Teaching & Learning Guide for: Social Identity and Corporate Mergers

Abstract

Social psychology is concerned with people interacting as members of social groups. Cor- porate mergers provide an interesting field to apply social psychological theory in practice and also provide a context for the test and development of such theories. Mergers and acquisitions have been shown to often fail their financial and other strategic aims – one key reason for this failure is that human resources, that is, the needs of employees involved in the merger, are often considered less important than legal, techno- logical or other factors by senior managers. In particular, it is often the merger’s impact on employee identities as members of the pre-merger organizations and its consideration by change leaders that determines the merger’s failure or success. The article ‘Social Identity and Corporate Mergers’ utilizes a social identity approach to analyze the problem zones of mergers and we provide research suggesting how to lead a merger into success. In particular, leaders should provide reasons for why the merger is necessary, they should demonstrate actual and future continuity to reduce uncertainties due to the merger situation and leaders should pay attention to status differentials (e.g., between employees of the acquiring versus the acquired organization) as employees of the lower status merger partner have different concerns than employees of the higher status merger organization.