Psychological Effects of Mergers and Acquisition on Employees (Evidence from Commercial Banks of Pakistan through a Qualitative Study)
Author(s)
Mirza Osama Shahid , Syed Jamal , Dr. Ather Akhlaq ,
Download Full PDF Pages: 105-116 | Views: 706 | Downloads: 225 | DOI: 10.5281/zenodo.3702075
Abstract
The goal of any organization is to grow and expand the business. Over the past two decades, companies have expanded their business to serve global customers through mergers and acquisitions. Mergers and acquisitions are a strategy followed by organizations around the world to meet the demands of a dynamic new business environment. It has attracted much attention and importance in the business world. In Pakistan, this strategy is widespread in the banking sector. The available literature shows that the post-merger financial success rate is less than 50% and that the main reason for this percentage is that the administration focuses on financial factors and not on human or soft-issues. Employee’s identification with merged companies and their job satisfaction are important factors in the success of mergers and acquisitions. The aim of the study is therefore to assess the psychological effect of the merger and acquisition process on employees. The data were extracted from nine commercial banks from 2000 to 2018. The primary source of data collection interviews was used to collect data from respondents. The deductive and inductive approach of thematic analysis used to analyze the data. The results of the study demonstrated the negative effect of the M & A process on the Bank's employees in Pakistan. The outcome of this study is useful for both academicians and policymakers.
Keywords
Commercial Banks, Merger and Acquisition, Soft Issues.
References
i. Abbas, Q., Hunjra, A. I., Azam, R. I., Ijaz, M. S., & Zahid, M. (2014). Financial performance of banks in Pakistan after Merger and Acquisition. Journal of Global Entrepreneurship Research, 4(1), 13.
ii. Afza,T and Yusuf, M.U., ( 2012), “The impact of mergers on efficiency of banks in Pakistan” Elixir International Journal: Finance Management. 48 (2012) 9158-9163
iii. Ahmad, R., Rashid, M., & Zia-ur-Rehman, M. (2011). Managing post-acquisition cultural change: a case study of union bank limited (Now Standard Chartered Bank Pakistan Limited). International Journal of Trade, Economics and Finance, 2(3), 247.
iv. Ahmad, A., Rehman, K. & Saif, M. I. (2010). Islamic Banking Experience of Pakistan: Comparison of Islamic and Conventional Banks, International Journal of Business and Management, 5 (2), 137-144.
v. Arshad, A. (2012). Post-merger performance analysis of standard chartered bank Pakistan. Interdisciplinary Journal of Contemporary Reasearch Bussiness 4 (6), 164-173.
vi. Bari, M. W., Fanchen, M., & Baloch, M. A. (2016). Management practices and performance of mergers and acquisitions in Pakistan: mediating role of psychological contract. SpringerPlus, 5(1), 1527.
vii. Bauer, F., Matzler, K., & Wolf, S. (2016). M&A and innovation: The role of integration and cultural differences—A central European targets perspective. International Business Review, 25(1), 76-86.
viii. Beatty, R., A. Santomero, and M. Smirlock (1988): “Bank Merger Premiums: Analysis and Evidence.” Monographs in Finance and Economics, Salomon Brothers Center, New York University,
ix. Beccalli, Elena & Frantz, Pascal. (2012). The Determinants of Mergers and Acquisitions in Banking. Journal of Financial Services Research. 43.
x. Bellou, V. (2007). Psychological contract assessment after a major organizational change: The case of mergers and acquisitions. Employee Relations, 29(1), 68-88.
xi. Bohlin, N., Daley, E., & Thomson, S. (2000). Successful post-merger integration: realizing the synergies. Handbook of Business Strategy, 1(1), 225-231.
xii. Bower, J. L. (2001). Not All M & As Are Alike–and That Matters.”.
xiii. Braun, V., Clarke, V., Braun, V., & Clarke, V. (2008). Using thematic analysis in psychology Using thematic analysis in psychology, 0887(2006).
xiv. Buiter, J. E., & Harris, C. M. (2013). Post-merger influences of human resource practices and organizational leadership on employee perception and extra-role behaviors. SAM Advanced Management Journal, 78(4), 14-24.
xv. Burki, A.A., Ahmad, S., (2010). Bank governance changes in Pakistan: Is there performance effect? Journal of Economics and Business, 61, 162–171.
xvi. Creasy, T., Stull, M., & Peck, S. (2009). Understanding employee-level dynamics within the merger and acquisition process. Journal of General Management, 35(2), 21-42.
xvii. Gerpott, T.J. & Neubauer, F.B. (2011). Integration design and merger success after a company Acquisition-An empirical study from the employee’s perpective.ZFBF-Schmalenbachs Zeitschrift fur Betriebswirtschaftliche Forschung, 63, 118.
xviii. Golubov, A., Petmezas, D., & Travlos, N.G. (2013) Empirical mergers and acquisitions research. Handbook of Research Methods and Applications in Empirical Finance 2013.
xix. Gunkel, M., Schlägel, C., & Engle, R. L. (2014). Culture's influence on emotional intelligence: An empirical study of nine countries. Journal of International Management, 20(2), 256-274.
xx. Hagedoorn, J., & Duysters, G. (2002). External sources of innovative capabilities: the preferences for strategic alliances or mergers and acquisitions. Journal of management studies, 39(2), 167-188
xxi. Haider, A., Shoaib, M., & Kanwal, S. (2015). Impact of Mergers on Performance of Banking Sector of Pakistan. Pakistan business review, 17(1), 60-79.
xxii. Joash, G. O., & Njangiru, M. J. (2015). The effect of mergers and acquisitions on financial performance of banks (a survey of commercial banks in Kenya). International Journal of Innovative research and development, 4(8), 101-113.
xxiii. Kouser, R., & Saba, I. (2011). Effects Of business combination on financial performance: Evidence from Pakistan's banking sector. Australian Journal of Business and Management Research, 1(8), 54.
xxiv. Krug, J. A., Wright, P., & Kroll, M. J. (2014). Top management turnover following mergers and acquisitions: Solid research to date but still much to be learned.Academy of Management Perspectives, 28(2), 147-163.
xxv. Marmenout, K. (2010). Employee sense making in mergers: How deal characteristics shape employee attitudes. The Journal of Applied Behavioral Science, 46(3), 329-359.
xxvi. Marzucco, L., Marique, G., Stinglhamber, F., De Roeck, K., & Hansez, I. (2014).Justice and employee attitudes during organizational change: The mediating role of overall justice. Revue Européenne de Psychologie Appliquée/European Review of Applied Psychology, 64(6), 289-298.
xxvii. Meglio, O., & Risberg, A. (2011). The (mis) measurement of M&A performance—A systematic narrative literature review. Scandinavian journal of management, 27(4),418-433.
xxviii. Mirc, N. (2014). Human impacts on the performance of mergers and acquisitions. In Advances in mergers and acquisitions (pp. 1-31). Emerald Group Publishing Limited.
xxix. Newman, J. M., & Krzystofiak, F. J. (2011). Changes in employee attitudes after an acquisition: A longitudinal analysis. Sage Journal online.
xxx. Panasian, C. (2015). THE HUMAN SIDE OF MERGERS AND ACQUISITIONS : A LOOK AT THE EVIDENCE, (July).
xxxi. Rafferty, A. E., Jimmieson, N. L., & Restubog, S. L. D. (2009). When leadership meets organizational change: The influence of the top management team and supervisory leaders on change appraisals, change attitudes, and adjustment to change. In The Psychology of Organizational Change: Viewing Change from the Employee's Perspective (pp. 145-172). Cambridge University Press
xxxii. Rathogwa, A. T. (2008). THE EFFECT OF MERGERS AND ACQUISITIONS : Focus on employee job satisfaction of former employees of Smartcom in Vodacom SA, (December).
xxxiii. Sakali,C.(2012) Mergers and acquisitions in Central and Eastern Europe and the impact of the global economic crisis. In A. Bitzenis, V.A. Vlachos, & P. Papadimitriou (Eds.), Esantis mergers and acquisitions as the pillar of foreign direct investment (pp.121–140).
xxxiv. SBP (2003) Economic data. Retrieved February 4, 2016,
xxxv. SBP (2015) Economic data. Retrieved March 4, 2016,
xxxvi. Seijts, G. H., & Roberts, M. (2011). The impact of employee perceptions on change in a municipal government. Leadership & Organization Development Journal, 32(2), 190-213.
xxxvii. Wan, R. 92015). Cultural Integration of Cross-Border M&A Activities in the Chinese Auto Industry; Case Study: the Acquisition of Geely and Volvo
xxxviii. Yan, S., & Zhu, Y. (2013). Impact of psychological contract violation on interpersonal trust during mergers and acquisitions. Social Behavior and Personality: an international journal, 41(3), 487-495.
xxxix. Zephyr: M&A portal (2014). Internet resource: http://zephyr.bvdep.com/.
Cite this Article: