Academic journal article Academy of Strategic Management Journal

The Impact of Mergers and Acquisitions on Corporate Culture and Employees: The Case of Aegean & Olympic Air

Academic journal article Academy of Strategic Management Journal

The Impact of Mergers and Acquisitions on Corporate Culture and Employees: The Case of Aegean & Olympic Air

Article excerpt


Nowadays, business environment is becoming increasingly competitive, which is a negative factor that affects business survival (Tsitmideli et al., 2016 & 2017). Businesses should find new ways for creating a sustainable competitive advantage in order to be able to survive and develop (Skordoulis et al., 2017). For the last forty years, there has been a growing body of research on the antecedents for predicting the performance of M&A, but the key factors that can guarantee the success or failure of a merger remain unknown. Mergers and acquisitions have been a famous strategy for companies in order to achieve a corporate growth and diversification, especially by creating synergies (Antoniadis et al., 2014; Martynova & Rennenborg, 2006; Stahl, 2003; Stahl & Voigt, 2003) and have a very important role for all over the world (Selcuk-Akben, 2015). Mergers and acquisitions became an important issue and many researchers have focused on predicting the performance of companies after an M&A. Many firms have no alternative but to merge, acquire or be acquired (Bruner, 2011). Until now, businesses have two choices: grow or die. Mergers and acquisitions in recent times are very different. Today, merger or acquisition is quite strategic and operational in nature (Galpin et al., 2010). Koumanakos et al. (2005) noted that the basic reason for companies making this decision is the prospects of growth because the merged companies can offer more benefits for the shareholders compared to individual companies. The purpose of this research is to evaluate employees' reactions and the impact of the new corporate culture within the M&A integration process. It is also necessary for the new company to adopt a new culture, where all employees will learn, follow and respect. To sum up, there are several factors that may affect the failure of an M&A. This study is focused on the impact of M&A on corporate culture after a merger or acquisition with the following main question: Which is the most important factor that will cause a merger both for Aegean and Olympic Air employees? In this research, the degree of employees' resistance to change in Aegean and Olympic Air will be examined, as well as the difference between these two different corporate cultures and the possibility of the two cultures that merged smoothly at the pace of these companies.


Mergers and Acquisitions

A merger is defined as a strategy that combining two companies and occurs when two businesses join or merge to one single company with a new name. As Coffey et al. (2002) perceptively state, M&A represent a "marriage". Machiraju (2007) has stated that merge take place when two companies differ significantly in size. "Acquisition refers to a situation where one company acquires another and the latter ceases to exist" (Machiraju, 2007). To sum up, a merger "creates" a new company with a new name from two organizations who join forces. An acquisition happens when one business buys another company which is smaller and might be absorbed within the parent organization or run as a subsidiary (Taneja & Saxena, 2014).

The Causes of Mergers and Acquisitions

Many studies highlight some of the basic reasons why companies use mergers and acquisitions. Mergers and acquisitions are also used for risk spreading or for saving a business (Chalikias et al., 2016). Many mergers and acquisitions carry out when management of any business recognizes the need of a new corporate identity (Sherman et al., 2006). Many mergers and acquisitions carry out for market dominance and reaching economies of scale (Schuler et al., 2001). Acquisitions are undertaken to achieve vertical and horizontal operational synergies (Sherman, 2010). There are several primary rationales that determine the nature of a proposed merger or acquisition. These rationales are (Roberts et al., 2010): Strategic, Speculative, Management failure, financial necessity and Political rationale. …

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