36" International Conference of the System Dynamics Society, Reykjavik, 2018
The Dynamics of Related Acquisitions;
Downsizing Magnitude, Timing, and Employee Engagement
extended abstract, work in progress
Vincent de Gooyert, Rick Aalbers
Institute for Management Research, Radboud University
P.O. Box 9108, 6500 HK Nijmegen, The Netherlands
+31 24 36 11 615, +31 24 36 11 767
r.aalbers@fm.ru.nl, v.degooyert@fm.ru.nl
Andreas GréBler
Department of Operations Management, University of Stuttgart
Keplerstrafe 17, 70174 Stuttgart, Germany
+49 711 685 83469
andreas. groessler@bwi.uni-stuttgart.de
Keywords: strategy, merger and acquisitions, downsizing timing, employee engagement,
related acquisitions.
Problem & methodology
This study extends current understanding of the downsizing-employee engagement
relationship in the dynamics of an M&A trajectory. We argue that the effectiveness of
related acquisitions -- in terms of post-deal productivity benefits to be reaped -- is
contingent on two major preparatory actions: the timing of downsizing in relation to the
moment of acquisitions and the magnitude of such downsizing. We model an acquisition
and downsizing event based on system dynamics with a non-linear effect of both
acquisition and downsizing on employee engagement.
Preliminary results
Our findings indicate that while every organization has some resilience in dealing with
exogenous shocks, the double blow of both acquisition and downsizing can be too much
to take when it comes to safeguarding instant post-deal productivity. Additionally, and in
advancement of further modeling on this matter, we theorize on the timing of downsizing
in relation to acquiring. We suggest that acquiring firms that choose to implement
downsizing actions prior to the deal have a higher likelihood of reaping efficiency
benefits than firms that choose to conduct downsizing as part of the post deal trajectory.
Figure 1: Preliminary model on merging, do izing, and emp
layoft'size
layott effect size
time to lower morale
resilience effect siting
productivity cintigldn Geen ‘Contagion ti
‘normal employee
‘engagement
time to return to normal
Summary
Overall, our findings shed light on the importance of timing strategic actions inan M&A
event, preluding to the potential of pre-acquisition downsizing to improve acquisition
performance. Our study validates the relevance of employee engagement as a prime
driver of post deal performance.
References
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Atkinson, S., & Gary, M. S. (2016). Mergers and acquisitions: modeling decision making
in integration projects. In Behavioral Operational Research (pp. 319-336).
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Bauer, F., & Matzler, K. (2014). Antecedents of M&A success: The role of strategic
complementarity, cultural fit, and degree and speed of integration. Strategic
management journal, 35(2), 269-291.
Birkinshaw, J., Bresman, H., & Hakanson, L. (2000). Managing the post-acquisition
integration process: How the human integration and task integration processes
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Miczka, S., & GréBler, A. (2010). Merger dynamics: Using system dynamics for the
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1491-1512.
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