The Impact of Organizational Citizenship Behavior on Synergy Creation in Mergers and Acquisitions, According to Levels of OCB and Types of M&A
Cho, Young Sik, La, Kwon Ah, Academy of Accounting and Financial Studies Journal
The findings of several studies suggest that synergy value creation through merger and acquisition (M&A) activity is very difficult. Haleblian et al. (2009) argued that "acquisitions did not enhance acquiring-firm value, as measured by either short-term or long-term performance measures; acquisitions were often found to erode acquiring firm value and produce highly volatile market returns" (Haleblian, Devers, McNamara, Carpenter, & Davison, 2009: 470). Shanley (1994) points out that the occurrence of employee resistance, such as high-level conflict, turnover, and non-compliance; acts as a critical failure factor in M&As. Schoenburg (2003) argues that culture clashes between the acquiring firm and the acquired firm can be a primary source of employee resistance. In fact, according to the Economist Intelligence Unit's 2006 report, approximately 67% of executives indicate that cultural integration is the most significant success factor in M&A. Given the practical importance of human resource problems that occur in the culture-integration phase of the M&A process, it is surprising that the impact of employee organizational citizenship behaviors (OCBs) on M&A performance has rarely been studied. Thus, the purpose of this study is to investigate the relationship between OCB, M&A, and synergy creation in M&A. In particular, it examines the following research questions:
Q1 How can the dimensions of OCB be classified by level of OCB (individual versus group level)?
Q2 Is individual-level OCB or group-level OCB more significant to synergy creation in M&A?
Q3 How is the moderating effect of OCB on M&A execution represented differently according M&A types, such as horizontal, vertical, and conglomerate?
In this study, eight dimensions of OCBs are classified into two types: individual-level OCB, which targets individual benefits, and group-level OCB, which targets overall organizational benefits. The study demonstrates that group-level OCB more significantly influences synergy creation in the execution of M&A than individual-level OCB does. Furthermore, it suggests that the significance of the moderating effects of OCBs differ according to OCB level as well as M&A type. Finally, this study presents a simple case study along with some theoretical and managerial implications; and provides recommendations for future research.
Organizational Citizenship Behavior (OCB)
Dennis Organ (1988) defines OCB as "individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promotes the effective functioning of the organization" (p.4). OCB is broadly considered to develop as a result of two motivational bases: job attitude and disposition (Organ, 1990; Organ & Ryan, 1995). Organ & Ryan (1995) demonstrate that OCB stems from an individual's authentic desire to help an organization or the other people at work, based on personal disposition, or as a means of reciprocating for organizational actions, as is described in social exchange theory. On the other hand, Bolino (1999) suggests that a motivational force behind citizenship behaviors is the impression-management motive, in which citizenship behaviors result from an individual's desire to look like a good citizen. It is now widely accepted that employee OCB considerably influences employee performance (MacKenzie, Podsakoff, & Fetter, 1991; Motowidlo & Van Scotter, 1994; Van Scotter & Motowidlo, 1996).
Dimensions of OCB Initially, Smith, Organ, and Near (1983) proposed two dimensions of OCB: altruism and general compliance. In 1988, Organ replaced the dimension of general compliance with four other dimensions, leading to a conceptual model of OCB involving five dimensions. Altruism involves discretionary behaviors directed at helping other employees at work. …