Diversity management and postmergers and acquisitions performance

Abstract

PurposeThe purpose of this paper is to examine the role of diversity management on postmergers and acquisitions (M&A) performance. Building on prior literature, it investigates whether a firm ability to harmonize people with different backgrounds and to deal with uncertainty and dynamics in the diverse work environment will affect post-M&A performance either directly or through its interactions with acquirer-target characteristics.Design/methodology/approachThis paper used panel regression analysis on a sample of 218 M&As conducted by listed large US firms across industries.FindingsResults show that the diversity management of an acquiring firm positively influences post-M&A performance. This paper also finds support for diversity management having a more significant moderating role where merged firms have a bigger size difference and higher industry relatedness.Originality/valueThe primary contribution of this study is in testing and finding evidence to support the claim that diversity management is a useful factor in predicting post-M&A performance. The success of post-M&A integration should be considered alongside the extent of firm capabilities to manage internal diversity.