Explaining employees' reactions towards a Cross-border merger: the role of English language fluency.
| Verfasser | Kroon, David P. |
| Posten | RESEARCH ARTICLE |
Abstract In this paper, we focus on the role of language in cross-border mergers and acquisitions and explore how organization members' language skills, or fluency, in the adopted lingua franca may impact their reactions to a merger. Drawing on a qualitative study of the post-merger integration between a French and Dutch airline where English was adopted as a lingua franca, we illustrate how language fluency influences the ability of individuals to give meaning to their changed circumstances. Moreover, we elaborate on how language fluency indexes social groupings and identities, and may thus be a driver of perceptions of status inequality and identity politics between different groups of employees. With our study we draw attention to the multi-faceted role of English as a lingua franca. Our findings also contribute to research on sociocultural dynamics associated with post-merger integration and the role of language in mergers and acquisitions, as well as in multinational companies more generally.
Keywords English language fluency * Cross-border mergers and acquisitions * Identity politics ? Status attributions * Perceived anxiety * Post-merger integration
1 Introduction
Cross-border mergers and acquisitions (M&As) have become an essential means through which multinational companies (MNCs) can grow and stay competitive, and have as a result received sustained scholarly attention (Haleblian et al. 2009). This overall interest has stemmed from frequent problems and high failure rates (Calipha et al. 2010). A significant part of recent research has focused attention on post-merger integration in general and sociocultural integration in particular to be able to better understand the causes of success and failure of M&As (Bjorkman et al. 2007; Brannen and Peterson 2009; Sarala et al. 2014; Teerikangas and Very 2006).
One distinguishing feature of cross-border M&As is that they typically involve multi-lingual environments in which multiple cultures and languages come together (Brannen and Peterson 2009; Vaara et al. 2005). Previous research has illustrated that the decision of introducing a common language in such a context is important, yet can be associated with all kinds of negative reactions from employees that can jeopardize the success of the post-merger integration efforts. For example, when it leads to a perception of one language being given a dominant position over another, employees at one side of the M&A may feel threatened or excluded (Brannen and Peterson 2009; Piekkari et al. 2005). From a managerial point of view, the choice of a common corporate language is also a delicate one as for example can be seen in the Daimler-Chrysler case. When both companies merged in 1998 the corporate lingua franca became English. However, German top managers kept using the German language at press conferences and in internal communications, which significantly undermined the integration process (Welch et al. 2005).
Within international business research interest in the role of language, and specifically in English as a lingua franca in MNCs, has grown steadily in recent years (Bordia and Bordia 2015; Brannen et al. 2014; Cuypers et al. 2015; Feely and Harzing 2003; Henderson 2005; Janssens and Steyaert 2014; Neeley 2013; Welch and Welch 2008). Yet, there has been far less research on how language fluency in the adopted lingua franca affects strategies, interactions, collaboration, and coordination in MNCs (Brannen et al. 2014; Cuypers et al. 2015; Hinds et al. 2014; Janssens and Steyaert 2014; Peltokorpi and Vaara 2012; 2014). In the case of post-merger integration, language fluency in the lingua franca in a newly formed company may however be central to the merger integration process and its success (Vaara et al. 2005).
In the present study, we therefore set out to study the effect of language fluency in a lingua franca on people's reactions to the merger in the context of a Dutch firm being acquired by a French company where English became the lingua franca. In our study, we not only focus on the senior management level of the merged organization, but also on organization members of six organizational units of the acquired organization. This allows us to explore how middle managers and employees on the ground reacted to the merger, both individually and collectively, and how their reactions were to a greater or lesser degree influenced by their command of the English language.
With our study, we aim to contribute to research on the role of language in the human integration process within cross-border M&As. We specifically respond to the call of Neeley (2013) and Janssens and Steyaert (2014) who ask for more detailed studies of the effect of the adoption of a lingua franca on a workforce. In the present study, we take up this call in the context of a cross-border M&A and highlight that language fluency influences the way in which individuals make sense of their changing circumstances. Where previous studies often focused on how people from both companies react to a merger (Brannen and Peterson 2009; Vaara et al. 2005), we generally find that employees with lower levels of fluency in the adopted business language had greater difficulty in coming to terms with the merger, and in large part because of the significant change brought about by the adoption of a business language in which they were not fluent. In particular, individual employees with low levels of fluency in English felt constrained and under pressure in the merged company, not only because of their own limitations in articulating their thoughts and in voicing and expressing their concerns in English to others in the merged company, but also because they associated their lack of fluency with less career opportunities within the merged company in the future.
When we coded the data in detail, we found that across different organizational units lower levels of fluency in English corresponded with anxiety about the merger and with perceptions of status (in)equality between the two merged companies. We also discovered that when employees in a unit are fluent in English and do not speak many other languages at work, it led to strong support for the new merged company identity. In contrast, we observed outright resistance when organization members' level of fluency in English was low and significantly lower than other spoken languages.
With these findings, we suggest that language fluency in a lingua franca may be an explanation for why sociocultural post-merger integration may succeed in some instances and fail in other cases (Birkinshaw et al. 2000; Bjorkman et al. 2007; Brannen and Peterson 2009; Sarala et al. 2014). In particular, our findings illustrate how language indexes social groupings and identities, and may act as a driver of perceptions of status inequality and identity politics between different groups of employees. In turn, these perceptions and behaviors seem to influence the extent to which employees accept or (actively) resist the merger. These findings have, we believe, significant implications for MNCs, their M&A activity and their collaboration across borders (Brannen and Doz 2010; Brannen and Peterson 2009).
The remainder of the paper is organized as follows. We first provide the theoretical backdrop to our study by drawing on previous studies on international mergers and acquisitions, post-merger integration, and on language and communication research in international business. Then, we introduce the case, describe our data, and explain our approach to the data analysis. The subsequent section reports on organization members' reactions to the merger as a function of their English language fluency. Based on this section we develop testable propositions around the role of language in post-merger integration and we answer our main research question: 'How do language skills impact employees' reactions in a cross-border merger?' We conclude the paper with a discussion of our findings and their theoretical and managerial implications.
2 Theoretical Background
2.1 Post-Merger Integration and the Role of Language
The low success rate of M&As effectively implies high levels of risk. Traditional financial and strategic perspectives are, however, limited in terms of explaining these disappointing outcomes (King et al. 2004). Therefore, scholars have increasingly begun to focus on social, cultural and psychological factors related to the integration of merged and acquired firms (Birkinshaw et al. 2000; Cartwright and Cooper 1993; Sarala et al. 2014).
Post-merger integration, defined as the "the integration or blending of processes including the management of human resources, technical operations and customer relationships" (Epstein 2005, p. 40), has been studied from multiple perspectives. The more strategically oriented studies focus on synergy realization (Larsson and Finkelstein 1999), value creation (Graebner 2004), and knowledge or capability transfer from one organization to another (Bresman et al. 1999). More human resource-oriented researchers have concentrated on the uncertainty and anxiety that people involved in post-M&A integration processes experience (Schweiger and DeNisi 1991). In closely related studies, researchers have sought explanations for post-M&A integration problems in terms of cultural clashes between merger parties (Schweiger and Goulet 2005) or as a result of a perceived lack of justice or fairness towards one of the parties (Monin et al. 2013). In international settings, studies have furthermore focused on national cultural differences and cross-national confrontation (Sarala and Vaara 2010; Very et al. 1997). Finally, scholars have highlighted the political aspects of post-merger decision-making (Graebner 2004; Vaara et al. 2005).
Where language is arguably also an important element in most of the aforementioned studies, it has received limited attention as a direct topic of study (see Piekkari et al. 2005...
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