Employee commitment in the post-acquisition integration ... · commitment in the post-acquisition...

Employee commitment in the post-acquisitionintegration process: The effect of integrationspeed and leadership

Lars Schweizer a,*, Holger Patzelt b,1

aUniversity of Frankfurt, Grueneburgplatz 1, 60323 Frankfurt am Main, GermanybTechnical University Munich, Karlstr. 45, 80333 Munich, Germany

Scandinavian Journal of Management (2012) 28, 298—310

KEYWORDSAcquisitions;Employee commitment;Integration speed;Leadership

Summary We draw on a behavioural decision making framework and the M&A and leadershipliteratures to examine the effect of post-acquisition integration speed and leadership on thecommitment decisions of employees to stay with acquired target firms during the integrationprocess. We propose that fast integration motivates employees to stay, and that effectiveleadership can enhance this effect. Drawing on conjoint analysis and data on 2912 commitmentdecisions nested within 91 employees, we find that fast integration has a positive effect onemployees’ motivation to stay with the firm, and that the more the leadership style of theirsupervisor is characterized as relational, contextual, inspirational, supportive, and stewardship-based, the stronger this effect of fast integration. We discuss implications of our work for the M&Aliterature.# 2012 Elsevier Ltd. All rights reserved.

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Introduction

Despite the popularity and occurrence at record levels ofmergers and acquisitions (M&As) over the last years, M&Asare a more complex phenomenon than ever and frequently failto realize their potential (Sirower, 1997). It is becomingincreasingly important that M&A research focuses on thehuman elements of the integration process as they can make

* Corresponding author. Tel.: +49 69 798 34 832;fax: +49 69 798 35 020.

E-mail addresses: [email protected](L. Schweizer), [email protected] (H. Patzelt).1 Tel.: +49 89 289 26 748; fax: +49 89 289 26747.

0956-5221/$ — see front matter # 2012 Elsevier Ltd. All rights reservedoi:10.1016/j.scaman.2012.02.003

or break the successful integration of an acquired company(Birkinshaw, Bresman, & Hakanson, 2000; Cording, Christman,& King, 2008; Larsson & Finkelstein, 1999). Increased turnoveramong key managers (Canella & Hambrick, 1993) or key R&Dpersonnel (Ranft & Lord, 2000) following an acquisition resultsin the loss of valuable knowledge and expertise which, in turn,limits knowledge transfer and the opportunities for valuecreation.2 How can managers secure the commitment ofimportant employees during the integration period?

2 We acknowledge that the goal of many acquisitions is to increaseefficiencies and lay off personnel, in which case fostering the com-mitment of employees is not the goal of a post-acquisition integra-tion process. These acquisitions are not the focus of this article.

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Effect of integration speed and leadership 299

Consistent with Cohen (1993), we define commitment asemployees’ decision to stay with their new firm duringthe integration process. Drawing on a behavioural decisionmaking perspective we argue that employees leave anacquired firm because the integration process is often asso-ciated with substantial uncertainties that most individualstry to avoid (McMullen & Shepherd, 2006; Podolny, 1994).Employees will perceive these uncertainties because manyacquisitions are accompanied by a change of existing orga-nizational structures and working relationships (Shanley &Correa, 1992), a disruption of culture (Nahavandi & Malek-zadeh, 1988), a lack of communication (Schweiger & DeNisi,1991), career disruption (Walsh, 1989), and loss of status inthe organization (Hambrick & Cannella, 1993). It appearsthat overcoming employees’ perceptions of uncertaintyduring the post-acquisition integration period is central totheir organizational commitment.

Scholars have argued that a quick implementation ispositively related with employee commitment, partlybecause it reduces the uncertainty for employees of thecombining firms (Ashkenas, DeMonaco, & Francis, 1998;Inkpen, Sundaram, & Rockwood, 2000). Quick integrationprovides employees with a defined organizational environ-ment including stable hierarchical structures, incentive sys-tems, social norms, and career perspectives, thus diminishinguncertainty about their future role in the organization.However, a quick post-acquisition integration approach canalso be problematic (Bragado, 1992; Schweizer, 2005)because a period of acclimatization and understandingbetween the employees of the two companies and thebuilding of mutual trust can demand a considerable amountof time (Birkinshaw et al., 2000). Moreover, in a fast post-integration process cultural adaptation is more difficult toachieve than during slow integration (Bragado, 1992; Ranft &Lord, 2002). Thus, while fast integration may generally befavourable for employees and positively impact their com-mitment during the integration process, there appear to bechallenges associated with quick integration that need to beaddressed in order to maximize its benefits.

We argue that leadership at a functional level can address(some of) the problems associated with fast post-acquisitionintegration by supporting the human side of M&A integration(Waldman, 2004). That is, rather than analyzing the directeffects of leadership on employee commitment, we investi-gate moderating effects of leadership on the integrationspeed—employee commitment relationship. We focus onemployees’ perceptions of integration speed and leadershipstyles since perceptions of the environment rather than itsobjective characteristics impact the decision policies ofindividuals (e.g., Das & Teng, 2001; March & Shapira,1987). Empirically, we use a decision-making experimentand metric conjoint analysis to collect data on 2912 commit-ment decisions nested within 91 corporate employees.

Given the general lack of research in the post-acquisitionintegration phase (Bower, 2001; Javidan, Pablo, Singh, Hitt,& Jemison, 2004; King, Dalton, Daily, & Covin, 2004; Larsson& Finkelstein, 1999) with special respect to a lack of researchconcerning integration speed (Homburg & Bucerius, 2006;Javidan et al., 2004; Schweiger & Walsh, 1990) and leader-ship (Sitkin & Pablo, 2005), we make the following maincontributions to the literature. First of all, our study addsto existing literature by showing that high post-acquisition

integration speed has a positive effect in increasingemployee commitment, in line with the few existing studiesdemonstrating a positive effect of fast integration on acqui-sition success in general (Haspeslagh & Jemison, 1991; Hom-burg & Bucerius, 2005; Inkpen et al., 2000; Ranft & Lord,2002). More importantly, however, we demonstrate that theefficiency of a fast integration is contingent on managerialleadership. Existing research on leadership has rarely ana-lyzed the role of leadership in major organizational eventssuch as M&As (Waldman, 2004). Sitkin and Pablo (2004)emphasize that, although M&A research has identified thiscrucial role of leadership as an important determinant ofM&A success, leadership has neither been well developed norhas it been widely recognized in M&A research. Oftentimes,leadership is only treated on a very general level (Haspeslagh& Jemison, 1991) or its relevance is even denied (Ashkenaset al., 1998). Our study acknowledges the important role ofleadership and shows that some (but not all) M&A leadershipstyles that have been identified as important in the context ofM&As (Sitkin & Pablo, 2004) maximize the benefits of a fastintegration for securing employee commitment. Finally, ourarticle answers the recent calls for research with relevancefor practice (Cummings, 2007; Van de Ven & Johnson, 2006)with regard to the M&A context as we demonstrate howmanagerial leaders can keep important employees ofacquired firms for different designs of integration processes.

Our article proceeds as follows. In the next section, weformulate our theory and hypotheses. We then describe ourresearch method, sample, and analysis before presenting anddiscussing the results. Finally, we point to limitations of ourstudy and suggest avenues for further research.

Theory and hypotheses

Employee commitment and post-acquisitionintegration speed

According to behavioural decision making theory, individuals’perceptions of uncertainty have a major impact on how theymake decisions, and on the outcomes of these decisions(Kahneman, Slovic, & Tversky, 1982), suggesting thatemployees’ decisions to stay with an acquired firm dependon the level of uncertainty they perceive to be associatedwith continued commitment. Employees face high levels ofuncertainty when they have little information and knowledgeabout their role in the new organizational environment, andif they do not know what outcomes the post-acquisitionprocess may yield for them and their position. Although thereis variance in the extent to which individuals are willing tobear uncertainty (Knight, 1921), in general they tend toprefer controllable and predictable situations over thosecharacterized by low information availability and high levelsof uncertainty, resulting in career choices that avoid uncer-tainties about their future (Knight, 1921; McMullen & Shep-herd, 2006). This suggests that employees are more likely tostay with an acquired firm if they perceive fewer uncertain-ties in their new organizational environment.

Uncertainty for employees of an acquired firm can becaused by a variety of factors (Graves, 1981; Marks & Mirvis,1985). For example, Buono and Bowditch (1989) emphasizethat the human side of M&A is frequently neglected by the

300 L. Schweizer, H. Patzelt

top management team of the combined firm, and Cartwrightand Cooper (1990) argue that human aspects of mergers andacquisitions have come to be labelled the ‘‘forgotten’’ or‘‘hidden factor’’ in M&As. That is, top managers of acquiringorganizations often pay little attention to the concerns andproblems of acquired employees, and insufficient commu-nication on behalf of top management about the future pathand goals of the combined organization (Schweiger & DeNisi,1991) creates uncertainty in employees about their ownfuture. Moreover, career disruption (Walsh, 1989) and lossof status in the new organization (Hambrick & Cannella,1993) frequently come up during the post-acquisition inte-gration phase and result in uncertainty about the employees’future role in the new firm. The loss of existing structures andsimultaneously not yet developed new structures duringearly stages of an acquisition may lead employees to perceivethat acquisition as loss (Schweiger, Ivanevich, & Power,1987), creates merger stress (Marks & Mirvis, 1985), anddisturbs the cultural peace (Buono & Bowditch, 1989), whichmakes it all the more difficult for employees to deal withtheir uncertain situation in the new firm. As a result, employ-ees’ job satisfaction and motivation at work erode, leading toa decrease of commitment to the new firm.

Since many of these changes are inevitable when firms areacquired, scholars have claimed that it is best to implementthe integration quickly (Ashkenas et al., 1998; Haspeslagh &Jemison, 1991; Inkpen et al., 2000) although some scholarsalso recognize that speed may come with some costs andconsequences (Angwin, 2004; Bragado, 1992, see also ourarguments how leadership can help mitigate these costs andconsequences in the next section). Quick implementationintroduces defined physical, task, and social structures thatminimize the uncertainty employees perceive in their newenvironment. For example, when the structural integration ispursued quickly and hierarchies, reporting structures, andincentive schemes are in place, employees’ perceived uncer-tainties about their expected behaviour and expectedperformance in the new firm diminish. Moreover, quickintegration allows for the development of social interactionpatterns between employees of newly formed groups andacross groups in the combined firm. These established socialstructures can help to create a sense of cohesion and increasethe degree to which employees are attracted to each other,resulting in an enhanced motivation to stay in the newlycreated entity. Furthermore, by quickly getting peopleworking together and solving business problems they areable to build up a common culture and understanding leadingto reduced uncertainties and making people more eager tostay in the newly created firm. Thus, rapid acquisition inte-gration can be considered as a means of minimizing humanresources related post-acquisition integration problems(Ashkenas et al., 1998; Haspeslagh & Jemison, 1991; Inkpenet al., 2000), and employee commitment can be maintainedand fostered through fast integration. The notion that fastintegration fosters employee commitment is consistent withempirical studies that demonstrate the positive relationshipbetween post-acquisition integration speed and general M&Asuccess (Homburg & Bucerius, 2005).

Real world examples of integration strategies of experi-enced acquirers also suggest that a quick integration processcan enhance the commitment of employees of acquiredtarget firms. For example, Cisco Systems applies a fast

post-acquisition integration strategy aiming at integratingan acquired company usually within 100 days, and employeeretention is one of the key factors for measuring acquisitionsuccess at Cisco (Bunnell, 2000). Cisco believes in early,honest and clear communication to employees in the targetcompany about their future roles in the merged organization.By this, Cisco tries to ensure that top people in the target firmare given key positions in the new organizations in order tomake them stay (Goldblatt, 1999). Similarly, GE Capital hasdeveloped a ‘‘Pathfinder Model’’ for M&A integration (Ash-kenas et al., 1998) emphasizing a rapid integration as oneimportant stage of their integration approach. From GECapital’s point of view, decisions about management struc-ture, key roles, reporting relationships, layoffs, and restruc-turing should be made, announced, and implemented as soonas possible. If not, slow changes, uncertainty, and anxietyamong employees that last for months might start to drainvalue from the acquisition (Ashkenas et al., 1998). Thus,

H1. There is a positive relationship between the post-acqui-sition integration speed and employee commitment duringthe post-acquisition integration process.

Employee commitment, post-acquisitionintegration speed, and leadership

While it appears that high integration speed generallyincreases the commitment of employees in the post-acquisi-tion process, some challenges are associated with fast inte-gration that can diminish its benefits because they limit theextent to which fast integration can reduce the employees’perceptions of uncertainty. For example, in order to developan understanding of motivations, rules, and norms thatgovern behaviour in their new organizational environment,employees will need a certain amount of time (Bragado,1992; Olie, 1994). If employees are not provided sufficienttime, they will be uncertain whether they behave asexpected, and what outcomes their behaviours will producefor them and their new firm. Further, the development oftrust in their new organization and its top managers is often alengthy process (Stahl & Sitkin, 2005) and may even be moredifficult to achieve when integration is fast (Birkinshawet al., 2000; Ranft & Lord, 2002). When trust is not yetdeveloped, employees will be uncertain whether leadersin their new firm decide and act in a way that is in theemployees’ interest, or whether those leaders will onlyfollow their own interest by, for example, laying off peopleor breaking promises they have made before the acquisition.Finally, adaptation to the new organizational culture may behard to realize during fast integration processes (Bragado,1992; Ranft & Lord, 2002). When employees have insufficienttime to identify and adapt to new cultural norms, they willfind themselves in an environment where belief systems andassumptions prevail that are different from their own ones(Nahavandi & Malekzadeh, 1988; Stahl & Voigt, 2008) leadingthem to question their own beliefs and assumptions, andbecome uncertain whether those are correct and appropri-ate. Overall, this is in line with Birkinshaw et al. (2000) whopoint out that task integration cannot be faster than success-ful human integration.


Effective leadership in the acquired firm may facilitate afast post-acquisition integration process by at least partlyaddressing some of these problems. In general, existingresearch in the leadership literature (Koene, Vogelaar, &Soeters, 2002; Waldman, Javidan, & Varella, 2004; Waldman,Ramirez, House, & Puranam, 2001) supports the notion thatleadership and organizational performance are positivelyrelated. Waldman (2004) suggests that leadership can sup-port M&A integration and, thus, the ultimate acquisitionsuccess because value creation takes place after an acquisi-tion (Haspeslagh & Jemison, 1991). Other authors also claimthat leadership has an important influence on the success orfailure of an acquisition (Sitkin & Pablo, 2004; Stahl, 2004).Moreover, Grabher (2004) emphasizes the importance ofacquired leaders in the integration of technology firms,and Bjorkman, Stahl, and Vaara (2007) point at the importantrole of social integration mechanisms. Sitkin and Pablo (2004)draw on a recent general model of leadership consisting of sixdimensions (personal, relational, contextual, inspirational,supportive, stewardship-based leadership) and apply thismodel to the M&A context. These six leadership dimensionsare derived from different theoretical perspectives and thusare conceptionally distinct from one another. We build on thiswork and will below investigate how these leadership dimen-sions can address the challenges of a fast integration process.

Personal leadership refers to the idea that a leader not onlyinstils a new sense of purpose, but also conveys a sense ofpersonal vision, values, emotions, and beliefs (Sitkin & Pablo,2004) so that employees know who the leader is as a person.A personal leader fosters and keeps up the loyalty of theemployees during the M&A process (Haspeslagh & Jemison,1991). The notion of personal leadership in M&A is consistentwith Tetenbaum (1999) who stresses the importance of theleader in the integration process as somebody being followedbecause of his/her merits, qualities, knowledge, and resilienceunder stress, decisiveness, and experience.

Personal leadership in the acquired firm contributes toovercoming the challenges of a fast integration process byfacilitating employees’ development of trust in the neworganization. Employees who know their supervisor as aperson, and her or his values and beliefs, tend to perceiveher or him as more credible and trustworthy (Kouzes &Posner, 1993; Tetenbaum, 1999). These employees will viewthe information they receive from a personal leader abouttheir new organization and its top management as correctand accurate, and will believe that the leader disseminatesall information that is relevant to the employees instead ofhiding it or manipulating its content in a way that is detri-mental to the employees’ interest. The more credible andtrustworthy employees perceive information received, themore they will be willing to adapt their own behaviour andbelief systems quickly according to that information. Forexample, when a personal leader with high credibility com-municates to employees that the top management of theacquiring organization is trustworthy and will keep its pro-mises during and after the integration process, the employ-ees will believe that leader and also develop trust in the topmanagement of the acquiring firm. When this trust can morequickly develop, this will reduce employees’ perceptions ofuncertainty about unforeseen and potentially detrimentaldecisions of top managers in their new organization during afast integration process (cf. Birkinshaw et al., 2000). Thus,

H2a. The positive relationship between post-acquisition in-tegration speed and employee commitment is more positivewhen the degree of personal leadership is high than when itis low.

Relational leadership emphasizes the leader as an inter-face manager who promotes interpersonal cooperation andestablishes emotional connection and accessibility (Sitkin &Pablo, 2004). Haspeslagh and Jemison (1991) introduce thenotion of ‘‘interpersonal leadership’’ as being important tocapture and understand the acquisition’s purpose and todefine the employee’s role therein. In a similar vein, Teten-baum (1999) stresses the need for strong interpersonal andconflict management skills, in line with Schweiger and DeNi-si’s (1991) findings on the importance of communication inreducing uncertainty during the post-acquisition integrationphase.

Relational leadership facilitates employee commitmentduring fast integration by triggering their understanding ofthe acquiring organization, and by promoting cultural inte-gration. First, when their supervisor establishes personalconnections between employees and (original) members ofthe newly combined organization, this creates an organiza-tional atmosphere of mutual understanding and an increasedwillingness to participate in organization building (Sitkin &Pablo, 2004). For example, direct interpersonal relationshipsmay foster the exchange of information between employeesof the formerly separated entities. This additional informa-tion allows the employees of the acquired firm to betterunderstand the motives and behavioural rules in their newenvironment, thereby reducing the uncertainty about whatbehaviour is expected from them in that environment.Further, Ashkenas and Francis (2000) argue that this rela-tional dimension and the building of social connections leadto the development of a common language and culture in theM&A context. For example, frequently communicating withmembers of their new organization allows employees tounderstand the beliefs and assumptions of that organization’smembers, and subsequently adapt their own belief systemsand assumptions. Relational leadership fosters such frequentcommunication (Sitkin & Pablo, 2004). Thus,

H2b. The positive relationship between post-acquisition in-tegration speed and employee commitment is more positivewhen the degree of relational leadership is high than when itis low.

Contextual leadership. The task of the leader to create anorganizational setting and conditions that enable employeesto focus and be effective is referred to as contextual leader-ship (Sitkin & Pablo, 2005). The leader acts as an architectwho creates physical, task, and social structures (Green-halgh, 2001). Cording et al. (2008) argue that the fasterthe integration speed, the greater the internal reorganiza-tion goal achievement following an acquisition. Pablo (1994)refers to the leader as a ‘‘master designer’’ who is at thesame time the chief community builder and the architect ofthe new organization’s structure. Contextual leadership doesnot only provide some kind of roadmap for employees to seethe work ahead (Ashkenas & Francis, 2000), but it also fostersa positive organizational identity that employees wish to bepart of (Haspeslagh & Jemison, 1991).


Contextual leadership in an acquired firm may partlymitigate the challenges of a fast integration process becauseit allows for quicker acculturation of employees. In an envir-onment where structures and processes are clearly definedand simple, employees can more easily identify and adoptnorms and patterns of behaviour that are typical for theirnew organization (Adler & Borys, 1996). For example, whentheir supervisor creates a structured context by establishinghierarchies, report practices, or incentive systems that are inline with the organizational culture of the acquiring firm, thiscan help employees to get an impression of the organiza-tional processes and expected behaviours in their new firm.Further, a contextual leader may create social structures byforming teams and establishing regular group meetings in away that is practiced in the acquiring firm, which demon-strates to employees which social interaction patterns andsocial norms are desired in the new firm. When contextualleaders involve employees in these processes, this forms asense of community (Sitkin & Pablo, 2005) where membersshare cognition, beliefs, and behavioural norms, thereforeleading to the development of a common organizationalculture. Thus,

H2c. The positive relationship between post-acquisition in-tegration speed and employee commitment is more positivewhen the degree of contextual leadership is high than whenit is low.

Inspirational leadership aims at building a desire for excel-lence and for the acceptance of challenges with enthusiasmand confidence (Sitkin & Pablo, 2004). Inspirational leadershipis generally important in the post-acquisition integrationphase because inspirational leaders drive to stretch acquisi-tion targets and create high expectations for the post-acquisi-tion integration (Jemison & Sitkin, 1986). In doing so,inspirational leaders generate the action and enthusiasmthe firm’s employees need to overcome challenges in thepost-acquisition integration phase (Sitkin & Pablo, 2005).

Inspirational leadership in an acquired firm is a means ofenhancing employee commitment in a fast integration pro-cess because it facilitates employees’ understanding of theirnew organizational environment. Inspirational leaders com-municate and visualize future goals of the integration processwhich can help employees to gain a picture of the directionof, and their position within, the newly created organization(Sitkin & Pablo, 2004). For example, an inspirational leadermay communicate a vision to an acquired R&D division thatthis division will become the organization’s centre of excel-lence in a particular research field (Schweizer, 2005). Thisvision provides the employees with a roadmap for their dailybehaviours in the quickly changing environment andenhances their understanding of what is expected fromthem. A clearly communicated and ambitious vision can alsomotivate employees to strive for high performance (Collins &Porras, 1994) and more quickly overcome obstacles of a fastintegration process (Sitkin & Pablo, 2005) such as conflictswith members of the acquiring firm. Thus,

H2d. The positive relationship between post-acquisition in-tegration speed and employee commitment is more positivewhen the degree of inspirational leadership is high than whenit is low.

Supportive leadership. Supportive leaders make othersaware of pressing organizational problems and make themfeel secure enough in their own capacity to take appropriatecorrective action (Sitkin & Pablo, 2004). Supportive leader-ship involves providing the resources, training, encourage-ment, and necessary feedback to foster a sense ofacceptance, security, and personal efficacy. Tetenbaum(1999) and Marks and Mirvis (1985) suggest that employeesof an acquired firm require significant support because theyhave experienced a major psychological shock through theacquisition.

Supportive leadership in an acquired firm increases thecommitment of employees in a fast integration process bytriggering mutual understanding and acculturation in the neworganizational context. Ashkenas et al. (1998) depict thetasks of a supportive ‘‘integration manager’’ who builds‘‘connective tissue’’ in order to help each side (acquirerand target) to understand the other by bridging, explainingand translating. In doing so, the supportive leader provideselements that bring the people of both organizationstogether (Sitkin & Pablo, 2004). For example, if employeesof a quickly integrated firm face problems to understanddecisions of top managers of the acquiring firm, a supportiveleader will explain to them these decisions, and the reasonsunderlying these decisions. Similarly, a supportive leaderexplains motivation, behaviours, belief systems, and socialnorms prevalent in the new organization to employees of anacquired firm, which facilitates their understanding of orga-nizational rules and their adaptation to the new culture.Moreover, explaining not only the rules and norms themselvesbut also their underlying purpose and history creates a senseof acceptance in the employees and facilitate the interna-lization of those rules and norms into to their own beliefsystems (Ryan & Connell, 1989) leading to faster accultura-tion. Thus,

H2e. The positive relationship between post-acquisition in-tegration speed and employee commitment is more positivewhen the degree of supportive leadership is high than when itis low.

Stewardship-based leadership. Sitkin and Pablo (2004)stress that firms are institutional ships that require andcan profit from symbolic leaders at the helm. This needfor institutional leadership is of crucial importance in theM&A context as there is a tendency for value to be destroyedwhen guidance is lacking (Haspeslagh & Jemison, 1991).Galpin and Herndon (2000) refer to stewardship M&A leadersas ‘‘accountable others’’ emphasizing the mutual responsi-bility of all employees for the success of the M&A process.

Stewardship-based leadership can (partly) mitigate therisks of fast post-acquisition integration for keepingemployee commitment because a stewardship leader in anacquired firm speeds up the acculturation process by effec-tively communicating to the employees the tacit values andmental models prevalent in their new organization (Sitkin &Pablo, 2004). Stewardship leaders serve as a personal symbolfor the collective beliefs and values of organizational mem-bers and the institution (Mezias, Grinyer, & Guth, 2001). Theimmediate and repetitive interaction with a symbolic leaderrepresenting the values and belief systems of the acquiringfirm will lead employees to more readily adapt those values


and beliefs and make them part of their own mental modelsand belief systems (Bandura, 1977) leading to the creation ofa social conscience and the development of a commonculture (Clemente & Greenspan, 1998). Thus,

H2f. The positive relationship between post-acquisition in-tegration speed and employee commitment is more positivewhen the degree of stewardship-based leadership is high thanwhen it is low.

Research method

Data and sample

We use a multi-national sample of corporate employees fromcompanies in the US and Europe. In 2006, these employeeswere Executive MBA students at a major business schoollocated in France, and Executive MBA students at a majorUS university with on average almost 10 years of workexperience. Survey instruments were handed out to theemployees after an MBA class, and they returned thesebooklets the following class. We collected data from 91employees, a number of participants consistent with studiesusing the same methodological approach and a similar num-ber of independent variables (Shepherd, 1999). MBA studentshave been used frequently before as representations ofemployee samples in strategy and organizational behaviourresearch (Choi & Shepherd, 2005; Goodwin, Wofford, & Boyd,2000).

The employees were on average 33 (standard deviation 7)years old, 45% were female, and 26 (29%) were from the US.Their average work experience was 9.5 (std. dev. 6.9) years,and they held their current positions for 3.4 (std. dev. 3.2)years on average. Thirty-five participants (38%) worked in thehigh technology sector, 16 (18%) in the banking/financesector, 4 (4%) in consulting companies, and the rest in variousother sectors. Thirty-nine (43%) of the participants had beenactively involved in an M&A before, and 10 (11%) of them atthe time of our study.3 The firms of the participants employedon average 37,000 (std. dev. 131,000) people and were 58(std. dev. 68) years old.

Conjoint analysis

We used a metric conjoint experiment to collect data on thedecisions of employees to stay in the newly created firm afteran acquisition depending on integration speed and leadershipstyle. Conjoint analysis is a technique that allows researchersto decompose an individual’s decisions into its underlyingstructure (Green, 2001). Metric conjoint analysis is well esta-blished in research on strategic decision-making (Priem &Harrison, 1994) and has been used by many authors (e.g., Choi& Shepherd, 2004; Pablo, 1994; Shepherd, 1999). Conjointanalysis has also been applied in research on decision making inM&As and interfirm partnerships (Dollinger, Golden, & Saxton,

3 We did not find significant differences in assessment policies ofparticipants who had been actively involved in M&As before andthose who had not.

1997; Pablo, 1994; Tyler & Steensma, 1995). In metric conjointanalysis decision makers are asked to make assessments basedon a number of attributes which describe a specific decisionsituation. The attributes are described by different levels(e.g., high and low). Several different attributes with pre-determined levels constitute a profile to which the decisionmaker assigns her/his judgement.

We consider a metric conjoint experiment as particularlyappropriate for our research for the following reasons. First,conjoint analysis is useful for studying how individuals’ per-ceptions of integration speed and leadership influence theirdecision policies. Objective characteristics of an environ-ment can differ substantially from individuals’ perceptions ofthat environment; however, perceptions rather than objec-tive characteristics impact individual decision-making (Das &Teng, 2001; March & Shapira, 1987). A second strength ofconjoint analysis is that it allows researchers to obtain realtime data about decisions. In contrast to retrospective meth-ods such as questionnaires, interviews or surveys, thismethod is not (or only little) biased due to the mistakenor missing introspection of decision makers (Shepherd &Zacharakis, 1997). Since this bias can be substantial (Fischh-off, 1988; Zacharakis & Meyer, 1998), we expect an experi-mental approach to provide more accurate data on theemployees’ decisions. Third, metric conjoint analysis allowsfor the investigation of contingent relationships (two-wayinteractions) between decision variables (Priem & Harrison,1994). Because our theory suggests interactions betweenintegration speed and leadership styles and thus contingentdecision policies of employees, metric conjoint analysis is theappropriate method for our research. Finally, gaining real-time access to firms that undergo an M&A transaction ishardly possible due to confidentiality reasons, and doing asurvey after a successful integration limits the sample tothose employees that remained with the firm, potentiallycausing a survivor bias. Our experimental approach providesan opportunity to overcome these challenges of limited dataaccess and survivor bias.

Besides these advantages for the purpose of our research,however, there are limitations associated with the use ofconjoint analysis. We tried to minimize these limitations bythe design of our study, but we want to emphasize them here.One possible criticism conjoint studies face is that thesestudies do not represent real decision situations and there-fore lack external validity (face validity). Scholars have beenconcerned about this issue already in the early days ofconjoint analysis, and studies have shown that conjointanalyses well reflect decision policies employed by indivi-duals (Brown, 1972). Moreover, external validity of conjointexperiments is usually high when judgement attributes arederived from theory as it is the case in our study (Shepherd &Zacharakis, 1997). In addition, we asked the employees toself-report the importance of the decision criteria whenevaluating their commitment on a seven-point Likert-typescale anchored by the end points ‘‘very unimportant’’ and‘‘very important’’. Participants reported the following aver-age values: integration speed 4.0, personal leadership 3.9,relational leadership 3.1, contextual leadership 3.1, inspira-tional leadership 3.0, supportive leadership 3.1, and stew-ardship leadership 3.7. Thus, all criteria had self-reportedimportance with some emphasis on integration speed,suggesting that the design of our conjoint study (at least


to a certain extent) mirrors the decision cues of employeesduring the post-acquisition integration process. The self-report data also (to some extent) indicate that respondentswere not attaching importance to attributes merely becausethey were presented in the experiment (cf. Brehmer &Brehmer, 1988). The importance of the attributes was alsoconfirmed in pre-tests where, in addition to conducting theexperiment, we had feedback conversations with five sub-jects. All individuals confirmed that the experimental designis appropriate and the decision situations described can beassessed based on the individuals’ experiences. Finally, fol-lowing most published conjoint studies in the field of strat-egy, we use the dichotomous operationalization of thedecision cues (leadership styles and integration speed, seebelow). This dichotomization represents a simplification anddoes not cover all potential levels of leadership styles man-agers may apply in practice. However, in conjoint designs,there is a trade-off between using more (e.g., three) levels ofa particular decision variable vs. using more variables to keepthe number of scenarios manageable for participants. Wedecided to cover all leadership styles described by Sitkin andPablo (2004) at the expense of using multiple levels of onlyone or two styles. Future research can focus on the investi-gation of one or two particular leadership styles during post-acquisition integration and, for example, explore curvilineareffects.

Research instrument

In the conjoint experiment, the judgements of the decisionmakers represent the dependent variable, whereas the attri-butes describing the decision scenarios constitute the inde-pendent variables. As far as the depth of integration isconcerned and in line with Pablo (1994) as well as Haspeslagh& Jemison (1991), the chosen post-acquisition integrationapproach across all scenarios was defined with a high level ofintegration leading to a full consolidation of operations,structures, and culture. The higher the level of integration,the more likely employees’ work environment is affected bythe acquisition.

Dependent variable. The dependent variable of our studyis the employees’ commitment to the newly combined firm.Consistent with previous studies (Cohen, 1993; Meyer &Allen, 1997), we asked employees to assess their willingnessto stay with the firm on a seven-point Likert-type scaleanchored by the end points ‘‘No, definitely not stay withthe firm’’ and ‘‘Yes, definitely stay with the firm’’.

Independent variables. The scenarios in our experimentare described by seven attributes. Following other conjointstudies (Choi & Shepherd, 2004; Pablo, 1994), we describedeach of the attributes by two levels. These attributes aresplit among one that describes the post-acquisition integra-tion speed and six that describe the leadership style of theemployees’ boss. Attribute descriptions were formulated in away that they represent the perspective of the employeesduring the post-acquisition integration process and that theyare consistent with Sitkin and Pablo (2004). Speed rangesfrom slow (Your organizational tasks and work environmentchange slowly so that you can GRADUALLY adapt to the newsituation) to fast (Your organizational tasks and work envir-onment change quickly which requires you to adapt RAPIDLYto the new situation). Personal means the degree to which

the leadership style of the employee’s boss can be charac-terized as personal and ranges from high (Your boss commu-nicates her/his personal vision, values, emotions, and beliefsabout the newly combined firm) to low (Your boss does NOTcommunicate her/his personal vision, values, emotions, andbeliefs about the newly combined firm). Relational stands forthe degree to which the leadership style of the employee’sboss can be characterized as relational and ranges from high(Your boss fosters interpersonal collaborations and connec-tions with members of the other firm) to low (Your boss doesNOT foster interpersonal collaborations and connections withmembers of the other firm). Contextual means the degree towhich the leadership style of the employee’s boss can becharacterized as contextual and ranges from high (Your bosscreates conditions that enable you to focus and be effectivein the new environment) to low (Your boss does NOT createconditions that enable you to focus and be effective in thenew environment). Inspirational is the degree to which theleadership style of the employee’s boss can be characterizedas inspirational and ranges from high (Your boss motivates youto strive for excellence. S/he has high expectations, acceptschallenges, and displays enthusiasm and confidence aboutthe acquisition) to low (Your boss does NOT particularlymotivate you to strive for excellence. S/he has averageexpectations and displays little enthusiasm and confidenceabout the acquisition). Supportive is the degree to which theleadership style of the employee’s boss can be characterizedas supportive and ranges from high (Your boss fosters a senseof acceptance, security, personal efficacy, confidence, andcollective understanding during the integration process) tolow (Your boss does NOT foster a sense of acceptance,security, personal efficacy, confidence, and collective under-standing during the integration process). Stewardship standsfor the degree to which the leadership style of the employ-ee’s boss can be characterized as stewardship and rangesfrom high (Your boss acts as a ‘‘steward’’ and integrator,articulating and communicating to all employees the valuesof the newly combined firm) to low (Your boss does NOTact asa ‘‘steward’’ and integrator, i.e., he does NOT articulate andcommunicate the values of the newly combined firm).

Experimental design and reliability

Profiles of our experimental design consist of seven attributes,each of which is represented by two levels, yielding 27 = 128possible combinations. Since evaluation of 128 profiles appearsnot an easily manageable task for participants in our study, weapplied an orthogonal factorial design to reduce the number ofattribute combinations to 16. In an orthogonal design inter-correlations between attributes are zero (we therefore omit acorrelation table), which eliminates issues of multicolinearityand increases the robustness of experimental results (Huber,1987). We chose a fractional factorial design which con-founded main effects and all two-way interactions of mostinterest (involving the integration speed) with other two-wayand higher order interactions (which are of least interest). It istherefore unlikely that the latter will bias the results of ourstudy (Louviere, 1998). Similar designs have been used beforein strategy and M&A research (Choi & Shepherd, 2004; Pablo,1994; Shepherd, 1999).

Reliability (internal validity) is a necessary condition forthe validity of measures in general. In conjoint experiments,

Table 1 Employee commitment during post-acquisition in-tegration.

Evaluation criteria Coefficient Standarderror

t-Ratio

Intercept 3.780 0.064 59.840 **

Integration speedSpeed 0.105 0.062 1.701y

Leadership stylesPersonal 0.601 0.058 10.308 **

Relational 0.783 0.057 13.775 **

Contextual 0.958 0.060 15.904 **

Inspirational 0.897 0.047 18.986 **

Supportive 1.146 0.069 16.636 **

Stewardship 0.738 0.047 15.608 **

InteractionsSpeed � personal 0.026 0.063 0.414Speed � relational 0.161 0.078 2.053 *

Speed � contextual 0.130 0.075 1.736y

Speed � inspirational 0.108 0.057 1.904y

Speed � supportive 0.221 0.065 3.415 **

Speed � stewardship 0.136 0.076 1.786y

n = 2912 decisions nested within 91 employees.y p < 0.10.* p < 0.05.** p < 0.01.


reliability of decision makers’ judgements is tested by repli-cating profiles and performing test-retest checks (Shepherd& Zacharakis, 1997). Full replication of all 16 attributecombinations of our experimental design resulted in 32profiles. In order to control for effects resulting from thespecific order of the profiles and/or the specific order ofattributes within each profile, we randomly assigned the 32profiles as well as the attributes in two ways each resulting infour versions of our experiment. We distributed the versionsrandomly among participants. Since we found no significantdifference across versions, we conclude that order effectshad little impact on our results. Moreover, we included a‘practice’ profile as a first evaluation task, which weexcluded from the statistical analysis, in order to makeparticipants familiar with the decision situation beforeentering into the experiment. Thus, our final experimentaldesign consisted of 33 profiles, similar to the number ofprofiles used in other conjoint experiments described inthe literature (Pablo, 1994; Shepherd, 1999).

Statistical analysis

Our statistical analysis draws on 32 decisions from 91 indi-viduals, thus yielding a total of 2912 data points. However,these data points are not independent of each other sinceeach set of 32 observations is nested within an individualmanager and mental models between individuals differ. Wetherefore applied Hierarchical Linear Modeling (HLM), whichtakes into account nested decisions within individuals. Thatis, we do not have to control for between individual differ-ences such as age, gender, education, country of origin,experience and so on, because HLM separates decision levelvariance from individual level variance (Bryk & Raudenbush,1992). HLM is thus the state-of-the-art statistical method forevaluation of conjoint data (e.g., Choi & Shepherd, 2004).Another advantage of HLM is that the coefficients calculatedby this method have the same interpretation as coefficientsgained by ordinary least square regression techniques (Bryk &Raudenbush, 1992). We did not use hierarchical linear regres-sion analysis as earlier policy capturing studies had done (Hitt& Tyler, 1991) and report only full model results since ortho-gonal fractional designs assure zero correlation betweenindependent variables (Priem & Rosenstein, 2000). That is,coefficients in models that include only some independentor interaction variables are identical to coefficients in thefull model.

Results

Ninety-two percent of the individual decision models werestatistically significant ( p < 0.05) and therefore explain asignificant portion of variance. This is consistent with pre-vious research (Choi & Shepherd, 2004: 95%; Shepherd, 1999:75%). The mean R2 of these models was 0.79 (Choi & Shep-herd, 2004: 0.72; Shepherd, 1999: 0.78). Eighty-nine percentof employees answered significantly reliable ( p < 0.05),again similar to existing studies (Choi & Shepherd, 2004;Shepherd, 1999). The mean test—retest correlation was0.70 (Shepherd, 1999: 0.69). These values indicate thatthe participants in our sample consistently performed theconjoint task. Table 1 presents our results. We report for each

decision criterion the standardized coefficient, the corre-sponding standard error, the t-ratio and level of significance.

Results in Table 1 show that all decision criteria (maineffects) are significantly used by employees in assessing theirorganizational commitment during the post-acquisition inte-gration process. Specifically, there is a (marginally) signifi-cant positive relationship between integration speed and thelikelihood that employees decide to stay with the acquiredfirm (coefficient = 0.105, p = 0.089, p < .10). This findingprovides some support for Hypothesis 1. Moreover, Table 1shows that employee commitment increases with the degreeto which the leadership style of their boss is characterized as(a) personal, (b) relational, (c) contextual, (d) inspirational,(e) supportive, and (f) stewardship-based. Furthermore, ourtheory stated that interactions exist between post-acquisi-tion integration speed and leadership styles. Table 1 showsthat two out of six interactions of integration speed withother attributes are significant at a conventional level, andthree are marginally significant at a conventional level.Specifically, we find that interactions between integrationspeed and the degree of relational leadership (coeffi-cient = 0.161, p = 0.040, p < .05), and integration speedand the degree of supportive leadership (coefficient = 0.221,p = 0.001, p < .01) are significant. Moreover and to a lesserdegree, the results show that interactions between integra-tion speed and contextual leadership (coefficient = 0.130,p = 0.082, p < .10), integration speed and inspirational lea-dership (coefficient = 0.108, p = 0.057, p < .10), and integra-tion speed and stewardship leadership (coefficient = 0.136,p = 0.074, p < .10) are marginally significant. Since we findno significance for the interaction between integration speedand the degree of personal leadership, we conclude thatHypothesis 2a is not supported.

High stewardship leadership

Low stewardship leadership

Slow

Integration speed

Fast

Employee commitment

E

High su pportive leadership

Low su pportive leadership

Slow

Integration speed

Fast

Employee commitment

D

Low relational leadership

High relational leadership

Slow Integration spee d

Fast

Employee commitment

A

High contextual leadership

Low contextual leadershi p


Fast

Employee commitment

B

High insp irat ional leadership

Low insp irational leadership


Fast

Employee commitment

C

Figure 1 Interactions between integration speed and (A) relational, (B) contextual, (C), inspirational, (D) supportive, and (E)stewardship leadership.


In order to understand the significant interaction effectsin more detail, we plot integration speed (x-axis) againstthe employees’ assessment of their organizational commit-ment (y-axis). We plot separate lines for high and low degreesof leadership styles (cf. Fig. 1). Fig. 1 demonstrates that,based on their assessments, employees are more likely tostay with their new firm during the post-acquisition integra-tion process when the post-acquisition integration speed ishigh than when it is low, and that this relationship is thestronger, the more the leadership style of their supervisor ischaracterized as relational (Fig. 1A), contextual (Fig. 1B),inspirational (Fig. 1C), supportive (Fig. 1D), and stewardship-based (Fig. 1E). The nature of these relationships providessupport for Hypotheses 2b and 2d, and marginal support forHypotheses 2c, 2f, and 2e.

Discussion and conclusion

In this study we use a behavioural decision making frameworkto develop a model of employees’ decisions to stay with anacquired firm based on their perceptions of uncertaintiesduring the post-acquisition integration process. Using anexperimental design and conjoint analysis we find that fastintegration helps to ensure the commitment of employees,

and that the efficiency of fast integration is multiplied whenemployees perceive their supervisor displaying high degreesof relational, contextual, inspirational, supportive, andstewardship-based leadership. These results extend theliterature on M&A integration in various ways.

First, we address the issue of the speed at which M&Aintegrations ought to take place. The existing debate (Ash-kenas et al., 1998; Buono & Bowditch, 1989; Haspeslagh &Jemison, 1991) is mainly as to whether integration ought tobe quick or slow in order to make an M&A successful. Existingresearch studies (Haspeslagh & Jemison, 1991; Homburg &Bucerius, 2005; Inkpen et al., 2000) as well as empiricalstudies of management consulting firms (Mercer ManagementConsulting, 1997; PriceWaterhouseCoopers, 2000) find thatthe speed of integration is positively related with M&Asuccess. Our work differs from these studies in that we focuson the individual employee of the acquired firm as the unit ofanalysis. Our results indicate that a quick integration reducesthe amount of uncertainty and stress that frequently come upduring the post-acquisition integration phase among emplo-yees (Buono & Bowditch, 1989; Cartwright & Cooper, 1993;Sales & Mirvis, 1984) and help to secure the commitmentof these employees as a means of making the acquisitionsuccessful (Canella & Hambrick, 1993; Ranft & Lord, 2000).


Although some authors recognize the importance of lea-dership on M&A success (Haspeslagh & Jemison, 1991; Marks& Mirvis, 1985), there is little work that analyzes the effect ofleadership in an acquisition context (Sitkin & Pablo, 2004).Our research results support the conclusion that all sixleadership dimensions (personal, relational, contextual,inspirational, supportive, stewardship-based leadership)identified by Sitkin and Pablo (2004) have a positive, directeffect on employee commitment during the post-acquisitionintegration phase, indicating that leadership can help toprevent employee turnover during this difficult period. More-over, our findings support the notion of Waldman (2004) thatleadership can be considered as a logical driver to support thehuman side of M&A integration, thus facilitating successfulpost-acquisition integration. Hence, effective leadershipcontributes to the retention of valuable human capital (Ranft& Lord, 2000) which is of crucial importance during acquisi-tion implementation as well as for knowledge, technology,and capability transfer in high-tech acquisitions becausevalue creation takes place after the acquisition (Haspeslagh& Jemison, 1991).

The major contribution of our study, however, is that wedo not investigate integration speed and leadership as inde-pendent means of fostering employee commitment, but thatwe explore interaction effects between integration speedand leadership. By that, we respond to the call for a moreextensive use of interactions in M&A research (Hitt, Harrison,Ireland, & Best, 1989; Hoskisson & Hitt, 1990; King et al.,2004). That is, the benefits of a quick integration are con-tingent on leadership styles of functional level managers. Ourresults show that the positive effect of fast integration isespecially enhanced when employees perceive their super-visors to display a relational and supportive leadership style.To a lesser degree, a contextual, inspirational, and steward-ship-based leadership style does also have a positive impact.It appears that these leadership styles are able to mitigatesome of the employees’ problems associated with quickintegration (e.g., lack of cultural acclimatization, trust-building, and common understanding).

Relational, contextual and supportive leadership reflectthe operational level of the post-acquisition integrationprocess. Relational and supportive leadership take care ofthe interpersonal ties and relationships between employeesby fostering social connections and a common language andculture (Ashkenas & Francis, 2000). From a managerial per-spective, this conclusion highlights the important role ofmiddle managers who are primarily responsible for theday-to-day operational implementation of the post-acquisi-tion integration process. Thus, these middle managers mayhave a stronger impact on the successful post-acquisitionimplementation than the more frequently studied Top Man-agement Teams. Moreover, our finding that relational andsupportive leadership styles are particularly important dur-ing fast integration processes is in line with the post-acquisi-tion integration concept developed by Birkinshaw et al.(2000). These authors emphasize that management cannotdrive task integration faster than their success with humanintegration. In contrast, contextual leadership deals with theconstruction of situational conditions that enable employeesto focus and be effective by creating physical, task and socialstructures (Greenhalgh, 2001). Creating a sense of enthu-siasm for reaching the integration goal through inspirational

leadership appears particularly important during fast inte-gration processes because by getting employees to believe intheir abilities to accomplish the operational part of theintegration process, the inspirational leader keeps up theconfidence and loyalty of the employees and, by this, theircommitment.

Concerning the non-significance of the interaction effectbetween integration speed and personal leadership, oneexplanation may be that employees do not pay much atten-tion on who their supervisor is as a person if she or he is notable to provide other leadership dimensions in the first place.That is, only being a personal leader may not be enough tomitigate the risks of a fast integration process and minimizethe employees’ perceptions of uncertainty in that process.For example, perhaps only leaders who represent the valuesand goals of the new organization (stewardship leaders), orleaders who extensively communicate visions of the inte-grated organization (inspirational leaders) can make use ofpersonal leadership as a means of effectively communicatingvalues, goals and visions to employees. Our research designdoes not allow for the analysis of contingency relationshipsbetween the leadership dimensions investigated. Futureresearch can make important contributions when it exploresthese effects.

Finally, while our theoretical arguments draw on a beha-vioural decision making framework and suggest that quickintegration can reduce employees’ perceptions of uncer-tainty which will lead to increased commitment, there arealternative ways how quick integration might influenceemployees’ commitment decisions. Specifically, high inte-gration speed may lead to low perceived procedural anddistributive justice among employees of the acquired firm.These perceptions may lower employee commitment andincrease turnover intentions. Again, however, leadershipmight help mitigate these problems of fast integration andmake such an approach suitable for securing employee com-mitment. For example, Cho and Dansereau (2010) found thatat the individual level, a leader’s individualized considera-tion relates to leader-directed organizational citizenshipbehaviours through interpersonal justice, whereas at thegroup level, a leader’s charisma relates to group-directedorganizational citizenship behaviours through proceduraljustice climate. Thus, it appears that even though employ-ees’ diminished perceptions of procedural and distributivejustice during quick integration might reduce commitment,leadership can contribute more to secure commitment duringa fast integration process than in a slow integration process.That is, the directions of the interactions postulated in ourtheoretical model remain the same if we take into accountthis additional mechanism.

Our study also addresses the recent call of scholars formore research relevant to managerial practice (Cummings,2007; Van de Ven & Johnson, 2006). Our key managerialmessage is that fast integration in combination with effectiveleadership in the post-acquisition implementation phase canmake a significant, positive impact on the success and valuecreation after the acquisition (Haspeslagh & Jemison, 1991;Hitt et al., 2001) because it can enhance the commitment ofimportant employees and motivate them to stay with thenewly created firm. As a consequence post-acquisition inte-gration and knowledge and capability transfer are facilitated(Ranft & Lord, 2000). While we cannot draw quantitative


conclusions (e.g., how many days an integration should take)given the qualitative nature of our research variables (e.g.,fast vs. slow integration speed) and heterogeneity of oursample, our results suggest that quick post-acquisition inte-gration can generally help to reduce employees’ perceiveduncertainty during the integration period and, thus, preventemployee turnover. This is a prerequisite in order to realizethe desired synergies associated with the acquisition. Man-agers who lead a quick integration process at a functionallevel should pursue a relational, contextual, inspirational,supportive, and stewardship-based leadership style in orderto further enhance the positive effects that quick integrationhas on employee commitment. In line with Birkinshaw et al.(2000), managers should look at keeping a balance between‘‘human integration’’ and ‘‘task integration’’ in order tosuccessfully lead a post-acquisition integration process.

Concerning the practical application of the differentleadership styles it is often discussed whether it is possibleto learn different leadership styles or to apply them to avarying extent. Given the fact that managers have differentpersonality traits and characteristics (Judge, Bono, Ilies, &Gerhardt, 2002), some will be more able to learn and applythe different leadership styles than others. However, basedon the concept of experiential learning (Huber, 1991), man-agers will be able to build up, enhance, and continuouslyimprove their know-how and capabilities with regard to theapplication of the different leadership styles during theirbusiness life (Day, 2000). Thus, they are (at least to a certainextent) able to adjust their leadership style according to thesituational requirements.

To a certain extent, implications for future research arisefrom the limitations of our study. First of all, we conductedour study in a U.S./European setting, and without any parti-cular industry focus. For example, it may be that employeesin different cultures value leadership dimension differently,and that employees in highly dynamic industries are betterable to deal with the quickly changing environment during afast post-merger integration process. Our statistical methodcontrols for these effects, but we do not investigate them.Future research can explore whether the impact of integra-tion speed and leadership on employee commitment differacross regions and cultures, and whether differencesbetween industries exist or not.

Second, the impact of leadership on employee commit-ment may depend on the extent to which employees perceivetheir leader to control the faith of the employees in his/herposition or promotion. Employees whose supervisors are lowlevel functional managers may not believe that those leadershave much (if any) impact on the employees’ future in thenew firm, and these leaders may hardly be able to impactemployees’ uncertainty perceptions and commitment. Afuture study might analyze the impact of leader status inthe organization on the effectiveness of leadership in M&As.In a further step, future research might analyze the impact ofmiddle managers and Top Management Teams on the successof the post-acquisition implementation process.

Third, in order to partially overcome the difficulties ofcollecting real world data on the role of leadership in M&As,we use an experimental design to investigate commitmentdecisions of employees. While this approach has advantages,we have also highlighted some of its limitation earlier inthe methodology section (such as concerns about external

validity and a dichotomous operationalization of the decisionvariables). Moreover, we do not have additional data (e.g.,from interviews and case studies) available to triangulate ourresults as suggested by Jick (1979) in order to further estab-lish the external validity of our results. While Jick (1979: 610)admits that ‘‘[t]riangulation is a strategy that may not besuitable for all research purposes. Various constraints (e.g.,time costs) may prevent its effective use’’, we encouragescholars to supplement our experimental data by examiningM&A leadership and its effect on employee commitment inreal-world contexts.

Fourth, an investigation of employees’ decision to stay withtheir firm is likely to have both rational components (e.g.,salaries paid, career perspectives) and emotional components(e.g., emotional attachment to the firm, the boss, or co-workers due to a shared identity, preference for a specificorganizational culture or working style). Our research designcannot distinguish between rational and emotional elementsin decision making. For example, while employees may ration-ally assess a personal leader as providing more trustworthyinformation about the M&A process leading to enhanced com-mitment (see our arguments earlier), personal leadershipmight also foster the development of an emotional relation-ship between supervisor and follower that triggers commit-ment. Distinguishing between these rational and emotionalcomponents in employees’ commitment decisions following anacquisition requires a different design than used in this study.We encourage scholars to develop and apply such researchdesigns in order to provide a more detailed picture of therational and emotional components of employees’ decisions tostay with a firm during the post-acquisition integration pro-cess. Finally, although an important advantage of the ortho-gonal design is that it yields more robust results (Huber, 1987),this design does not cover correlations between variables(e.g., different leadership styles). Future work may draw onother designs, such as policy capturing, to cover correlations.

In conclusions, our model suggests linkages betweenspeed of integration, leadership styles, and employee com-mitment during the post-acquisition integration phase.Employees are more likely to stay with their new firm whenintegration speed is fast than when it is slow, and relational,contextual, inspirational, supportive, and stewardship-basedleadership multiplies the positive effect of quick integration.Our research extends the M&A literature by responding to theneed for a more detailed analysis of the complex variabilityfound in M&As, and by focusing on integration speed andleadership as two largely neglected and under-researchedissues in the M&A context. Finally, we address the call forpractically relevant research by highlighting how the designof the post-acquisition integration phase in combination withmanagerial leadership can contribute to prevent the loss ofimportant human capital during that process.

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