An Empirical Analysis of Post‐Merger Organizational Integration |
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| Authors: | Valerie Smeets Kathryn Ierulli Michael Gibbs |
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| Institution: | 1. Aarhus University, School of Business and Social Sciences, DK‐8210, Aarhus, Denmark;2. University of Chicago, Chicago, IL, USA;3. University of Chicago Booth School of Business, Chicago, IL, USAFunding was provided by the European Commission (MEIF‐2003‐501280), Aarhus School of Business, Stigler Center, and Moensted Foundation. We thank many people for comments, especially John Burrows, Jed DeVaro, Jeremy Fox, Guido Friebel, Luis Garicano, Ed Lazear, David Margolis, Canice Prendergast, Imran Rasul, Kathryn Shaw, Chad Syverson, and Frederic Warzynski. |
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| Abstract: | We study post‐merger organizational integration using linked employer–employee data. Integration is implemented by reassigning a small number of high‐skilled workers, especially in R&D and management. Workforce mixing is concentrated to establishments set up after merger, rather than to previously existing establishments. Worker turnover is high after merger, but new hiring yields stable total employment. Target employees have higher turnover and reassignment, particularly if the target firm is small relative to the acquiring firm. These findings might suggest that integration is costly, but can be achieved by focusing on key employees. Alternatively, the reassignment of a few key employees is sufficient for achieving integration. |
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| Keywords: | Merger organizational integration D22 G34 J21 L23 M5 M10 |
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