tarba, 2010:205). Successful integration therefore demands careful attention to cultural dimensions to navigate these challenges effectively. Moreover, the conceptual framework of this study addresses the linkage between changes in organizational culture, negative reactions, and subsequent employee resistance. Our findings suggest that sudden and substantial changes in the acquired company's culture during the integration process can be perceived by employees as an imposition and can often be met with resistance. Across the cases, employees voiced concerns about changes to existing practices in the integration period and felt the need to protect what they deemed the identity of the acquired firm following the acquisition. In this regard, the findings appear to be in line with the group identity theory (Tajfel, 1974:69) and Role theory (Biddle, 1979:4) which addresses individuals’ attachment to their social groups and the fact that they feel a need to protect these groups. As argued by (Sarala et. al, 2019 :309) this can lead to the creation of a pre-acquisition identity which may hinder a smoother integration process. Therefore, acknowledging and addressing cultural differences between acquiring and acquired companies emerge as imperative strategies for successful integration, just as highlighted in extant research. Concerning distant culture, the findings show that the differences in culture between the acquiring company's origin and that of the acquired company can generate some resistance. In Cases 1 71 and 2 there were no indications of challenges that emanated from distant culture. The reason behind this was that in Case 1, both companies were from the same country. In Case 2 although the two companies originated from two different countries, employees perceived the cultures to be similar and that did not have any significant impact. However, there were notable challenges in Case 3 where the differences between the more direct Finnish culture and the Swedish culture that appears to promote participatory decision-making changed decision-making and work culture in the acquired company. Employees in collective cultures give more emphasis to interpersonal relationship-based agreements for collective interests (Sagie and Aycan, 2003:460). In the case of the cultures between the countries of the companies, this can be linked to the literature. Additionally, in Case 3 the language barrier was cited as a major challenge in communication which led to difficulty in expressing one's competencies. Relating this to literature, Ye et. Al (2023:12) and Webber and Tarba (2010:205) highlight the challenges associated with cross-border M&As and indicate that cultural differences between acquiring and acquired firm countries may potentially lead to conflicts, communication issues, and resistance among employees. This has the potential to affect the overall performance of the acquisition (Weber and Tarba, 2010:205). Vaara (2003:877-878) examined the acquisitions of Swedish furniture companies by Finnish firms aiming to introduce their brands into the Swedish market. The study identified communication challenges arising from the language barrier and cultural differences in communication and decision-making practices. It highlighted the Swedish decision-making culture, which values active discussions and consultations before committing to major actions, contrasting with the quicker Finnish decision-making style, often misunderstood by the Swedish side. These findings parallel the impact of distinct cultures on the integration process observed in our study. 5.4 Knowledge and Understanding of Changes This section of the analysis addresses the level of managers' knowledge and understanding of proposed changes during the integration period. It will highlight how adequate managerial knowledge and understanding of changes lead to the effective management of the PMI process or how the lack of it can influence employee resistance. The findings suggest that managers who have access to adequate 72 information on changes can influence a smooth integration process. However, access to information and understanding of the detailed aspects of changes puts managers in a good position to manage a smooth integration process. As observed in case 1 the manager’s awareness and access to detailed information placed his department in a better position to go through the implementation process smoothly. However, as interpreted from the findings of Case 1, the other departments had difficulties during the same period due to receiving less detailed briefings on the proposed changes. This implies that the amount of knowledge and understanding needed to implement the process was affected by the inadequacy of information available to the managers of those departments. Additionally, the findings support the assumption made in the conceptual framework which links managers’ inadequate knowledge and the lack of understanding of changes to employee resistance. Literature highlights the role of change agents as involving supervising changes in such a way that shapes employees' intention to resist changes (Oreg and Berson, 2011:628). This makes the manager's sensemaking of changes an important aspect of change implementation and tends to influence employees' interpretation of changes (Luscher and Lewis, 2008:221). In relation to employee resistance that is influenced by managers’ lack of knowledge or understanding of changes, the findings revealed that when managers are inadequately informed of the details of changes, it affects how they implement it down the hierarchy. This implies that the process of sensemaking becomes flawed. As observed in Case 4, employees’ frustration came from the manager’s lack of understanding and knowledge of the changes which resulted in difficulties for employees in embracing the changes. There is a direct link between a manager’s sensemaking and the sensegiving process. The findings support the argument by Luscher and Lewis (2008:221) which indicates that when managers have difficulty in making sense of the changes themselves the process of implementing them may be chaotic and challenging for employees to embrace. 73 The findings highlight the importance of manager involvement in the initial stages of the acquisition. The key to top-level management involving change agents (middle managers) in the integration strategy is to facilitate managers' sense-making process (Balogun and Johnson, 2004:543). Managers' interpretation of changes can be influenced by how they perceive the changes which can lead to the implementation of changes in their opinions. In Case 4, middle-level managers' active participation in the initial discussions on change strategy significantly influenced the effective knowledge impartation to employees. In essence, the manager’s participation influenced an effective sensegiving process. Moreover, literature indicates that middle-level managers have difficulties making sense of change designs that they have not been part of and that can negatively affect the implementation process (Balogun and Johnson, 2004 :543). 5.5 Communication This section discusses managers’ communication approaches in the integration process. It addresses the communication strategies employed by managers and how they influence employee resistance or foster smooth post-acquisition integration. Communication is widely acknowledged as a key part of the integration process and facilitates the transfer of knowledge in organizational changes (De Leon, 2020:377). The role of managers as communicators of change involves the dissemination of information from top-level management to employees. The insights from respondents provide evidence to support the notion that the ability of managers to keep a frequent, clear, and transparent flow of information to employees can determine how they interpret changes and subsequently lead to either acceptance or rejection of the changes. Not only is it important to these but it is an important variable in the sensegiving process. The findings of the study highlight that frequency in communication is key to reducing uncertainties among employees because it tends to fill the gaps of speculations and rumormongering within the organization (Napier et al., 1989:110). This highlights that insufficient information, poor communication of changes, and the communicative behavior of managers are major concerns for organizations undergoing significant transformations (Erturk, 2008:468). While literature 74 acknowledges that frequent communication during organizational changes has the potential to reduce employee resistance, frequency alone is not enough. From the perspectives of all the managers interviewed, frequency of communication appears to be a key component of change implementation. However, from the employee's perspective, frequency in communication is important but the findings indicated that many employees were not satisfied with the communication processes across all four companies even though there was a sense of frequency admitted by most of the respondents. Employees admitted the institution of monthly meetings which was clear throughout the cases, however, meetings were experienced differently by employees. There were indications of inconsistencies in the information, clarity issues, and delays in communication. These highlighted aspects of communication were observed to have caused varying degrees of discomfort to the employees. The findings on clarity in communication can be associated with the argument of Milner, (2005:236), who argues that clarity in communication sets a direct path to goals and prevents ambiguity in interpretation. This is because a communication approach that presents clear and precise instructions, policies, and goals to employees is known to prevent misinterpretation of information (ibid). Our findings and literature have highlighted that frequent, clear, and transparent communication is important during post-acquisition integration. Moreover, literature advocates for a communication strategy that incorporates explanations or reasons for the changes, as it is believed to foster employee acceptance of changes (Serban and Iorga,2016:372). The findings of this study suggest that this approach enhances the possibility of employees embracing changes. In accordance with the argument by Serban and Iorga (2016:372), manager respondents stressed the need to communicate changes positively by highlighting the positive implications of changes on employees and the acquired company. Ertuk (2008:468) argues that in communicating changes, the reasons for the changes need to be made clear to the employees involved and must include the vision of the direction or goals of the change in order to know where they need to go. Further to this, Jenssen (2013:214) highlights that employee resistance to change can emanate from employees' lack of understanding and acknowledgment of why change is necessary. This is highlighted by the findings of this study where most of the manager 75 respondents placed importance on communicating the reasons behind changes as a way to reduce employee resistance. One challenge for managers in ensuring frequency of communication during the PMI period has to do with the amount of information they are allowed to communicate to employees. This comes on the back of the signing of a confidentiality agreement by managers which limits the amount of information that can be disseminated to employees. The findings of this study highlighted that there are instances where the signing of confidentiality agreements such as NDAs can lead to managers being restricted in what to communicate to employees. This is corroborated by the argument by Sinkovics et.al (2011:32) which indicates that it is common for managers to withhold certain information from employees and that has the potential to cause doubts and mistrust among employees. Additionally, the findings suggest changes to the organizational structure can impact the dynamics of communication. Findings from Cases 1, 2, and 3 indicate that there were frequent meetings with employees throughout the integration process. However, although these meetings were intended to be an avenue to share insights, they appeared to be overwhelming for some employees and they became less effective in some cases. What can be drawn from this is that the structured periodic meetings as implemented by the acquirer to replace the informal discussions in the smaller acquired companies were perceived to be excessive and overwhelming. 5.6 Trust This section discusses the relevance of trust in the integration process and specifically highlights employee trust in managers and how it influences employee resistance or fosters a smooth integration process. The findings have shown that trust is important in the change implementation process. Literature indicates that trust is an essential interpersonal component in managing people through changes (Morgan and Zeffane, 2003:58). This study has established that employees face uncertainties due to the different changes that acquisitions bring to them and the organization. Cai et. al, (2018:1058) suggest that the extent to which organizational members are willing to accept change, 76 amidst the uncertainties and anxiety is linked to the amount of trust they have in those implementing the changes. As indicated by the managers of the Case companies, the presence of trust is essential in influencing employees to embrace changes. However, the study has also found that the lack of responsiveness from managers leads to frustration and undermines employees' trust in managers. According to Respondent 1, managers who have good relations with their employees usually end up with the employees knowing their track record and trusting them to work in their interests. This assures employees that managers understand the difficulties associated with the changes and believe they are not just being forced into accepting them. Similarly, Respondent 5 indicated that trust influences employees to embrace changes and thus when trust is established before changes, it leads to a smoother integration process. These approaches are consistent with the idea that when employees trust their managers, they are likely to perceive changes as genuine, transparent, and aligned with their best interests (Rodriguez-Sanchez et. Al., 2018:652). Additionally, the findings are in line with the suggestion of literature that trust creates a sense of psychological safety among employees and are influenced to put in the necessary efforts to navigate changes even though they may be faced with some difficulties. This was observed mostly in respondents who had continued working with the same manager after the acquisition. On the contrary, the absence of trust in managers may lead to employees resisting changes. The findings suggest that in cases where acquisitions have resulted in managerial changes, it could affect the amount of trust employees have in the new manager, which could lead to difficulties in adapting to the changes. This is because new relationships have to be started with both employees and managers getting to know each other’s competencies. According to the Respondents who experienced changes in their managers during the integration period, there was a notable lack of trust leading to questions about their managers' motivation behind some changes. The findings suggest that managerial changes in the early stages of the integration process can lead to a lack of trust in managers. A common thread identified from the findings is that long-term relationships between employees and managers foster employees' trust in managers. This trust can be in the form of confidence in their managers’ competence to navigate changes as well as trust in their commitment to employees' interests. However, changes in 77 managers imply the beginning of new work and personal relations, and per the findings of this study, it makes it challenging for employees to adapt to changes. Moreover, as mentioned by different respondents across different cases, changes to managers result in a break in manager-employee relations which in turn leads to a break in the initial discussions between managers and employees concerning different aspects of change and potentially leads to mistrust in newly appointed managers. This is reinforced by the argument by Dorling (2017:941) that employees show less commitment to changes when they have little or no trust in their change agents. This is because existing relations and trust have been developed through past relationships with managers (Sorensen et. al., 2011:407). Furthermore, trust during the integration process is crucial to managing changes and as argued by Sorensen et. al. (2011:406) the greater the uncertainty the more trust is needed and the harder it is to retain or develop trust. This supports our findings that building trust ahead of the process can help to smoothen the implementation process and reduce resistance. Therefore, existing trust in manager-employee relations is significant to the change implantation process. 5.7 Support from Managers and Interpersonal Relations with Employees In investigating how manager support for employees and the existence of interpersonal relations between managers and employees is important to the integration process, this research has found direct connections between manager support and interpersonal relationships to employees' resistance or acceptance of changes. Evidence from all the cases highlights that managers who offer support to their employees during change are bound to influence employee acceptance. On the contrary, those who do not offer employees support and have no existing interpersonal relations with employees are likely to increase employee uncertainties which influence employee resistance. In Case 1, it was found that the manager and the employees had good relations and that influenced the positive response towards the changes, and this was similar in Case 4 where employees indicated receiving support during the integration process. Comparably, in Case 2 there was an indication of a lack of support, which led to uncertainties among some employees. In Case 3, changes to managers were seen to have impacted the relations between employees and their managers as new relationships had to be built with the new 78 managers. As indicated by literature, managers who can portray emotional intelligence in their interactions with employees can influence employees to respond positively to challenges (Udod et. al, 2020:2). Interpersonal relations and support between middle-level managers and employees are crucial in managing change since they are the closest to the employees and can understand their emotional reactions towards the change (ibid) which is often perceived by employees as a show of support for employees in the midst of difficult transitions. As observed across the cases, supporting employees during organizational changes involves managers' ability to value employees' opinions and ideas, employee involvement, and cultivating positive attitudes among employees. It also encompasses employee empowerment and effective communication with employees as well as advocacy for their wellbeing. Additionally, this contributes to employees feeling valued and included in the organization and listened to. The offer of support by managers in this is corroborated by Ertuk (2008:467) which emphasizes that involving employees and offering support for them leads to successful organizational change management. Moreover, managers also need to put a high priority on creating a conducive atmosphere where workers can easily adjust to changes. Fostering positive work relations is essential for organizational change initiatives, which emphasizes the responsibility of middle-level managers in creating this kind of atmosphere. (Fowlie & Wood, 2009:560). In relation to the interaction between employees and managers during the integration period, the findings of this study suggest that managerial changes during the process can lead to difficulty in embracing changes. As indicated earlier, employees from the cases who had new managers along the line had to begin new relations with the new managers whom they were yet to know and trust. As argued by Huy (2002:32) managers' closeness to employees signifies an understanding of their emotional concerns and are in a better position to interpret changes and facilitate employees' adaptation to changes. Hence the inconsistencies surrounding periodic managerial changes can lead to a breakdown in relations and mutual trust that has been created over time. 79 Chapter 6: Conclusion 6.1 Findings and answers to the research questions Research Questions ❖ How do employees' perceptions of change contribute to their resistance to changes in the acquired company? o How do managers effectively manage the PMI and what traits /approaches are key to the process? This study has focused on resistance to change in the acquisitions of SMEs by MNEs and has delved into employees’ perceptions of changes and how that can influence employee resistance in the acquired company. It has also investigated how middle-level managers can manage the post-acquisition integration process and what key traits and approaches are vital to the process. To propose valuable insights to the concept of resistance to change in acquisitions, the authors developed a conceptual framework that highlights employee reactions to change and how they influence employee perception of changes and potential resistance. Additionally, the framework proposed changes to the organizational culture as inducers to employee resistance. The framework also proposed managerial traits and approaches; knowledge and understanding of changes, communication approach, interpersonal skills, and trust as important to the integration process and suggested that the absence of these traits could influence employee resistance. The findings of this study indicate that employee reactions to acquisition-related changes are usually characterized by uncertainty and the stress of not knowing what the changes will imply for them. However, employee perceptions of changes are developed while change implementation is ongoing. This makes the role of middle-level managers important because they play a significant role in influencing employees' perceptions of changes. Employee perceptions refer to how employees interpret and make sense of changes. The findings of this study show that employees' perception of 80 changes is influenced by the impact of the changes on them. Employees perceive changes as negative when they impact their established routines, roles, and personal interests, however, in connection to resistance, it is evident in how changes are managed. Personality traits influence employee perceptions of changes; however, they do not necessarily lead to outright resistance. Organizational culture changes were observed to influence employee resistance. The study found that major and rapid cultural changes in the acquired company have the potential to make employees perceive changes negatively. This coincides with employee attachment to the SME culture and the leap to a more structured MNE organizational culture. When employees interpret changes to affect their usual way of working and doing things in the organization, they tend to resist such changes. Changes in the organizational structure resulting in shifts in the chain of command within the acquired company may prompt employees to view the changes negatively. Likewise, the imposition of the acquiring company's culture onto the acquired company, which may alter familiar aspects of the organization to which employees are emotionally connected, can also evoke a negative perception of the changes. In summary, the findings of this study show that when employees perceive changes to impact them negatively, they tend to resist such changes. On the role of middle-level managers in the integration process, the findings of the study show that managers who have enough knowledge about the changes and understand what needs to be done in terms of implementing the changes can influence employees to embrace the changes. This will enhance managerial sensemaking and further the sensegiving process. The findings highlight the importance of middle-level managers’ involvement in the new strategic direction of the acquired company in the early stages of the acquisition. However, when managers appear to have limited knowledge of the changes or seem to lack understanding of the change initiatives, it causes employees to have reduced trust and question managers’ knowledge and competence in the change management process. This influences employee resistance. In relation to the communication approaches adopted by middle-level managers in the integration process, the study found that frequency, clarity, and transparency are key aspects of communication that middle-level managers need to adopt in communicating changes. This is important 81 because it helps to reduce uncertainties among employees and prevent ambiguity in the interpretation of changes. Similarly, a communication strategy that highlights the reasons behind changes is another key aspect of communication during organizational change efforts. This is important to the integration process because it influences employees to embrace changes when they have a clear understanding of the reasons why such changes have been made in the acquired company. Furthermore, the study found that acquisitions result in changes in the acquired company, and they impact organizational members in varied ways. Consequently, managerial support to employees during the implementation of these changes emerges as crucial for successful integration. Given the proximity of middle-level managers to employees, they are well positioned to understand and address the emotional frustrations that may arise from these changes. Providing both personal and professional support during this period influences employees' ability to adapt to the changes and facilitates a smoother integration process. Strong interpersonal relations between managers and employees are pivotal during change implementation. Managers who have strong interpersonal connections with their subordinates can help to reduce resistance and cultivate trust in managers' ability to navigate changes effectively. Moreover, the study shows the impact of frequent managerial changes during the implementation process, which disrupts existing relationships between managers and employees and hinders employees' willingness to embrace the changes. Finally, the study found that trust is important in change implementation within acquisitions. Managerial competence, stemming from their knowledge and understanding of changes, encourages employees' trust in managers' capabilities. Additionally, trust is developed through interpersonal relations, because established relationships over time mean that employees are familiar with their managers' approach to work and their ability to handle difficult situations. Essentially, trust is fundamental for successfully implementing changes within the acquired organization. It establishes a foundation of confidence and cooperation necessary for managing the difficulties in of change implementation in the integration process. 82 6.2 Theoretical and Practical Implications Extant research on M&A failures has mostly focused on the financial reasons behind the many failures. In this study, we use existing literature and theory to investigate employee resistance to changes. Our study contributes to theory by explaining the connections between employee perceptions of changes and resistance to the acquisitions of SMEs. The findings of this study are linked to literature and emphasize that negative perceptions of changes can influence resistance among employees of the acquired company. Additionally, the conceptual model provides a framework to further deepen the understanding of resistance to change in M&As. Appelbaum et. al. (2017:87) have demonstrated that the success of M&As is connected to management's ability to manage changes effectively and integrate individuals from different organizations and cultures, while also addressing and minimizing their concerns. We have identified and explored key managerial traits/approaches that can be practically implemented in organizational change situations to effectively manage change and reduce employee resistance to change. 6.3 Recommendations for Future Research Since M&As have been accepted as a strategy for organizational growth, it implies that we have not seen the last of them. This thesis provides an understanding of the concept of employee resistance to changes with a focus on employee resistance in acquisitions. The study’s participants were selected from SMEs that have been acquired by MNEs. It is therefore recommended that future research should explore employee resistance to acquisitions or mergers between MNEs of similar sizes. Given that distant culture has not been the focus of this research, another area for future research consideration is to explore cross-border acquisitions between companies from different countries with notable differences in culture. 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How would you describe your reaction when the Acquisition was announced? Can you briefly describe some of the changes or initiatives you experienced during the integration period? How did you perceive these changes? Could you describe how that affected your work or role within the organization? In your opinion, how has the organizational culture changed since the acquisition? How would you characterize the extent to which you trusted your managers to implement the changes successfully? Based on the changes you experienced during the merger/acquisition, what would you consider to be the reasons why you would have disagreed with some of the changes (if any)? How do you describe the communication from your managers concerning changes and updates related to the acquisition? Was it frequent, clear, and enough in your opinion? How would you describe the support you received from your managers during the integration period and how would you describe the interpersonal relations between you and the manager? Did that have any impact on the way you adapted or resisted the changes? To what extent do you believe your manager's knowledge and understanding of the changes influenced your acceptance or rejection of the changes? 95 Managers Interview Questions Could you indicate your role? What is your perspective on the role of managers in facilitating change during Mergers and Acquisitions (M&As)? How would you describe the amount of knowledge you had about the changes that had to be implemented in the new company during the PMI period? (How much did you know about the changes that had to be made in the new company). What was your perception of the changes and how do you think that influenced your role in implementing them? What strategies did you employ to communicate these changes and updates to employees during the integration process? Did you identify any instances where your team members showed resistance to the changes you supervised? What challenges or obstacles did you encounter in influencing employees to embrace the changes due to the acquisition? How do you ensure that the concerns and feedback of employees are heard and addressed during the integration process? Given the changes that occur in Acquisitions, how important do you think the role of interpersonal relationships between managers and employees is in influencing a positive response from employees? What key traits in your leadership style or approach have you employed in leading your team members through the changes? How do you support and empower employees during the period of implementing the changes? 96