Effect of Organizational Identity Change on Integration Approaches in Acquisitions: Role of Organizational Dominance

Abstract

AbstractThe main focus of this study is the role that organizational dominance in organizational identity change plays in shaping integration approaches in acquisitions. Using four in‐depth case studies, this study categorizes the organizational identity change process into three stages: forms of resistance; conformation of new organizational identity; and integration approaches. The authors first identify two distinct roles of organizational dominance in organizational identity change after acquisition: multilevel resistance and power struggles, which are the prerequisites for developing integration approaches, according to the social identity theory. Second, they further investigate the conformation of new organizational identity with each of these two roles. They conclude that target firms completely lose their organizational identity when there is high organizational dominance after the acquisition. Conversely, target firms work with acquirers in developing integration approaches, and the power winner dominates the integration when there is low organizational dominance. Third, this study contributes to the understanding of integration approaches by connecting three specific integration approaches to the changed organizational identity. The study contributes to the literature on both organizational identity change and acquisition.