Mergers and acquisitions—Time for a methodological rejuvenation of the field

RESEARCH NOTE

Mergers and acquisitions–—Time for a methodologicalrejuvenation of the field?

Olimpia Meglio a, Annette Risberg b,*

aUniversity of Sannio, via delle Puglie, 82, 82100 Benevento, ItalybCopenhagen Business School, Porcelaenshaven 18A, Frederiksberg, Denmark

Scandinavian Journal of Management (2010) 26, 87—95

KEYWORDSMergers and acquisitions;Methodology andmethods;Processual research;Ethnography;Participant observation

Summary Mergers and acquisitions (henceforth M&As) have long attracted interest fromacademics. Yet, despite all the research, we do not seem to know much about M&A outcomes.Reasons for this state of affairs are frequently attributed to the fragmentation and existence ofsubstantive gaps in current M&A literature, and the need for integrative frameworks to grasp sucha complex phenomenon. We do not agree. We would instead posit that the M&A field has becomemarred by a set of bureaucratic method techniques that trivialize research with little organiza-tional relevance. If we are to advance our understanding of M&As as scholars wemust rethink howwe produce knowledge in the M&A field in terms of research designs and sources of data. This isthe aim of this research note–—to discuss a possible way to query M&As. To accomplish this, we willaddress some methodological issues about the study of M&A as processes instead of as one timeevents in order to bring forward some ideas on how to learn more about M&A processes.# 2009 Elsevier Ltd. All rights reserved.

ava i lab le at www.sc ienced i rect .com

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Introduction

Mergers and acquisitions (henceforth M&As) have longattracted interest from academics trying to explain andpredict the outcome of deals. Today there exists a largeamount of empirical research analyzing M&As from the per-spectives of different paradigms (although the functionalistone prevails), using different methods and studying differentunits of analysis. Yet, despite all this research, and themultiple theoretical and methodological approaches used,we do not seem to know much about M&As and their effectson the organizations involved. For instance, a recurrenttheme in existing research is to explain what makes M&As

* Corresponding author.E-mail address: [email protected] (A. Risberg).

0956-5221/$ — see front matter # 2009 Elsevier Ltd. All rights reservedoi:10.1016/j.scaman.2009.11.002

succeed or fail. Bower (2001) points out that despite allempirical research, the academic community has not yetcome up with a coherent answer to this question even thoughit has attracted, and still attracts, so many strategic manage-ment scholars.

M&A scholars tend to explain inconsistency in researchfindings by referring to the fragmentation of M&A literature(e.g. King, Dalton, Daily, & Covin, 2004), the existence ofsubstantive gaps in existing literature (e.g. Barkema & Schji-ven, 2008b; Haleblian, Devers, McNamara, Carpenter, &Davison, 2009), and a need for integrative frameworks tograsp such a complex, multifaceted, and multi-temporalphenomenon (e.g. Larsson & Filkenstein, 1999; Pablo &Javidan, 2004). Because of this state of affairs, Bower(2004) and Javidan, Pablo, Singh, Hitt, and Jemison (2004)posit that researchers aiming to explain M&A outcomes ingeneral have not yet been able to successfully develop andtest a grand theory about M&As. Based on these explanations,

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88 O. Meglio, A. Risberg

there is a widespread belief among M&A scholars that thereason for not being able to fully explain M&A outcomes isbecause of a lack of coherent theory.

We deem such statements to reflect a positivistic mindsetthat overemphasizes the importance of finding general laws,explaining and predicting phenomena, and mainly relying onlinear models and statistical analysis as tools to attain theresearch aim. Within such a research paradigm, knowledgeaccumulates through a process of filling substantive gaps withresearch findings serving as building blocks of the ever-growing ‘‘edifice of knowledge’’ (Guba & Lincoln, 1994).Yet, seen from a constructivist perspective, this fragmenta-tion entails a different meaning, becoming merely an out-come of the fact that researchers with different ontological,epistemological, and methodological stances investigateM&As in different ways. For example, the question of findinga coherent answer to the question of M&A failure and successbecomes irrelevant as each M&A is different, with differentmotives and objectives. The aim of inquiry is instead to reachunderstandings and reconstructions of the constructions peo-ple formulate about a phenomenon (Guba & Lincoln, 1994).From such a perspective, multiple constructions can coexistas knowledge accumulates only in a relative sense throughthe formation of more informed and sophisticated construc-tions.

In the M&A-related literature, the case of M&A perfor-mance is paradigmatic of a belief in grand theories, universallaws, and standard methods. Much of the empirical researchaims at seeking what explains or predicts M&A performance(e.g. Bergh, 1997; Capron, Dussage, & Mitchell, 1998; Chat-terjee, 1991; Cording, Christmann, & King, 2008; Halebian &Filkenstein, 1999; Hayward, 2002; Kapoor & Lim, 2007; Seth,1990; Shelton, 1988; Zollo & Singh, 2004). M&A scholarsgenerally claim that findings are, at best, contradictory.What M&A scholars seem to overlook is that contradictoryresults arise from the adoption of different performancemeasures embedded in different research methods.

In an extended narrative literature review of M&A studieson performance, published in top-tier management journalsfrom the 1970s to date, the authors of this research notefound patterns indicating that the definitions of M&A per-formance were almost as many as the studies, in terms ofoperational definitions, indicators, temporal orientations,and units of analysis (Meglio & Risberg, 2009). For instance,within the realm of technology-driven M&As, M&A scholarssometimes measure performance in terms of inventors’ post-acquisition productivity, abnormal returns, or knowledgetransfer, just to name a few (Meglio, 2009). As almost eachstudy has its own definition of performance, and each studyinvestigates correlations between different types of vari-ables, it becomes impossible to talk about M&A performancein general since each contribution is so marginal (Meglio &Risberg, 2009). M&A scholars, indeed, seem to be caught in astraightjacketed mindset of hypotheses testing on largesamples, seeking the ultimate independent, moderating,and mediating variable able to explain or predict M&A per-formance. The conventional discourse about M&A perfor-mance reveals a belief that THE performance is out theresomewhere, and we only need to find the best measure tocapture it (Lubatkin & Shrieves, 1986; Schoenberg, 2006;Zollo & Meier, 2008). The existence of a common languageabout M&As, along with shared modes and protocols of

investigation, creates among scholars a source of sharedintellectual beliefs that lead to a sense of security, whichis probably one reason for the academic search for integratedtheory and universal measures. An alternative view, however,is that the M&A field has become marred by a set of bureau-cratic techniques (that everybody must use) that trivializeresearch with a concern for minor problems with littleorganizational relevance (Daft & Lewin, 1990). This is whatwe believe has happened in much of the M&A research that isconducted today.

Consequently, filling in substantive gaps in the literatureor elaborating on existing integrative frameworks will not domuch to further knowledge in the field. If we are to advanceour understanding of the effects of M&As, as scholars wemustrethink how we produce knowledge in this field in terms ofresearch designs and sources of data. This is the aim of thisresearch note–—to discuss a possible way to query such anambiguous and complex topic as M&As. To accomplish this,we will address some key issues about the study of M&As asprocesses (suggested already by Jemison & Sitkin, 1986)instead of as one time events, and bring forward some ideason how to learn more about what happens during M&Aprocesses.

Our discussion focuses on the limitations of cross-sectionalresearch designs, typically found in the US-hegemonized M&Aresearch. Such designs are based on secondary data or sur-vey-based perception data, which results in all sorts ofnumbers- and variables-based research published in top-tierjournals. We will then continue to discuss the need forlongitudinal real-time research designs as well as observationas an alternative method for data collection.

There are some examples of longitudinal investigations,but they are generally based on secondary data (see, forinstance, Ahuja & Katila, 2001; Barkema & Schjiven, 2008a).Instead, we propose scholars to go into the field and doprolonged studies, with observation and interviews as theprimary methods of data collection. While our primary focusis on methodology and method, we will also suggest somesubstantive topics that could be improved upon by the use ofa different method.

The remainder of this note is structured as follows. First,we review the current state of research methods employed inM&A empirical studies. Next, we propose methods to reju-venate the field, outlining the contribution of processualresearch in unraveling the complex web of factors affectingM&A processes. In the final section, we will discuss why thesemethods are still uncommon in management studies in gen-eral and M&A studies in particular and provide a list ofpossible research questions M&A scholars could focus on withthe help of this method.

Research methods in M&A studies

In 2004, following an M&A summit, Javidan, Pablo, Singh, Hittand Jemison discuss the past and future of M&A studies,offering a list of substantive issues deserving careful atten-tion. In the concluding section, they address the methodo-logical domain while claiming that current research designsand methodologies are not able to deal with a multi-level,multi-disciplinary, and multi-stage phenomenon such as aM&A. Further they posit that because M&A scholars tend

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to use single level, single stage, single disciplinaryapproaches, most of the work in this field is narrowly focusedand fails to capture the dynamic and complex nature of theconstruct. Yet, in their analysis methodological problemsremains largely unquestioned in that they do not dig deeplyinto the analysis of drawbacks of current approaches. In asimilar vein, more recent literature reviews (Barkema &Schjiven, 2008b; Haleblian et al., 2009) continue to overlookmethodological and method concerns while striving to iden-tify substantive gaps.

In fact, most M&A scholars seem to be more concernedabout substantive issues in M&A research rather than dis-cussing methodological matters and methods while addres-sing what they express as problems in the M&A research field.The methodological conformity that prevails in empiricalM&A articles, published in top-tier management journals,only confirms that methods and methodology remain ratherunderproblematized and unquestioned in the M&A researchcommunity (see Meglio & Risberg, 2009).

The vast majority of acquisition research is, in fact, cross-sectional and focuses on large publicly traded US corporateentities, using mainly quantitative secondary data madeavailable by the proliferation of databases (Haleblianet al., 2009). A typical empirically based M&A article employsstructural equation techniques or other statistical analyses tofind correlations between variables. These methods impli-citly assume that model parameters are constant, overlook-ing that most theoretical constructs vary across firms andover time (Bowen & Wiersema, 1999). Such research designsallow scholars to obtain statistically significant findings with-out even entering the field, thus not experiencing first handwhat is going on out there (Van de Ven, 2007). While cross-sectional research is clearly useful for laying out the systemicpatterns of relationships surrounding an organizational phe-nomenon, it fails to provide temporally embedded accountsthat help scholars understand how such patterns evolve overtime (Langley, 2007).

There are instances of longitudinal research (Ahuja &Katila, 2001; Barkema & Schjiven, 2008a), but they areoften based on secondary data and use the same stock ofstatistical analyses, which do not do justice to the gen-erating mechanisms and the hidden arrangements thatproduce certain outcomes. Not only is much M&A researchill-suited to deal with the multi-temporal and complexnature of M&As; some studies even use methods inap-propriate for the research questions they intend to answer.For example, Walsh (1988, 1989) did some, by now, classi-cal studies on top management turnover. He wanted toexplain why managers leave companies after an acquisi-tion. In his study, he did not ask the managers why theyleft; instead he tested correlations between, for instance,premium paid or type of payment and the managementturnover rate. In both publications he admits that he hasnot really been able to explain why they leave. We wouldposit that it is because he used the wrong method forinvestigation since the secondary data used in the studiesare simply not suitable to answer such a research question.Had he instead talked to or observed the top managers, hewould probably have reached an understanding of why theyleave. Of course, an alternative explanation could be thathe posed the wrong research question for the chosenmethod and available data.

However, not all M&A research is hypothesis and correla-tion testing. There are several studies that employ differentresearch methods with the aim of highlighting what numberscannot say about M&As. This is the aim of some researchprojects using mixed methods, such as those inquiring R&Dintegration in cross-border M&As (Birkinshaw, Bresman, &Hakanson, 2000), organizational culture in an insurancecompany merger (Buono, Bowditch, & Lewis, 1985), humanresource management practices in cross-border M&As (Faul-kner, Pitkethly, & Child, 2002), leadership and change inuniversity mergers (Kavanagh & Ashkanasy, 2006), nurturingexternally acquired small technology companies (Lindholm,2000), national culture in cross-border M&As (Morosini,Shane, & Singh, 1998), and one, still ongoing, that involvesFrench and Dutch M&A scholars investigating social identityissues in the Air France-KLM merger (Rouzies, Monin, &Noorderhaven, 2009). These scholars mix qualitative andquantitative data as the means to build stronger inferences(that is when the results of both types of analyses thatinvestigate the importance of several factors show similarfindings). Their goal is to combine the generalizability offindings from surveys with the depth of the qualitativeresearch. The combination of methods can offer a potentialfor exploring new dimensions and for raising new researchquestions.

Another body of M&A empirical research adopts a purelyinductive approach, for instance, Graebner (2004, 2009),Graebner and Eisenhardt (2004), Ranft and Lord (2002),and Schweizer (2005). The objective of these studies is toquery issues overlooked by existing research, such as motivesto sell from the target firm leaders’ perspectives (Graebner,2004; Graebner & Eisenhardt, 2004), trust asymmetries(Graebner, 2009), technology and knowledge transfer follow-ing technology-driven M&As (Ranft & Lord, 2002), or how thepost-integration process actually unfolds in pharmaceutical-biotech settings (Schweizer, 2005).

A consistent body of innovative studies in terms of methodand theory comes mainly from the Nordic countries, from thelate 1990s and early 2000s. The aim of this strand of researchis rarely to come up with explanations of why things occur, ornormative descriptions of how to achieve good performance,but rather to provide a better understanding of what happensin the organization during the integration and how peopleexperience the process (Risberg, 2006). They offer an alter-native perspective to M&As in terms of substantive issues,methodologies, and theories. As for substantive issues, theyinvestigate employees’ reactions (Lohrum, 1996), culturalaspects from a Foucauldian perspective (Riad, 2005), gendersegregation (Tienari, 2000), sense making and sense giving(Søderberg, 2003), gender and cultural identity construction(Tienari, Søderberg, Holgersson, & Vaara, 2005; Kleppestø,1998 for the latter), ambiguity (Risberg, 1999), power impli-cations of language policy decisions (Vaara, Tienari, Pekkari,& Santti, 2005), and politicization (Vaara, 2003). Some ofthese studies are based on interpretive and social construc-tionist research, conducting in-depth case studies, relying oninterviews as well as on participant observation as a means ofdata collection, in order to understand the integration pro-cess from different actors’ points of view (Kleppestø, 1993;Piekkari, Vaara, Tienari, & Santti, 2005; Risberg, 1999; Vaara,Tienari, & Santti, 2003). Some of them apply innovativemethods, such as critical discourse analysis (Kuronen, Tie-

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nari, & Vaara, 2005; Risberg, Tienari, & Vaara, 2003; Tienari,Vaara, & Bjorkman, 2003), or narrative interviews (Søder-berg, 2006; Søderberg & Vaara, 2003), to unravel irrationalfeatures that would have not been discovered by conven-tional methodological approaches.

These studies are ‘‘interesting,’’ in the meaning Davis(1971) attaches to this term, in that they bring in newtheories that disagree with the taken-for-granted world oftheir audience. Taken together, they contribute to changingthe view of M&As as rational, monolithic, and manageriallybiased phenomena that the conventional researchapproaches depict. But more can be done, we believe.

Methodological considerations forrejuvenating the field

In the light of the above observations about existing M&Aresearch, we posit that in order to rejuvenate the field andincrease our understanding of questions such as what drivesacquisition activity, how the integration process unfolds,what affects the outcome and the performance, or whyM&As have high failure rates, we must turn to other meth-odologies as well as methods than those prevailing today. Wewill here suggest alternative methodologies and methods.

In general, M&As are described as unique (Bower, 2001;Lubatkin, 1987). While most M&A researchers would endorsethat no two acquisitions are alike, nevertheless, existingresearch treats them as homogeneous events, and in doingso, over-generalizes and oversimplifies the acquisitions (e.g.,Bower, 2001; Lubatkin, 1987). M&As are also described asprocesses (Haspeslagh & Jemison, 1991; Jemison & Sitkin,1986). This notion implies that M&As unfold over time, areaffected by inherent ambiguities (Jemison & Sitkin, 1986),and that value creation takes place not just after theannouncement or when the deal is closed, but also duringthe post-acquisition phase (Haspeslagh & Jemison, 1991).Still, many M&A scholars reproduce the same type of cross-sectional research designs, based on secondary data (Bar-kema & Schjiven, 2008b; Haleblian et al., 2009; Phelan,Ferreira, & Salvador, 2002) that measures performance ina short window, a few days after the announcement of thedeal. M&As are generally depicted and analyzed as a linearsequence of phases, each one detached from the previousand the following phase.

Nevertheless, as noted above, Nordic M&A scholars haveshown how far M&A processes are from these ideal-types.M&As are fraught with instabilities, ambiguities, politiciza-tion, and fragmentation that traditional research approachescannot do justice to. If M&As are understood as processes,they should also be studied as such. Processual approaches,which can provide new insights into understanding thedynamics of organizational change, such as M&As, are gainingincreasing recognition among scholars because suchapproaches highlight the importance of context along witha detailed account of how change unfolds over time (Van deVen & Huber, 1990).

In practice, studies of process can take different forms,Van de Ven (1992) contends. Some of them attempt toestablish the temporal relationship between two causallyrelated variables, while others are concerned with eventsor activities that describe how change unfolds over time. Inthe former case, empirical research typically examines ques-

tions dealing with the antecedents or consequences ofchange. In the latter case, the definition of process takesa historical developmental perspective, and focuses on thesequences of incidents, activities, or stages of change (Van deVen, 2007). The latter are the kind of process studies we willrefer to here. We also embrace the idea that to be proces-sual, empirical studies must deal with beliefs and attitudes ofpeople in organizations in order to capture their experiencesand views of the world (Dawson, 2003). As such, processualresearch requires and implies a close engagement with theresearch setting.

Participant observation as a method for studyingM&As as processes

Processual studies can be described as field studies where theresearchers are sensitive to changes (as opposed to stability),have temporal awareness, ethnographic sensitivity, and showhumility before a complex social world (Rehn, Strannegard, &Tryggestad, 2007). Consequently, these types of studies canbe labeled ethnography, qualitative research, or naturalisticresearch (Lofland, Snow, Anderson, & Lofland, 2006). Besidesthe different labels, they are also generally alike in featuringdirect, qualitative observation of the phenomena in theirnatural settings through the investigative techniques of par-ticipant observation or intensive interviewing, or both. Alongwith Weick (1985: 368), we define ethnography as ‘‘sus-tained, explicit, methodical observation and paraphrasingof social situations in relation to their naturally occurringcontexts.’’ Morrill and Fine (1997) outline the suitability ofethnography to account for the dynamics of organizationalchange and for the hidden, informal arrangements by whichorganizational life is constituted. Prolonged observationsthat focus on behaviors, talks in action (i.e. talks takingplace during naturally occurring situations) (Lofland et al.,2006), and in-depth interviews allow the researcher todepict, for example, the give and take of political strugglesamong different organizational levels or the sense making ofindividuals or groups of people. Moreover, when organiza-tional activities are analyzed from a long term view, suchanalysis may reveal that what appear to be discontinuousshifts, when studied from a short term or one shot view oforganizational life, are instead recurrent events. Forinstance, Pettigrew’s (1995) study of the company ImperialChemical Industry (ICI) reveals the power of ethnography tograsp such patterns of change. His findings support the ideathat change occurs in rhythmic patterns: long incrementalwaves punctuated by rapid dramatic upheavals.

The significance of observation has become more recog-nized within the management and organizational academicdomains. In a recent survey among prominent managementscholars about what are the most influential studies in ourfield (Bartunek, Rynes, & Ireland, 2006), the one most com-monly mentioned was Stephen Barley’s (1986, 1990) study ofthe introduction of CT scanning at two hospitals, which isbased on extensive and prolonged participant observation. Tounderstand the value of this technique to collect field mate-rial, we would like to remind what Whyte (1943/1993:303)says about his study of an Italian-American slum. ‘‘As I sat andlistened, I learned the answers to questions that I would noteven have had the sense to ask if I had been getting my

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information solely on an interviewing basis.’’ In a mergercontext, Galit Ailon (2007) did a year-long ethnographicstudy of an US-Israeli merger, where she was able to demon-strate how the identity project after a merger is an open-ended, multi-authored process that runs in the background ofthe company’s daily activities, something she would have haddifficulty grasping had she only conducted interviews. Obser-vation as a method has other advantages: it allows theresearch to overcome potential biases that are supposedto affect the validity of retrospective interviews, for exam-ple, memory decay and ex post rationalization (Golden,1992; Isabella, 1990).

What M&A studies could look like with aprocessual approach

Based on the discussions above we can conclude that M&Asare not monolithic and isolated events in organizations asthey span long periods of time and affect people both withinas well as outside the merging firms. Moreover, we canconclude that it is difficult, if not misleading, to attemptto identify the effects of M&As independent of other eventsand measure these effects within a short time frame. If weaccept this view of M&As, then we must also acknowledgethat today’s dominant cross-sectional research designappears insufficient to capture the organizational effectsof M&As. A processual approach would, on the other hand,help M&A scholars to make some sense of the complex M&Aprocesses. Such an approach would allow examining multiplelevels of analysis concurrently, linking change processes andM&A performance outcomes and expressing different actors’viewpoints (Pettigrew, Woodman, & Cameron, 2001). M&Aresearch suffers from amanagerial bias because studies usingtop managers as informants permeate the M&A domain. Inorder to understand M&A processes, one needs to take otheractors’ points of view into consideration. For example, therole of middle management is relatively under-researched inthe M&A realm (Wooldridge, Schlidt, & Floyd, 2008). Meyer(2006) shows that middle management plays an active role inthe integration process as it operationalizes the strategiccontent. But it is not only managers that impact the integra-tion process; indeed, employees at all levels play a role. Forexample, in her research on employees’ reactions to M&As,Risberg (2003) shows that an apparent reluctance to acceptthe merger is more a question of differing interpretations ofthe acquisitive event than of employees’ resistance tochange.

How people in an organization experience acquisitions isquite variable. Some issues are shared by groups; other issuesare experienced only by individuals. But how particular issuesare experienced is rarely unanimous. Hence, multiplicityrather than uniformity characterizes the organization duringand after an acquisition process (Risberg, 1999, 2001). Suchdynamics are generally overlooked by traditional approachesbecause they focus on representations from top managerswho reflect a unifying view of the organization, thus makingambiguities or contradictions appear to be problems ratherthan unavoidable parts of organizational life.

A processual approach would also provide means forresearchers to overcome the limitations of current M&Astudies on, for example, M&A performance. While scholars

claim to measure performance, they measure many differentthings under this label–—CAR (cumulative abnormal returns),ROI (return on investment), market share, growth of variousforms, management turnover, innovation, and much, muchmore. Not only does the notion of performance include manydifferent metrics, but these metrics also vary in their tem-poral orientations and reflect different stakeholders’ per-spectives (Meglio & Risberg, 2009). Although no measure isinherently better or worse, M&A scholars need to recognizedifferent performance outcomes during a post-acquisitionphase and that these outcomes can be of interest for differ-ent stakeholder groups. For example, CAR measures could beof interest for shareholders, whereas employee turnovermeasures could be of interest for union representatives.There are various ways to highlight that there are differentmeasures representing the interests of different groups. Oneway could be to connect performance measures to acquisi-tion motives to see if the motives where fulfilled or not(Brouthers, van Hastenburg, & Van den Ven, 1998). One couldlook to the position of the acquisition within the acquirer’sacquisition sequence to see if the acquirer learned fromexperience (Barkema & Schjiven, 2008a), or to integrationpriorities and implementation issues. Another way of under-standing what affects the performance of M&As could be tostudy the acquisition processes that create (or do not create)M&A value and how the interaction between the mergingfirms influence acquisition implementation success (Hale-blian et al., 2009). We would like to point to a commonmistake of comparing different measures as if they weremeasuring the same thing. It does not make sense, in thename of a generic performance, to compare CAR — which is aprediction of possible future company performance — withaccounting measures — which are measures of historicalperformance — with management perceptions — which,besides being historical, usually depict non-measurableaspects. The different measures all say something aboutthe performance of the M&A, but they are different storiestold for different audiences, often by different narrators (cf.Corvellec, 1997).

Ethnographic approaches would enable researchers toanalyze the role of time in the M&A domain. Academicsand practitioners have generally devoted great attentionto the roles time and speed play in creating value fromacquisitions. Business consultants, for example, claim thatthe first 100 days are crucial in making the deal successful(Habeck, Kroger, & Tram, 2000). Scholars have studied therole of speed in integration processes (Homburg & Bucerius,2006) and the role of the time devoted to integration prio-rities (Yu, Engleman, & Van de Ven, 2005). Such studiesreflect the commonplace notion of a unified organizationalclock time (Gherardi & Strati, 1988). Different parts of theorganization and different groups within the organizationmay, however, experience different temporal orientationsand place different emphases on time and speed during theintegration phase. Acknowledging a nuanced view of timemight help disentangle hidden sources of conflict betweenmerging firms.

Furthermore, a processual approach could be fruitful ininquiring how organizational routines evolve and co-evolveduring the integration process. Feldman (2000, 2004) showshow organizational routines are far from the stereotypes ofrepeated stable patterns of behaviors. As human agents

92 O. Meglio, A. Risberg

perform them, they are not stable but change continuously.The acquisition context could be an interesting setting inwhich to track how routines are transformed and reshapedthrough and throughout the integration process. Focusing theanalysis on micro-processes would enable us to overcome themonolithic view of integration models that permeates theM&A literature (Haspeslagh & Jemison, 1991; Nahavandi &Malekzadeh, 1988).

Trust building during the integration process is anotherimportant aspect of M&As that could be highlighted through aprocess approach. The role of trust has received relativelyscant attention in M&A research compared with other formsof inter-organizational arrangements, such as alliances (Stahl& Sitkin, 2005). The coexistence of trust and deception inM&As is puzzling (Graebner, 2009). An ethnographic approachcould help solve this puzzle by unraveling how executives andemployees in both companies interpret trust and deception,how trust evolves over time, how it affects power dynamicsand political processes inherent in the relationship betweenthe merging companies from different actors’ points of view.

A process approach could be a suitable tool to query who isthe integration manager (or how one prefers to call theperson or group of people who leads the process) and howthe role changes over time. An in situ observation from thefield could enable our getting a glimpse of the integrationmanager’s most salient characteristics. From this perspec-tive, it could be possible to investigate patterns of bodylanguage and habits of speech that the integration managerperforms. An observation of the habitual gestures within her/his practices, the rituals contained in strategy presentations,the employment of tools of persuasion, all these can add upto novel insights about the integration manager’s role as theintegration process unfolds (cf. Rasche & Chia, 2009).

Conclusion

Qualitative processual studies of M&As are still quite rare anddiffer greatly among each other. Following Van de Ven (1992),we argue that much of M&A literature falls in the realm ofunderstanding the process as a logic that explains a causalrelationship between independent and dependent variables.Few M&A studies adopt the meaning of process as a sequenceof events or activities that describe how things change overtime (exceptions are, for example, Cote, Langley, & Pas-quero, 1999; Yu et al., 2005). M&A studies with a longitudinalresearch design differ greatly in terms of temporal duration,data collection techniques, and granularity (the number oftemporal intervals or events observed during the field study)of collected data. In the M&A realm we have both short term(Meyer & Lieb-Doczy, 2003) and long term (Cote et al., 1999)process studies with fine-grained (Yu et al., 2005) as well ascoarse-grained (Greenwood, Hinings, & Brown, 1994) data.Yet, these studies differ greatly as to their temporal dura-tion. One study that is labeled longitudinal is a two-yearstudy (Meyer & Lieb-Doczy, 2003); another covers 14 years(Cote et al., 1999). On average, longitudinal M&A studieshave been found to last for four years (Greenwood et al.,1994). In terms of research settings, service (Cote et al.,1999; Greenwood et al., 1994; Yu et al., 2005) as well asmanufacturing industries (Meyer & Lieb-Doczy, 2003; Vaara,2003) have been investigated.

In these longitudinal studies, interview is the prevailingdata collection technique, allowing a retrospective accountof how the acquisition unfolded over time (e.g., Cote et al.,1999; Tienari, 2000). These studies were often conductedafter the outcomes were known. Only a few studies rely onobservation (for example, Vaara, 2003; Yu et al., 2005).While Yu et al. (2005) offer an eight-year-long ethnographicaccount based on attending meetings every twoweeks, Vaara(2003) carried out a four-year-long study collecting datathrough different methods with different time intervalsduring that period.

The paucity of processual studies, especially real-timestudies, is probably due to a prejudice among M&A scholarstowards qualitative research as so many of them come fromthe disciplines of strategy or finance. Since Blalock’s (1969)claim that the regression coefficients are the law of socialscience, we have witnessed a rapid development of struc-tural equation techniques at the expense of qualitativeresearch. Another reason for their paucity is the difficultyinherent in negotiating and gaining access to merging com-panies while the merger and following integration take place(Feldman, Bell, & Berger, 2003). There are of course excep-tions. As part of the large scale research program, theMinnesota Innovation Research Program (MIRP), a group ofresearchers studied M&As in different sectors, among thosethe health care sector. These studies constitute a prominentexample of research following the M&A process as it takesplace (e.g. Bastien, 1987; Van de Ven, Bechara, & Sun, 2008;Yu et al., 2005).

Another reason why such longitudinal studies are lesscommon, besides the problem with access, could be theincreasing academic demand for quick and multiple pub-lications. Longitudinal studies take time, and there couldbe a long while before one can start to analyze and publishfrom the study. If the university is demanding a certainnumber of publications from the researcher each year,most researchers will turn to less time consuming typesof studies. The methodological bias towards cross-sec-tional data and statistical methods in M&A research maythus partly be a result of university politics and resourceallocation.

Editors and editorial boards have a crucial responsibilitytoo. Through their policies and rules they show unspokenpreferences for cross-sectional studies over careful, in-depth, qualitative inquiry, thus performing the role ofgate-keepers in these journals. There is a need for seriousreflection within the academic community on how we pro-duce knowledge in this field as well as on what universities,scholars, editors, reviewers, and practitioners can do toimprove the quality of research in management and organi-zation studies.

Consequently, we believe that in order to further theunderstanding on what is going on in an organization duringthe M&A process, what these processes mean to the peopleinvolved, and what it is in the process that affects theoutcome of the M&A, one must turn to other methodologiesthan those prevailing today. Our suggestion is to turn toprocess-oriented longitudinal studies, employing ethno-graphic methods including observations as well as interviews.Our belief is that the cross-sectional correlation testingstudies can only provide a very limited understanding ofM&A processes and what it is that affects their outcomes.

Mergers and acquisitions 93

We would therefore like to end this research note withsuggesting a number of research questions — that shouldbe answered using our suggested methods — that wouldfurther investigate what takes place in organizations duringM&A processes. In relation to expanding the understanding ofM&A performance, we propose the following questions:Whatare the different audiences for the different performancemeasures, and how do the measures differ? Which are therhetorical strategies used to communicate M&A outcomesfor different audiences? How do performance measuresrelate to M&A motives?

To improve our understanding of the role of time, weadvise the following questions: How do different actors (topmanagement, middle management, employees) in theacquiring as well as the target company experience timepressure during the acquisition process? What are the dif-ferent temporal orientations coexisting at different organi-zational levels and within merging companies? How do theyinfluence the integration process?

To learn more about organizational routines during M&Aprocesses, we recommend that researchers study how aremerging companies’ routines transformed and reshaped byhuman agents during the integration process? Which is therole, if any, of political struggles in shaping this process?

As pointed out, trust is important in M&As, and tounderstand more about that importance, we advocatethe following tentative research questions. How do differ-ent organizational levels experience trust during the inte-gration process? How do trust and deception coexist duringan acquisition process? Managers are often given a domi-nant role in M&A literature on integration processes. Wesuggest a different twist to this by suggesting studies on:Which patterns of body language and habits of speech doesthe integration manager perform? How do they evolve overtime? Which are the tools of persuasion used to involvemembers of different organizational levels in the programof change?

These questions are of course only tentative suggestions,and there are many, many more questions to ask before wecan commence to understand how M&A processes affect theorganizations involved. We hope our reflections in this notewill inspire M&A scholars to consider new methodologicalpaths in their future studies of M&As.

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