in Mergers and Acquisitions
6.1 RESEARCH DESIGN .1 Requirements of Design
The first step in choosing a design is to specify the research problem and research objectives of the study (George, 1979). This includes (1) the kind ofphenomena or behaviour the investigator has singled out for examination, (2) the existing theory that bears on those aspects of the phenomenon in question, and (3) the aspects of the existing theory that can be singled out for assessment and/or refmement and elaboration.
The phenomenon to be studied in this dissertation is the process of organisational integration in mergers and acquisitions. Inthe introductory chapter I outlined the two research questions for the. study which were (1) To identify features and factors that facilitate or impede organisational integration, and (2) To study how the three
dimensions in organisational integration, i.e. integration of tasks, unification of power and integration of cultures and identities, interrelate and evolve over time.
According to Crabtree and Miller (1992) the nature of the question, problem or event of interest allows one to make a judgement about what form of inquiry which is best suited for investigation. For the design to match the research questions and the framework for dissertation it needs to be explorative, provide depth and cover
sensitive issues. Furthermore it should reflect the historical. contextual and processual character of the study. These requirements are explored subsequently.
Be explorative, provide depth and cover sensitive issues
The study's research questions are explorative in their nature and set the focus on building and extending existing theories in the organisational field of merger and acquisition literature rather than testing specific hypothesis.
The discussion in chapter four revealed that organisational integration was an important objective in mergers and acquisitions, but poorly defmed in previous studies. Most research has been conducted in relation to the third dimension which concerns integration of cultures and identities, though the development of indicators for measuring the dimension has not come very far. Regarding integration of tasks, this has been studied to a certain extent, but seldom in relation to the cultural
dimension. One exception is Shrivastava (1989). As for unification of power, this was a dimension that was included in the preliminary findings in the DnB-study, and which previously has not been included in the organisational integration concept.
When studying political processes in organisations, it is important to bear in mind that these are sensitive issues that are not easy to gain access to.
One of the purposes of the dissertation is to give organisational integration a more
precise meaning, develop the three dimensions and suggest how these dimensions can be operationalised. Moreover, the study aims to explore the interrelationships between the integration of tasks, unification of power and integration of cultures and identities.
Historical and contextual character
The contextual variables in the framework in chapter three consist of either pre-combination factors, such as friendliness and organisational fit, or outer contextual features such as environmental impact. Hence, the historical factors are embedded in the pre-combination factors in the framework.
Few studies within the organisational stream of merger and acquisition research examine how the past history of the organisations involved in the combinations influence the integration process in any depth. In particular, studies often acknowledge that culture is multifaceted and complex, consisting of sub-cultures, but nevertheless restrict their analysis to the dominant culture. One reason for this weakness is probably that few previous studies have collected data beyond the top management level.
As mentioned in chapter four, fmdings in the DnB-study suggest that focusing on the differences between the two parties' organisational cultures may be too impresise to detect long-term changes in the cultures, in particular when there are strong sub-cultures in the organisations. Hence, I intend to follow up the DnB-study by adopting a pluralist perspective focusing on sub-cultures at various levels and in different parts of the organisation. Beside opening for a more detailed and richer description of the
cultures, this approach opens for the possibility of having sub-cultures where both merger parties are represented.
Besides focusing on the sub-cultures, fmdings in the DnB-study suggest that important events prior to the merger may have important impact on the combination process.
Hence there is a need not only to explore the cultures of the organisations, but to focus on a more holistic picture of the organisations' past.
Regarding the other pre-acquisition factors such as friendliness, relative power,
discretionary slack and merger and acquisition regime, there is scant empirical research that explores their effect on the integration process. Here it will be important both to develop these concepts and give them a more precise meaning, as well as suggesting how they can be assessed.
There has been surprisingly little research that relates the integration process to the outer context, i.e. events in the environment. Indeed, Schweiger, Ridley and Marini's (1992) fmdings based upon a case study suggest that environmental pressures may alter the integration process, and further investigation is needed to elaborate these effects. My study will respond to these weaknesses by adapting a contextual design bringing the regulatory environment and economic climate into the analysis.
Processual character
The emphasis in the literature so far has been on assessing effects of the acquisition or merger after a relatively short period of time. Few go beyond two years, many focus on the first months or year of transition. This is particularly surprising given that the integration of cultures in general is a lengthy process. Walter (1985) for example, claims that three to five years is not an unusual transition time, and it can be much longer. As mentioned in chapter two, a number of researchers have claimed that there is a need for sustained examination of mergers and acquisitions over time.
The aim of my study is to investigate the causal effects between the factors in the framework, i.e. contextual factors and features of integration, and organisational integration. Moreover, I intend to examine how the organisational integration process evolves over time by assessing the degree of integration at different stages in the process. Hence, there is a need to adapt a processual design.
6.1.2 Choice of Design Fit to design requirements
I will in line with Pettigrew's (1990) recommendations argue that longitudinal research by means of the comparative case study method is a particular suitable design. This design reflects the processual, historical and contextual features and the need to explore complex, ill-defmed and sensitive issues in depth.
The case study is an approach that is particularly suitable for in-depth exploration of sensitive or complex issues. Moreover, it can reflect the contextual, historical and processual nature of the study. Third, the case study is open to building theory and starting off with a conceptual framework.
Inthe table below I have compared several approaches to show how they fit to the requirements of my design:
Table 6.1 Different Design and Fit to Requirements of the Study
Case Grounded Ethno- Classical Survey
study theory graphy experiment
Theory x x x x
building
Theoretical x x x
framework prior to data collection
In depth x x x
exploration of sensitive or complex issues
Contextual x x x
Historical x x x
Processual x x x (x)
The difference between the case study approach and other qualitative methods such as ethnography and grounded theory is that the case study is open to the use of theory or conceptual categories to guide the research and analysis of the data.
Grounded theory (Glaser and Strauss, 1967) "is one that is inductively derived from the study ofphenomenon it represents" (Strauss and Corbin, 1990, p. 23). As opposed to the case study, proponents of grounded theory give a basic warning in applying the methods by recommending to avoid premature use of theory or prior conceptual categories (Yin, 1993).
In ethnographic inquires (Fetterman, 1989; Jorgensen, 1989, Rosen, 1991) the researcher's goal is to gain direct experience with the phenomena under study. As such, participant observation is the preferred technique for conducting this type of research. As for the grounded theory approach, the theoretical perspectives are grounded in and emerge from the first hand data (Gioia and Chittipeddi, 1991).
My approach in this study is more deductive than the grounded theory or ethnographic approaches are open to. Building upon the framework proposed in chapter three, I intend to challenge the proposed relationships and build more refined and detailed models. Indeed, Hartley (1994) argues that without a
theoretical framework, the researcher is in severe danger of providing description without meaning. As opposed to a survey that usually starts with theory that is closed and needs to be proven or disproved, my approach is to begin with theory or understanding that is to be modified and confirmed in the context of study.
The requirements of the research design regarding the need for exploring in depth sensitive and complex issues and the contextual and historical nature of the study exclude the quasi-experiment and the survey. Firstly, both approaches are
ahistorical and acontextual in their nature. Secondly, the phenomenon to be studied is too complex and ill-defmed to study in a classical experiment. As for the survey approach, this is unsuitable for exploring in depth issues given its aim to test theory.
Case studies are tailor-made for exploring new processes or behaviours or ones that are little understood (Hartley, 1994). Hence, the approach is particularly useful for responding to how and why questions about a contemporary set of events (Leonard Barton, 1990). Moreover, researchers have argued that certain kinds of information can be difficult or even impossible to tackle in other ways than qualitative
approaches such as the case study (Sykes, 1990). These included sensitive subjects and topics that are ill-defined, ill-understood or conceptually complex (ibid).
The contextual nature of the case study is illustrated in Yin's (1993, 59) definition of a case study as an empirical inquiry that:
Investigates a contemporary phenomenon within its real-life context, addresses a situation in which the boundaries between phenomenon and context are not clearly evident, and uses multiple sources of evidence.
Hence, the case study is a useful approach where it is important to understand those social processes in their organisational and environmental context (Hartley, 1994).
Process is both historical and idiosyncratic, and statistical analysis is unable to cover either of the two (Stoecker, 1991). Hence, the processual manner of the study calls for a longitudinal case study where time can be covered through a
combination of retrospective and real time analysis.
Selection of cases
Case studies can involve single or multiple cases. The problem of single cases is limitations in generalisability and several potential biases. Eisenhardt (1989) says:
People are notoriously poor processors of information. They leap to conclusions based on limited data, they are overly influenced by vividness, or by more elite respondents, they ignore basic statistical properties, or they sometimes inadvertely drop or disconfirm evidence.
The danger is that investigators reach premature and even false conclusions as a result of these information processing biases.
One way to respond to these biases is by applying a multi-case approach (Leonard-Barton, 1990). Multiple cases augment external validity and help guard against observer biases. Moreover, multi-case sampling adds confidence to fmdings. By looking at a range of similar and contrasting cases, we can understand a single-case fmding, grounding it by specifying how and where and, if possible, why it carries on as it does (Miles and Huberman, 1994).
Given these limitations in the single case study, it is desirable to include more than one case study in the study. However, the desire for depth and a pluralist
perspective and tracking the cases over time implies that the number of cases must be fairly few. Several researchers (pettigrew, 1990; Van de Ven and Huber, 1990) have pointed out that the sheer labour intensity required to study an organisational change process over time limits a researcher's capacity to study more than a few cases at time. Taking these considerations and my own capacity as a researcher into account, I have chosen two cases.
The logic of sampling cases is fundamentally different from statistical sampling.
The logic in case studies is theoretical sampling where the goal is to choose cases that are likely to replicate or extend the emergent theory, or they may be chosen to fill theoretical categories and provide examples for polar types. (Eisenhardt, 1989).
Hence, whereas quantitative sampling concerns itself with representativeness, qualitative sampling seeks information richness and selects the cases purposefully rather than randomly (Crabtree and Miller, 1992).
In chapter three I discussed the rationale for choosing the DnB-merger and
Gjensidiges acquisition of Forenede as my two cases based upon George's (1979) and Pettigrew's (1990) recommendations for selecting cases. The aim was to find cases which matched the three dimensions in the dependent variable and provided variation in the contextual factors thus representing polar cases (Pettigrew, 1990).
Another way to respond to researchers' and respondents' biases is to have more than one unit of analysis in each case (Yin, 1993). This implies that beside developing contrasts between the cases, researchers can focus on contrasts within the cases (Hartley, 1994).
I have chosen an embedded design to analyse my cases, i.e. within each case attention is also given to sub-units and sub-processes. In both DnB and Gjensidige I compare the combination processes in the various divisions and local networks. Moreover, I compare the three distinct change processes in DnB; before the merger, during the initial
combination and after two years.
The overall and most important unit of analysis in my two cases is the combination process. In the pre-combination process this process occurs at an inter-organisational level. As the parties merge, the level of analysis shifts to the intra-organisationallevel.
The study also opens for studying contrasts within the cases.