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Employee Job Satisfaction in International Corporate Merger and Acquisition

Master's Thesis 2014 134 Pages

Business economics - Personnel and Organisation

Excerpt

TABLE OF CONTENTS

ABSTRACT

CHAPTER ONE: INTRODUCTION
1.1 Background to the Study
1.2 Statement of the Research Problem
1.3 Objectives of the Study
1.4 Research Hypotheses
1.5 Scope of the Study
1.6 Significance of the Study

CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction
2.2 Job Satisfaction in International Merger and Acquisition
2.3 Theories of Job Satisfaction in International Merger and Acquisition
2.4 Measures and Determinants of Job Satisfaction in Merger and Acquisition
2.5 Demographic Characteristics and Job Satisfaction in Merger and Acquisition
2.6 Effects of Job Satisfaction or Dissatisfaction in organizations
2.7 International Merger and Acquisition
2.8 Empirical Review

CHAPTER THREE: METHODOLOGY
3.1 Introduction
3.2 Research Design
3.3 Population and Sampling
3.4 Operationalization and Measurement of Variables
3.5 Model Specification
3.6 Data Collection Instrument and Validation
3.7 Method of Data Analysis
3.8 Limitations of the Methodology

CHAPTER FOUR: DATA PRESENTATION AND ANALYSES
4.1 Introduction
4.2 Demographic Characteristics of the Respondents
4.3 Data Presentation and Analyses according to the Research Objectives
4.3.1 Job Satisfaction in International Merger and Acquisition
4.3.2 Test of Hypotheses
4.3.3 Discussion of Findings

CHAPTER FIVE: SUMMARY OFFINDINGS,CONCLUSIONAND RECOMMENDATIONS
5.1. Introduction
5.2 Summary of Findings
5.3 Contributions to Knowledge
5.4 Conclusion
5.5 Practical Recommendations
5.6 Suggestions for Further Research

BIBLIOGRAPHY

APPENDICES

Appendix I: Research Questionnaire

Appendix II: Ranking of Job Satisfaction Level among Employees in each firm or Industry they belong to according to Mean Scores in respect to each Question.

Appendix III: The result for Two-Stage Least Square Regression for Hypothesis testing.

ACKNOWLEDGEMENTS

I wish to express my immense gratitude to my supervisor, Dr. E.M. Aghedo, whobse dedication, encouragement, constructive criticisms and meticulous effort tremendously improved the quality of this project. My appreciation also goes to Mr. E.E. Prest and Dr. O.R. Igbinomwanhia for their critical and incisive review of this project work.

A very special thank you go to Dr. Miguel Angel Clement Duran, Mrs. Margarita Canchal Fernadez, Jane Akhimien, Joy Ehigie and Victoria Akhimien for their moral and financial support throughout the period of the programme. I am highly indebted to my friends - Mr. Adekunle Simon, Victor Imote Adjaino, Osakwe Nkem, Blessing Alade and Mr. Mike Ede for their desire to make this project come out with minimal errors.

ABSTRACT

International merger and acquisition have increasingly been adopted by firms operating in Nigeria. Despite the fact that research in advanced countries revealed that dissatisfaction among employees who experienced international merger and acquisition has damaging effects on achieving post-international merger and acquisition performance, little or no research exists regarding satisfaction among employees who were involved in international corporate merger and acquisition in Nigeria. Thus, the study examined employees’ job satisfaction in international corporate merger and acquisition in Nigeria. Specifically, the study assessed the general level of employees’ job satisfaction in international corporate merger and acquisition. It ascertain whether work situational factors generate conditions that promote greater or lesser job satisfaction in international merger and acquisition, influence demographic characteristics and the industry employees belong on job satisfaction in international merger and acquisition.

The population of the study comprised all employees whose companies were either acquired or merged with international firms in Nigeria between 2010 to 2013. A sample size of three hundred and eighty two was drawn from the population. Merger satisfaction scale developed by Tikanmaki (2001) was adapted to collect needed data. Two hundred and seventy seven of the total sample size responded appropriately to the research instrument (questionnaires). Data generated were analyzed with descriptive and inferential statistics.

Findings of the study showed that respondents were moderately satisfied with their job in international corporate merger and acquisition. In addition, work situational factors generate conditions that promote job satisfaction in merger and acquisition. Furthermore, the findings of study revealed that the industry employees belong to and the demographic characteristics of employee such as: age, job tenure, job level and educational level except gender have significant influence on job satisfaction in international merger and acquisition. Based on the findings of the study, recommendations made were that management of firms involved in international merger and acquisition should as matter of urgency implement fair pay, fringe benefits, policy for promotion, and ensure job security and among others.

CHAPTER ONE:INTRODUCTION

1.1 Background to the Study

An understanding of merger and acquisition as a discipline is increasingly important in modern business. A glance at most business newspaper, business news or web page indicates that merger and acquisition are taking place all the time. Many sectors, such as finance, oil, pharmaceuticals, telecommunications, IT and chemicals, have been transformed since 1994 by the occurrence of very large-scale mergers and acquisitions (Gaughan, 2007). The transactional value of large scale acquisitions has the potential to strengthening host country balance of payment, savings, investment opportunities and capital market. For example, the acquisition of the German company Mannesmann by the UK company Vodafone in 2000 was valued at $183 billion. This deal created by far the largest company listed on the London Stock Exchange, and the fourth largest company in the world. The Vodafone– Mannesman deal overshadowed other recent large-scale deals including AOL-Time – Warner ($181 billion), MCWorld.com – Sprint ($127 billion), Pfizer – Warner Lambert ($88 billion), Exxon-Mobil ($86 billion), Airtel-Zain 10.9billion (Roberst, Wallace & Moles, 2012).

While, merger and acquisition have increasingly become external diversification strategies for many firms to survive and they have been characterized by five major waves which include 1895-1910s, 1920s, 1960s, 1980s and 1990s (Chambers, 2008), but, the last waves witnessed a growing number of international mergers and acquisition activities (Shimizu, Hitt,Vaidyanath & Pisano, 2004).

International merger and acquisition are large components of foreign direct investment activities (Deresky, 2005). They are seen by many firms as the fasted means to expand market, product and technology portfolios across national borders by combining or acquiring the asset and liability of another firm of different home countries (Harrison & Farrell, 2008). Statistics showed that the global values of international merger and acquisition transactions rose approximately from $2 trillion dollars in 2002 to $5 trillion in 2007 and down to $4 trillion in 2012 (Merger stats review, 2013). It has also been revealed that approximately 90% of global foreign direct investment activities annually are accrued to international merger and acquisition (Tuschke, 2003). This has been driven more than ever before by the phenomenon of globalization such as advancement in information communication technologies, economic liberation, and formation of regional blocs than ever before (Wallace & Moles, 2014). In addition, high cost of operating in home countries (e.g high cost of borrowing) couple with the intensity of home market competition, market saturation and shocks, product and technologies obsolete, and weak and inefficient managerial know-how have been seen as the factors making firms to engage in international merger and acquisition (Andrade, Mitchell & Stafford, 2001). It is common to see firms of developed countries merging with or acquiring firms of developing countries in order to have access to cheap labor cost, raw material, large markets and enjoy tax benefits outside their territorial boundary. Also, many firms in developing countries struggling to survive have merged with or acquired by other firms of different home countries particularly developed countries to have access to foreign loans, proprietary technologies, advanced specialized managerial skills that could enable to them to create synergy, innovativeness, operational stability and security, global brand, and other features of competent market and high competitive advantages with primary aims of improving market share and financial performance.

However, several empirical evidences emerged that about 75% firms involved in international merger and acquisitions did not increase post-merger market share, shareholders values and profits (Meyer & Altenburg, 2008; Zollo & Meier 2008), and the reasons for post- merger underperformance have been attributed to dips productivity, culture clash and job dissatisfaction (Cheng & Seeger, 2012; Klynevld, Peat, Marwick & Goerdeler (KPMG), 2013). It has also been indicated how integration of firms of dissimilar cultures such as international merger and acquisition create substantial change in technology, structures, cultures and people of firms involved in the deals which, in turn resulted in increase feeling of job insecurity, lost of trust, stress, low job satisfaction and its subsequent dysfunctional behaviors (Ellis, Reus, & Lamont, 2009; Emlyon, Noorderhaven &Vaara, 2013). For instance, study showed that immediately after the acquisition of America Chrysler Corporation in 1998 by German Benz, Chrysler directors were sidelined or replaced until the board was practically all-German and acquired employees careers were derailed, their promotions were denied, compensation policy was unfavorable and the aftermath of the alteration of acquired firms structure and culture were emotional trauma and job dissatisfaction (Badrtalei & Bates, 2007: 311). Study suggested the reactions of employee who experiences decline in job satisfaction after merger add additional costs to the post-integration process and this undermine the ability of the merging firms to collaborate in maximizing synergistic effects of the deals and achieving others primary reasons of engaging in merger and acquisition (Garver, 2006).

Job satisfaction or dissatisfaction in merger and acquisition has been defined as the extent to which employees evaluate and perceive there is less or more fairness, justice or equity in what they get from post-merger job situations than pre-merger job situations (Kyei-Poku, 2002; Sangbum, Bruce & Ellis, 2014). It is the degree to which employees evaluate and perceive post-merger outcomes (current pay, job security, opportunities for career growth and other work conditions) to be more or less satisfying than pre-merger outcomes and this perception is in turn influenced by the circumstances, needs, expectation and other personal demographics characteristics (Lipponen, Ollkonen & Miolanen, 2004). The extant literature opined the discrepancy or a gap between pre and post-merger job facets is critically important to determine the level of job satisfaction in merger and acquisition (Georgiades & Georgiades, 2014). The higher the negative discrepancy the lower the job satisfaction while the higher the positive discrepancy the higher the job satisfaction and motivation for employees increase effort in performing tasks and engaging in citizenship behavior (Guest, 2009).

For instance, pay disparities between pre-merger and post merger have showed to have negatively effect on employee’s motivation to engage in forthright forth·right adj.

1. Direct and without evasion; straightforward: a forthright appraisal; forthright criticism.
2. Archaic Proceeding straight ahead.adv.

1. communication patterns, provide accurate information about their firms and adhered to other rules and procedure in the resultant firms (Sangbum, et al, 2014). These effects are particularly likely in large mergers between similar-sized firms; where the pay comparisons are very salient and disparities are most likely to influence employees’ perception of how the merger process is manage in a fair way. It has also be suggested that employees who evaluate the benefits or pleasure derived from pre and post-merger job situations (pay satisfaction, job security, recognition and opportunities for career development), feel more satisfied with the post-merger than pre-merger job situations are likely to be more emotionally stable, more committed, more productive and more willing to portray a positive image of the resultant organization to customers than other who perceive otherwise (Robins, Judge & Vohra, 2011). In addition, the affected satisfied employees are more likely to derive sense of personal meaning in performing tasks, engage in less deviant behavior such as absenteeism, stealing and bribery that are incongruent to organizational philosophy or policy (Robins, Judge & Vohra, 2011).

In Nigeria, international merger and acquisition have been adopted by many firms in different sectors for their immediate business survival, building positive image and competent market than relied on organic growth. The attitude of employees affected by the international merger and acquisition is critical in determining whether the deals are ultimately successful. Rees & Edwards (2009) demonstrated this when they showed that the success of international merger and acquisitions largely depend upon how merging firms integrate in line with employees’ job satisfaction. In spite of this, anecdotal evidence indicated that employees affected by international merger and acquisition in Nigeria perceived to be satisfied with their jobs before the merger are now experiencing unpleasant tasks, increased in workloads, high job insecurity, unsuitable rules and procedures, abysmal pay and unfavourable career development. Hence, a detained empirical investigation of the work situational factors creating job satisfaction in integration of firms of dissimilar (international merger and acquisition) is important as they would help foreign firms merging with other firms in Nigeria to effectively adjust and implement or address the work situational factors which employees are less satisfied with when compared to pre-merger. Similarly, by assessing the work situations experienced by employees before and after merger will help in knowing the extent to which international merger and acquisition impact on job satisfaction in Nigeria. This is the motivation for the study.

1.2 Statement of the Research Problem

Empirical evidences emerged that almost all international merger and acquisition create organizational change by altering the original culture, structure and technology of one or both firms involved in the deals (Bebenroth & Ismail, 2014; Malatjie, 2011; Sanda & Adje Benin, 2012). In addition to that, most firms involve in international merger and acquisition do not plan adequately for cultural and structural integration in line with employees’ job satisfaction whose actions, reactions and interactions mold the resultant firm’ image, commitment and performance (Aghonifoh, 2008; Sacek, 2012). Hence, job dissatisfaction has been the major barrier for achieving successful international merger and acquisition.

Given the importance of job satisfaction to post-merger success, more empirical evidences have shifted from economic and financial assessment of the success or failure of merger and acquisition to human resource perspective (Cartwright & Cooper, 1990). In the extant literature on human issues, empirical studies have been conducted on the organizational justice and managerial commitment in corporate mergers (Ellis, Reus & Lamont, 2009; Klendauer & Deller, 2009), The psychological impact of corporate combination on the individual (Cartwright & Cooper, 1996), information adequacy and job satisfaction during merger (Zhu, may, Rosenfeld, 2004; Schweiger & Denisi, 1991), impact of change process and context on change reactions and turnover during a merger (Rafferty & Restubog, 2010), post-merger stress in a sample of field sales employees (Goyal & Joshi, 2012; Panchal & Cartwright, 2001), merger-deal characteristics (culture clash potential, degree of integration, employee’s position in deal structure) and employee attitudes (Marmenout, 2010), giving sense to and making sense of justice in post-merger integration (Emlyon, Noorderhaven &Vaara, 2013), allocation of resource processes in mergers and acquisitions (Meyer, 2001), disintegrating effects of equality (Meyer & Altenburg, 2007), managerial pay comparisons and informational justice during merger and acquisition (Sangbum, Bruce & Ellis, 2014), satisfaction with merger (Kyei-Poku, 2002), influence of perceived interpersonal justice and cultural openness on job satisfaction in merger and acquisition (Bebenroth & Ismail, 2014), satisfaction with coworkers, pay system, nature of work, supervision, and opportunities for promotions after merger (Baker, 2009), the relationship between employee job change and job satisfaction following merger (Boswell, Boudreau & Tichy, 2005; impact of merger on job satisfaction with more emphasis on operating conditions, promotion and job security (Georgiades & Georgiades, 2014; Sanda & Adjei-Benin, 2011). However, not many studies have simultaneously assessed pre and post -merger satisfaction with wide dimensions of jobs or work situational factors such as operating conditions, nature of work, communication, pay, supervision, opportunity for promotion, coworkers and fringe benefits and their influence on job satisfaction in merger and acquisition.

In addition, leveraging on person-job fit theory which indicated that the interaction between employee’s demographics and work situations are critically vital in determining whether employees are satisfied or dissatisfied with jobs, of which, an important aspect of this interaction relevant to job satisfaction in merger and acquisition is that employee who perceived that his demographic characteristics are more compatible with post-merger-job characteristics than pre-merger job characteristics will be more satisfied with job in merger than others who perceive otherwise (Erwin, 2010; Rhea; 2004; Collins, 2005). Therefore, this study also investigates the influence of demographic characteristics of employees on job satisfaction in international merger and acquisition.

In Nigeria, while employees could be a critical resource upon which firms involved in merger can rely on to gain a competitive advantage in a the competitive market in achieving successful international merger. However, at present, there is no adequate empirical information about the level of job satisfaction among employees who have experienced international merger and acquisition in Nigeria in order to know how employees involved in the merger were emotional and psychologically affected. Understanding the work situational factors that create job satisfaction among employees in merger and acquisition may help merging firms to deploy strategies in addressing human issues. This will motivate employees to increase their effort that will help in garnishing higher competiveness advantages in dynamic business environments imperative for promoting the success of international mergers and acquisition.

Deriving directly from the above stated research problem, this study set out to answer the broad research question which include: what is the general level of job satisfaction in international merger and acquisition in Nigeria. The specific research questions are as follows:

1 Do the work situational factors generate conditions that promote greater or lesser job satisfaction in international merger and acquisition?
2 Does the industry employees belong have any significant influence on job satisfaction in international merger and acquisition?
3 Do demographic characteristics of employee (e.g. age, gender, job tenure, job level and educational level) affect job satisfaction in international merger and acquisition?

1.3 Objectives of the Study

In line with our research questions, the broad objective of this study is to examine employee’s job satisfaction in international merger and acquisition in Nigeria. The specific objectives are to:

1 ascertain whether work situational factors generate conditions that promote greater or lesser job satisfaction in international merger and acquisition;
2 determine whether the industry employees belong significantly influence job satisfaction in international merger and acquisition; and
3 investigate whether demographic characteristics of employee (e.g. age, gender, job tenure, job level and educational level) affect job satisfaction in international merger and acquisition.

1.4 Research Hypotheses

In essence, this study focused on testing three hypotheses summarized as follows:

H1: work situational factors do not generate conditions that promote greater or lesser job satisfaction in international merger and acquisition;

H2: industry employees belong does not affect job satisfaction in international merger and acquisition; and

H3: demographic characteristics of employee (e.g. age, gender, job tenure, job level and educational level) do not affect job satisfaction in international merger and acquisition.

1.5 Scope of the Study

This study is restricted to employee’s job satisfaction in international corporate merger and acquisition in Nigeria. In addition, the study will focus on work situational factors affecting employee’s job satisfaction in international merger and acquisition. It will also review on influence of demographic characteristics of employee on job satisfaction in international corporate merger and acquisition in Nigeria.

In terms of surveyed companies, the study focused on companies operating in Nigeria that have merged or been acquired by international firms namely Airtel, Ecobank and Olam International. Zain was acquired by Airtel-an Indian telecommunication corporation in 2010, Crowd Flour Mill merged with Olam Singaporean International Firm in 2011, and Oceanic Bank was acquired by ECOBANK-a transnational corporation with corporate headquarters in Togo in 2011. These firms with different home countries were involved in international merger or acquisition in recent times in Nigeria (KPMG, 2013). Based on this, we selected them as scope for this study. Time frame for the study ranges from 2010 to 2013. On the basis of geographical coverage, the study will be limited to employees of the merged firms within Lagos and Benin City, Nigeria.

1.6 Significance of the Study

The study focuses on the impact of work situational factors on job satisfaction in international merger and acquisition, an area that hitherto received little attention in the extant literature. In addition, the study is significant as it hope to add to a body of knowledge and serve as foundation for scholars in Nigeria who may be interested in embarking on further research work on this subject matter. From a practitioner’s point of view, assessing the work situations experienced by employees before and after merger will help in knowing the extent to which international merger and acquisition impact on job satisfaction among employees in Nigeria. It will further enable practitioners to know the aspect of jobs which employees are less satisfied with in post merger than pre-merger in order eliminate the unfavorable aspect of job. Also, the study will help in knowing the group or segment of employees who are more or less satisfied with job in post merger than pre-merger in order for the concerned firms to embark on job programs by drawing a comprehensive job design or plan that better aligns job features or structures with employees’ demographic characteristics.

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

This chapter provides a detailed review of the relevant literatures related to the study. It will first of all explore the concept of job satisfaction in international merger and acquisition, models of job satisfaction in merger and acquisition, determinants of job satisfaction in international merger and acquisition, demographics influence of employee on job satisfaction in international merger and acquisition, consequences of job satisfaction and dissatisfaction in merger and acquisition. It will further look at the definition of international mergers and acquisition, difference between international merger and acquisition, drivers and motives for international merger and acquisition, types of international merger and acquisition, global trends of international merger and acquisition, international integration process, international merger and acquisition as form of organizational change and strategies for managing employees in international merger and acquisition induced organizational change, previous empirical studies of the subject matter and international merger and acquisition in Nigeria including the histories of the study firms (Ecobank, Airtel and Olam).

2.2 Job Satisfaction in International Merger and Acquisition

International corporate merger and acquisition involve combination of dissimilar cultures that often result in revamping of organizational system, technology, strategies, structures and cultures (Dagnino & Pisano, 2008). They entail massive organizational change in terms of structure, cultures, systems or technologies and people (Aghonifoh, 2008). Change in structure includes changes in authority, coordination mechanism, job design and other related structural variables. Change in technology involves adoption of new ways or modification in the way work is processed, method and equipment used in processing work. Change in cultures means reshuffle of leadership, management practices, values and norms. And change in people involves alteration in employees’ attitude, expectation and behaviors through new job designs features, policies and reward system. Research suggests that change whether planned or unplanned, tends to lead to insecurity. Change could have significant impact on employees’ attitude (job satisfaction). The exchange of managerial practices, policies, norms, technologies or systems and people during corporate integration have showed be potential source of increase or decrease job satisfaction and its subsequent behavior among the affected employees (Rafferty & Restubog, 2010; Sacek, 2012;).

For this reason, Antila and Kakkonen (2008) posit that job satisfaction in merger induced organizational change cannot be explained without first of all understanding employees’ job satisfaction in general and the primary factors create job satisfaction among them. They maintained that job satisfaction is a psychological tendency that is expressed by evaluating work situations with some degree of favor or disfavor with them. In addition to that, job satisfaction has been seen as an attitudinal variable. It has be defined as how people feel about their jobs and different aspects of their jobs (Spector, 1997); a pleasurable or positive emotional state resulting from the appraisal of one’s job or job experiences (Locke, 1976); positive feeling about a job, resulting from an evaluation of its characteristics (Robbins, Judge & Vohra, 2011) and perception and evaluation of one’s job, and this perception is in turn influenced by the circumstances, needs, values and expectations (Buitendach & deWitte, 2005).

Deriving from the above definitions, a number of authors have also defined job satisfaction or dissatisfaction in merger and acquisition in various ways. Few of these authors defined it as the extent to which employees evaluate and perceive post-merger work situations to be less/more satisfying than pre-merger work situations (Kyei-Poku, 2002), the cognitively and affectively evaluation that post-merger job features provide more or less pleasurable level and fulfillment than pre-merger job features (Emlyon et al, 2013), perceived discrepancy between prior merger job dimensions experienced and current job dimensions experienced (Georgiades & Georgiades, 2014), the degree to which employees derive more or less accomplishment in the current job perform than pre- merger (Sangbum, Bruce & Ellis, 2014) and how employees feel about their work environment after merger and acquisitions deals (Bebenroth & Ismail, 2014; Baker, 2009).

Equally important, job satisfaction or dissatisfaction in merger and acquisitions has also be defined as perceived discrepancy between prior-merger and post-merger job dimensions satisfaction level and this perception is influence by personal demographics characteristics (Rhea, 2004), the extent to which employees evaluate and perceive there is less or more fairness, justice or equity in what they get from post-merger job situations (current pay, job security, recognition and opportunities for career development) than pre-merger and this perception is in turn influenced by the circumstances, needs, expectation and others personal demographics characteristics (Lipponen et al, 2004) and employees judgment that post-merger job designs features are more or less fulfilling than pre-merger and this judgment is moderated by employees demographics (Malatjie, 2011).

Based on these definitions, we therefore believe that job satisfaction or dissatisfaction in merger and acquisition is perceived discrepancy between pre and post merger level of job satisfaction experienced by respondents. It is the extent to which there is disparity between pre and post-merger satisfaction with jobs. The large negative disparity will result in dissatisfaction, while large positive disparity will result in high job satisfaction. If post merger satisfaction exceeded pre-merger satisfaction, a positive gap or discrepancy and if pre-merger satisfaction exceed post merger satisfaction, a negative gap. Earlier behavioral researchers have empirically supported this claim (Locke, 1997; Rice, McFarlin & Bennett, 1989; Irving & Meyer, 1999). They believed that discrepancy between satisfaction with current jobs and previous held jobs determine employee job satisfaction and its subsequent behavior.

In line with this, employees who evaluate and perceive that post- merger work situations to be better than pre- merger work situations will hold positive attitudes as they are likely to be satisfied in international merger and acquisition. While employees who evaluate and perceive work situations in post merger to less satisfying than pre- merger work situations will hold negative attitude. It has been observed by a number of studies that when employees feel that they are working much harder compared to referent point but are receiving fewer rewards they will probably have a negative attitudes towards the work, the boss and/or coworkers, and in fact, the entire components of the organization (Ohiwerei, Ohiole & Emeti, 2011; Sarri & Judge 2004). The studies further maintain that when employees feel they are being fairly treated, their pay and other job outcomes are equitable in relation to their previous jobs, needs, skills and job demand, they are likely to have positive attitudes towards their job.

Sarri and Judge (2004) therefore noted that job satisfaction is determined by the degree to which there is balance between individual work outputs -input in relation to previous jobs. If employees perceived that post merger work outputs (‘pleasures’) increase in relation to work inputs (‘pains’) more than pre-merger work output - inputs relationship (‘pains’), job satisfaction will increase.

2.3 Theories of Job Satisfaction in International Merger and Acquisition

Job satisfaction theory evolved from a scientific management orientation around the turn of the 20th century, moving toward charismatic leadership and passion in the workplace in the 21th century (Buitendach & deWitte, 2005). The theoretical evolution regarding job satisfaction reflects or links several antecedents to overall job satisfaction. This is given that employee who positively evaluate his jobs and it characteristics in relation to their expectancy will hold positive feeling about their job in general.

In light of this, various studies have either adopts or modified the traditional theories of job satisfaction to explain the phenomenon of job satisfaction in merger and acquisitions. Recently, Seo and Hill, (2005) indicated that among theories that have been used in emplaning job satisfaction in merger and acquisition, anxiety theory, social identity theory, acculturation theory, role conflict theory, job characteristics theory, and organizational justice theory, discrepancy theory, norm theory, expectation theory, power-load- margin and person -job fit models implicitly or explicitly formed the most relevant theories for explaining job satisfaction in merger and acquisition. The authors integrate these theories into one conceptual framework that clearly delineates unique sources of problems that emerge in different stages of merger and acquisition integration, their psychological and behavioral effects on employees, and prescriptions to address the problems. The framework can be used by practitioners as a guide to systematically plan interventions and smoothing the human integration process. Among the theories mentioned above, this study specifically leverage on equity/organizational justice theory, discrepancy theory, expectation theory, power-load- margin model, acculturation and person -environment fit models as they are perceived to more relevant to explore the phenomenon of job satisfaction under the conditions of merger and acquisition.

Equity /Organisational Justice Model

The organizational justice theory provides important theoretical insight on job satisfaction in merger and acquisition. The theory of organizational justice indicated that employees are satisfied with their job when they perceived that procedural, distributive, interactional/interpersonal and information justice are fair as compared to previous job or relevant others. As matter of fact, several studies on merger and acquisition have opined that employees perceive unfairness in the current job they do after merger when it is not as satisfying as compared to the ones they had before merger (Georgiades & Georgiades, 2014, 2013; Lipponen, et al, 2004). Employees who experienced merger and acquisition perceived their current organization as unjust when they believe the outcomes they received after the merger and the way they received them are less favourable when compared to pre-merger. For example, when employee found the opportunities for career advancement he/she has after corporate merger or acquisition is not as good as the one he/she had before the merger.

Furthermore, study has alluded that there is a strong relationship between current input-rewards as compared to previous jobs (Robins et al, 2011). Lipponen, et al, (2004) maintained that most merger induced change increase employee responsibilities, and thus satisfaction among employees occur in merger and acquisition when they evaluate and perceive fairness, justice or equity in what they put and get from post-merger job situations as compare to pre-merger. They further indicated that if employees evaluate and perceive the ratio of pre and post -merger job situations to be equal, a state of equity exist; the situations are fair, justice prevail and hence satisfaction. But if employees evaluate and perceive post -merger work situations to be fairer than pre-merger job situation they will be more satisfied with the jobs in post merger than before the merger. Hence, satisfaction occurs when perceived equity exists, and dissatisfaction occurs when perceived inequity exists.

Study revealed that employees who perceive inequity in pre and post merger work situations will make one of five choices which include: change their input (exert less effort if underpaid or more if overpaid), distort perception of self (‘‘I used to think I worked at a moderate pace, but now I realize I work a lot harder than ever before or everyone else), distort perception of others (John’s job is not as desirable as I thought), choose a different referent ( I may not make as much money as my brother –in-law, but I am doing a lot better than Dad did when he was my age) or leave the field (quit the job) (Robbins et al, 2011). In fact, it has consistently been documented in merger literature the manner in which both surviving and displaced employees were treated during corporate integration (Miller & Fernades, 2009, Rafferty & Restubog; 2010) and this do only influencing survival employees attitudes leading to psychological withdrawal and intention to quite but also bad mounting of the resultant organization (Goyal, & Oelher, 2013). Robbins et al (2011) therefore concluded that in order to foster employees perception of fairness and job dissatisfaction, the concern firms must not only realized that employees are especially sensitive to unfairness but also focus their actions on where unfairness exist in the organizational variables in order and deals with them.

It is also relevant to point out in this study that justice perception among employees involved in merger does not only encompasses reward but also other component of jobs. Specifically, the distributive justice is concern with the way employee’s perceived fairness of amount and allocated of rewards as compared to relevant others. Procedural justice is the perceived fairness of the process used to determine the distribution of rewards (pay, fringe benefits, promotion) and other resources among employees as compared to relevant others, Interactional/interpersonal justice is the perceived degree to which one is treated with dignity and respects as compared to relevant others. Information justice is the perceived degree to which information is adequate, share, accessible to performed tasks as compared to relevant others. Among the four types of organizational justice, distributive justice is most strongly related job satisfaction in merger and acquisition with outcome such as pay (Ellis, Reus, & Lamont, 2009), while procedural justice also relates strongly to job satisfaction and employee trust, commitment, withdrawal from the organization, performance and citizenship behavior (Klendauer, & Deller, 2009; ).

Expectancy theory

Expectancy model of job satisfaction have been based on the hypothesis that employees form expectations about how their job will look like. Employees general expect international merged firms to offer them job that is rewarding, fulfilling and satisfying. Employee’s resulting satisfaction/dissatisfaction with job is directly related to whether the job meets, exceeds, or falls short of their expectations. Expectation theory postulated that satisfaction is directly related to work motivation and it is a function of chain relationship of valence x expectancy. Valence is the value an individual places on the particular outcome. Expectancy is the belief that a certain form of behavior or effort or action will lead to that particular outcome. Study suggested that employees will be more motivated in post-merger than pre-merger to exert a high level of effort when they believe their effort in post-merger will lead to suitable or fair rewards. In addition, they will be more motivated in post-merger than pre-merger to exert a high level of effort when they believe or expect that their effort in post-merger will lead to better performance appraisal; that a good appraisal will lead to favorable rewards such as fringe benefits, salary increase, or promotion; and that the rewards will satisfy the employees’ personal goals (Baker, 2009). Employees who believe their expectations in merger induced changes in terms of work conditions are met will be satisfied than others who perceive that their expectations are not met.

However, dissatisfaction with job in merger occurs when there is no reciprocal relationship between efforts that individual put into current jobs and the reward attractiveness he or she receives as compared to previous (Badrtalei & Bates, 2007). The dissatisfaction could be worse when the rewards received do not satisfy or meet employee personal goals or dominant needs (Badrtalei & Bates, 2007). Scheer, Kumar and Steenkamp (2003) stressed that strength of a tendency to act in a certain way depends on the strength of expectation of a given outcomes and its attractiveness, if employees perceived their expectation of outcomes such as promotion, pay and fringe benefits are less attractive in post-merger than pre-merger outcomes, their level of job satisfaction will be low in the merger and acquisition. This dissatisfaction in merger and acquisition could be based on the expectancy theory which says that if either valence or expectancy is zero, motivation will be zero. In other words, if either an employee expectation of obtaining the desired outcome or value of the outcome is low, then his level of satisfaction will be low. But if individual has a high expectation that effort will lead to desired outcome, his motivation will be high and hence satisfaction.

Furthermore, study observed for effort to lead to good performance and performance reward relationship is influenced by other factors such as individual traits (Rhea, 2004). Robbins et al, (2011) indicated that mergers and acquisitions create enormous challenges in terms or increase responsibilities to employees and for effort to lead to good performance in post-merger the individual must have the ability to cope and perform given task or increase workloads. Hence, for merging firms to increase job satisfaction among employees, there is need to examine the level of valence or the need level of the employees and their ability performs tasks before integrating organizational structure, embarking on job design or designing reward system. This will help to provide job that matches employees need levels and capacities or ability to perform tasks.

Role conflict Theory

The role conflict theory indicate that psychological tension occur when individual experienced organizational change, involve indifferent roles that are new to them or their responsibilities and workloads increased (Bebebroth & Ismail, 2014). This tension is further compounded when individual are engaged in multiple roles that are unexpectedly thrust upon them, either are the interpersonal or in-group level. Recent studies have also indicated that one of the organizational factors that lead to role conflict among employees is the merger and acquisition event (see Sangbum et al, 2014). The study opined that employees involved in merger experience role conflict not only because they are striving to fit in or possibly to cope and adjust to the new cultures thereby to remain loyal to both previous managers and managers from other partner firm (Joshi & Goyal, 2012). The study further showed that perceived threat of job loss, uncertainty and pressure to perform which are after math of many merger and acquisition are major source of conflict (Joshi & Goyal, 2012). In addition, merger and acquisition that resulted in high employees downsizing often end up in given employees increase responsibilities resulting in conflict (Georgiades & Georgiades, 2014). The role conflict is worse off when the merging firm do not evaluate surviving employees’ ability in order to know if they can performed the increased responsibilities thrust on them. The damaging consequences of role conflict are low job satisfaction (Seo & Hill, 2005), which may lead to other negative behavior outcomes such as low productivity, having an intention to quit and high stress (Bebebroth & Ismail, 2014; Joshi & Goyal, 2012).

Exploring the nature of role conflict and role ambiguity in merger and acquisition process, study noted that the role conflict describe two or more sets of incompatible work demand, whereas role ambiguity described a lack of specificity or predictability in role functioning and responsibilities (Emlyon et al, 2013). Role overload is the most common merger features creating role tensions and is sometimes viewed as a particular form of role conflict. The role overload is a function of too much word, time pressures, and lack of resource to meet commitment and responsibilities. Chang and Seeger, (2012) argued that role conflict and ambiguity result in merger because inability to properly align surviving employees who were performing the same role in their respective organization prior merger. Role overload result because too much employees downsizing and voluntary turnover. Study therefore suggested, that it is crucial that the new management enlightens their employees affected by merger about new role expectations (Schweiger & Denisi, 1991) and employees downsizing must done with care or in prudent or just manner (Seo & Hill, 2005).

Discrepancy theory

It has been argued that job satisfaction relates to incongruence between previously held experiences and experienced hold currently on job features (Locke, 1976). The discrepancy theory that forms the underpinning model of job satisfaction suggested that job satisfaction is determined in part, by the discrepancies resulting from a psychological comparison process involved in the appraisal of current job experiences against some standards of comparison. The psychological comparison process can produce both positive and negative discrepancies depending on the specific combination of job facet and standard of comparison (Locke, 1976). The positive discrepancy occurs when employees perceived that job facets exceeds prior experienced and negative discrepancy occurs when job facets below prior experienced. In order words, positive discrepancy will likely result in satisfaction, whereas negative discrepancy leads to dissatisfaction. Locke believed that only unfulfilled desires can cause dissatisfaction.

From the above theory, job satisfaction or dissatisfaction occurs in merger when there is discrepancy between pre and post-merger work situations or job facets. The higher the perceived discrepancies or differences between pre and post-merger job facets the higher employees job dissatisfaction or satisfaction in merger and acquisition. For instance, employees who perceived pay cut or less pay which is a job facet in post merger than pre-merger are likely to be dissatisfied (negative discrepancy) and workers receiving higher pay in post merger than pre-merger are likely to be pleased with job, hence positive discrepancy (Locke, 1976). This theory is in cognizant with cybernetic model of job stress which states individual monitor the discrepancy between a preferred or reference state and actual work conditions. The perceived discrepancy is the sources of strain for the individual, job dissatisfaction and subsequent behavior or reactions. For examples, a discrepancy between actual workload (post merger) and previous workload (pre-merger) describe the behavior pattern of employees affected by merger. Empirically research on discrepancies has informed our understanding of job satisfaction in a number of ways. For example, study has earlier found that satisfaction with job is clearly related to discrepancies between job facets previously experienced and same job facets currently experience (Rice, McFarlin & Bennett, 1989). Irving and Meyer (1999) also found that the discrepancies of prior and current job facets predict overall job satisfaction, organizational commitment, intention to leave (remain) job survival and job performance. Although job satisfaction may be viewed either as a global, overall view of satisfaction or as specific satisfactions with the various facets of the job (i.e., pay, supervisor, promotion, etc.) which are somehow combined to determine overall job satisfaction (Judge & Klinger, 2012; Robins et al, 2011), our main focus in this study is on determining the discrepancy between what ‘it was and what is now’ for each job facet and then summing the job facets scores to determine overall job satisfaction.

Power-Load- Margin Model

Model of Power-Load- Margin developed by McClusky (1990) postulated that for employees affected by merger induced organizational change to effectively cope, adapt and be satisfied in the context of the merger and acquisition is determined by the power or resource that is given or available to them to carry the Loads or challenges brought by the merger or acquisition. These challenges occur particularly in international merger and acquisition due transfer of high technologies and management practices (Chiang & Birtch 2007; Slangen, 2006). McClusky (1990) stated that: “margin is a function of the relationship of Load to Power’’. In simplest terms, Margin is surplus Power. It is expressed as a ratio between the Load or challenge and the Power to carry the load. The greater the power merger offers to employees the greater their capacities to sustain the Load. Power refers to the resources one possesses in any given moment to meet the Load (McClusky, 1990). Resources describe a wide range of job training and empowerment programmes, employees participation in decision making, professional development, favourable reward, energy, opportunities for career development, freedom for employees to act discretionally, good operating conditions and leadership support (McClusky (1990), dimensions of information that are important for adaptive functioning (Goyal & Joshi, 2012).

Accordingly, if merger and acquisition broadens the resultant organizational technologies and induced more workload than pre-merger on surviving employees, management style that displays a high task and relationship orientations will make affected employees who would have been unable and unwilling to do a task to meet the challenges or job demands induced by the merger. But, a situation where employees are able but unwilling to do a task then leadership style that displays a supportive (training), reward and participative attitude will make affected employees buy into the management desires. These assertions are critical because most international merger and acquisition create enormous opportunities and challenges in terms of new managerial skills, technologies and products, thus, structure of work activities that are specific and clear with considerable high relationship, effective communication mechanism, support, participation, quality training, effective reward and other favourable job design features will enhance employees perception of fairness in order to quickly cope, adapt, apply and improve on the use of new technologies, managerial skills and knowledge in the resultant firm.

However, job dissatisfaction occurs in merger when employees face increased workloads or job demand but at the same time, are given little control over the work (Goyal & Joshi, 2012). Job demand refers to pressures to work hard or fast, excessive responsibilities, while decision latitude, or control concerns with the workers ability to control his work activities, including authority to make decisions on the job and to select appropriates strategies to accomplish the job (skill discretion). Study therefore noted that job demands in this essence is that aspect of a job which requires additional or sustained physical job control, or decision latitude and other favorable job design features. If merger induced corporate restructuring resulted in an increase pay, better operating conditions, more opportunities for career growth and better job training and development then affected employees morale will be increased thereby more power is given to them. This will rejuvenate them to high level of satisfaction. But job dissatisfaction in merger results from the threat of or reduction or conservation of resources or power.

Theory of Power-Load- Margin developed by McClusky (1990) is somehow relate to job situational theory (job characteristics model) which argues that enrichment of specified job characteristics are the core factor in making job challenging, fulfilling and satisfying. The job characteristics model (JCM) argues that jobs that contain intrinsically motivating characteristics will lead to higher levels of job satisfaction (Hackman & Oldham, 1976). Five core job characteristics define an intrinsically motivating job: (1) task identity-degree to which one can see one's work from beginning to end; (2) task significance-degree to which one's work is seen as important and significant; (3) skill variety-extent to which job allows one to do different tasks; (4) autonomy-degree to which one has control and discretion over how to conduct one's job; and (5) feedback-degree to which the work itself provides feedback for how one is performing the job. According to the theory, jobs that are enriched to provide these core characteristics are likely to be more satisfying and motivating than jobs that do not provide these characteristics. More specifically, it is proposed that the enrichment of core job characteristics lead to three critical psychological states. These psychological states include sense of meaningfulness of the work, feeling of personal responsibility for outcome and knowledge of results which, in turn, lead overall job satisfaction.

From the theory of job characteristics, the more employees perceived merger and acquisition offer or given them opportunities to develop skills, use number of different skills and talent in performing a variety of different activities; direct and clear information concerning job performance, freedom in using personal discretion in performing job, perform identifiable pieces of work toward completion of whole; finally the job performed significantly impact on one’s life and others the more the positive feeling of meaningful work, personal responsibility, job satisfaction and that the incumbents find merger to be worthwhile.

Regardless of importance of job characteristics theory in explaining job satisfaction, Robbins et al, (2011) however contended that job characteristics theory failed to take cognizance of the role of social support or interpersonal aspect of job design in making a job more fulfilling. They stressed that job design characterized with high autonomy, task significance, task variety and feedback do not always lead to higher job satisfaction if employees feel isolated from his/her coworkers. This is because having a good social relationship can make the most boring and onerous task fulfilling and satisfying. Hence, social interaction among coworkers is as important as task designed features. Therefore, policies such as employees’ empowerment, employees’ participation and employees’ involvement do not only positively affect productivities because they encourage more communication and social interaction but also higher job satisfaction.

Acculturation theory

Against the background that international merger and acquisition involve business combination of dissimilar cultures, ac culturation theory examines the exchange of cultural attributes between merging firms and how they affect job satisfaction among the affected employees. The theory propounded that during integration process between two merging firms, the original culture of one or both firms alters, in such that the concerned firms may retain some aspect of their culture of origin and also learn, favor or create some new dimensions of culture (Emlyon et al, 2013). The acculturation involves the overall combination of corporate values beliefs and norm that defined the new organization (Bebenroth & Ismail, 2014), thus, the primary reasons merger and acquisition often do not deliver longer term value is owing to the inability to adequately integrate cultural dimensions in line with employee job satisfaction (Shah, 2009). Hence, cultures have emerged as one of the dominant barriers to effective integrations (Cartwright & Cooper, 1993).

Given that acculturation process takes place in several ways and have be describes in the context of merger and acquisition as different modes through which employees from both groups adapt to each other and resolve emergent conflict. One of the modes include de-acculturation in which members of the new organisation do not retain their old culture or replace it with a new one, the other is assimilation in which members of an organization adopt the culture of another, separation in which members of both organizations retain their original cultural identity and integration in which there are some degree of change in both organizational cultures. Research has proposed that when members of two combined organizations disagree on the desired mode of integration this will result in acculturative stress and job dissatisfaction ((Bebenroth & Ismail, 2014). Stress, tension and job dissatisfaction may lead to conflict, also known as culture clash, a phenomenon that is well documented in merger and acquisitions literature. Culture clash is even more likely when people feel threatened by the risk of losing their accustomed way of doing things and their job outcomes do not meet their expectation as determined by their cultural beliefs. This scenario is common in cross-border and international merger and acquisition.

Study has further revealed that in cross border or international merger and acquisition, the transfer of managerial practices and policies especially in the area of rewards and other outcomes distribution is rampart and there exist a cross national different in reward and other job outcomes preferences (Chiang & Birtch, 2007). The study therefore maintains that dissatisfaction among employees in merger occurs when they perceived that merger induced transfer of managerial practices for example in reward distributions and its level of attractiveness do not meet their expectation or general cultural beliefs. They further noted that job satisfaction is low in post-merger if the outcomes (post- merger outcomes ) individual expected and received for task perform do not satisfied his dominants needs consistent with the individual culture. Given that factors that create job satisfaction vary across countries or culture (Fischer & Smith 2003), it therefore important that firms merging with other firms of different countries or culture integrate in line with employees needs according to their culture. This has been empirically researched when a study revealed that in developed countries(culture) higher order needs such as increased responsibility, growth and achievement dominate individual orientation and behavior and hence organization operating in the region that seek to satisfy these higher needs will increase job satisfaction level among its employees (Huang, Van DeVliert, 2003). Whereas in developing countries, the physiological and safety needs often dominated individual orientation (Huang, Van DeVliert, 2003), hence reward and other extrinsic factors do correlate with higher level of employees’ job satisfaction and overall happiness than intrinsic factors (Huang & Van DeVliert, 2003). These findings could be attributed to the poor working conditions and standard of living among developing countries. But once an individual reaches a high level of comfortable living as in the case of most employees in advanced countries, the relationship between pay, other extrinsic factors and job satisfaction disappear and stronger relationship emerged between presence of intrinsic job characteristics and job satisfaction.

Similarly, Fischer and Smith (2003) showed that organizations in western or developed countries that emphasized performance orientation, intrinsic job designs (e.g. recognition and achievement), hard work, individualism and competition have more satisfied employees than organizations that do not. While organization operating in underdeveloped countries that place emphasis on collectivisms, fatalism and cooperationalism (interpersonal), financial reward and other extrinsic job designed features have more satisfied employees than organizations in the regions that do not. The study revealed that the reasons for the differences in the factors affecting job satisfaction between employees in developed and underdeveloped countries are that employees are culture bound. Employee’s attitude varies across cultures as determine by the level of economic development. Hence, employees are satisfied with their job when their expectations are met as determined by their cultural values and general belief.

In respective of the implication of culture on job satisfaction, the unwillingness of most foreign organizations operating and merging with domestics firms in developing countries including Nigeria, to reward employees adequately and provide them with work safety and job security and attractive pay which are critical to fulfilling dominant needs is the root cause of not only job dissatisfaction which has induced inefficiency and partial commitment, but also corruption (Onubro, 2006). This poor motivation among employees in Nigeria is evident in their involvement in the company products diversion for personal financial gains, sales and marketers adding to the company’s actual product cost for their own benefit, employees’ delaying to perform their task just to receive bribe and various other malpractices (Onubro, 2006). All these have implications on corporate failure.

Hence, in order to create employees’ job satisfaction, firms operating or merging with domestics firms must adequately treat and manage employees on the basis of their cultural values rather impose foreign cultural values, practices, policies and norms on the employees of the acquired firms or countries where they operate. This will help to create higher level of job satisfaction among employees in the region. Hence, a detail understanding of the factors that motivates employees in developed and developing countries is critically important as they would help firms operating in developing countries like Nigeria to effectively adjust and implement the most significant work situational factors that influence employee attitudes in the region thereby address employees’ issues accordingly.

Person-job fit model

Person-job fit model of job satisfaction is one of the earlier models that have been used to explain job satisfaction among employees (Bono & Judge, 2003). The theory was best articulated by John Holland personality-job fit theory. Holland presents six personality types and proposes that job satisfaction depend how well individual’s personality matches job characteristics. Accordingly, the person-job fit theory states job satisfaction is function of an interaction between characteristics of the person and the characteristics of the job. The theory further opined that fit between personal characteristics and job characteristics determined the level of job satisfaction and consequent behavior such as stress and intention to leave an organization. An important aspect of this interaction relevant to job satisfaction in merger and acquisition is the degree of fit between the current (post- merger) work situations as compared to pre-merger work situations experienced among employees and their personal characteristics. Employee who perceived that his demographic characteristics are more compatible with post-merger job characteristics than pre-merger job characteristics will be more satisfied with job in merger (Rhea, 2004).

The influence of demographic variables on satisfaction in international merger and acquisition was further elaborated by Chambers (2008) when he reported that merger or acquisition induced change with interaction with demographic factors had the greatest impact on level of job satisfaction in merger and acquisition. He argued that regardless of whether merger and acquisition bring about positive or negative change in work situational factors, employees’ demographic features have a pervasive impact on every aspect of how they view work situations factors. Employees’ job satisfaction in merger and acquisition is as a result of appraisal of balance or fit between current job demands or challenges or outcomes and ability of individual to meet such demands and his/her needs.

Given that human behavior is a function of interaction between person- environments and the degree of fit between the person’s demographics and work environment or job characteristics is paramount to determine the level of job satisfaction. Two types of interaction are important in determining the degree of job satisfaction in merger and acquisition. One of it is relationship between outcomes merged firms provided to employees and the needs motives of the employees, or preference of the employees themselves and the other is relationship between the demand/requirements or nature of the job and skills/ abilities or background or other core attributes of the employees. In terms of preferences of the employees themselves, value-percept theory developed by Locke (1976) argued that individuals' values would determine what satisfied them on the job. Only the unfulfilled job values that were important to the individual would be dissatisfying. According to Locke's value-percept model, job satisfaction can be modeled as satisfaction = (want - have) X importance. In mathematical form, S = (Vt- P) x Vi, where S is satisfaction, Vt is value content (amount wanted), P is the perceived amount of the value provided by the job, and Vi; is the importance of the value to the individual. Thus, value-percept theory predicts that discrepancies between what is desired and what is received are dissatisfying only if the job facet is important to the individual. Because individuals consider multiple facets when evaluating their job satisfaction, the cognitive calculus is repeated for each job facet. Overall satisfaction is estimated by aggregating across all contents of a job, weighted by their importance to the individual. The value-percept model expresses job satisfaction in terms of employees' values and job outcomes.

In respect to demand/requirements, skills/abilities or background or other core attributes of the employees, Baker (2009) emphatically stressed that employees who have positive core self-evaluation or beliefs in their inner worth, skills and background as effective and capable of controlling (locus of control) work environments are more likely to be satisfied with their jobs in merger and acquisition than others with negative self-evaluation. This was also supported by Erwin (2010) when he opined that employees who positively evaluate work situations in relation to their demographics experienced by them in the context of merger will be satisfied and those who negatively evaluate the work situations will be dissatisfied in merger and acquisition. He believes that demographic characteristics are critical identities that affect employees feeling about a job, resulting from an evaluation of its characteristics.

Relating person-job theory to adaptation-level theory to explaining the phenomenon of job satisfaction in merger and acquisition, study alluded that an individual’s reference point for subjective judgments regarding particular classes of stimuli is determined by the individual’s prior exposure to such stimuli as well as recollections of past judgments of similar stimuli. The adaption theory expresses the relationship by proposing that one’s adaptation level, or reference point for subjective judgments, is the logarithm of the mean of relevant stimuli, where individuals weight such stimuli based on their salience among other criteria. In this sense, adaptation-level theory is a psychological theory of relativity based on the general principle of perceptual contrast between current job (prevailing norm) and past-job satisfaction. Accordingly, job satisfaction in merger and acquisition result from: (1) the perceived discrepancy between the qualities of the stimulus, (2) the environment in which the stimulus is perceived (contextual variables), and (3) the personal characteristics of the perceiver (individual demographic characteristics). The theory believes that individuals level of adaption in current work environment is determine by his level of satisfaction with the current jobs which is influenced by past experienced (pre-merger), motives, personality and expectation. Employees perception that they are more or less fit in post merger than pre-merger work environment may be due – at least in part, to the person’s age, cultural background, experience and educational level. That is, the degree to which employees perceive that their demographics fit in post merger jobs than pre merger could determine their level of job satisfaction. We also believe that employees who evaluate the benefits or pleasure derived in job in relation to the pain put into the job situations and feel more satisfied with the post-merger than pre-merger job are likely to be more emotionally stable, more committed, more productive and more willing to portray a positive image of the resultant organization to customers. In addition, the affected employees are more likely to derive sense of personal meaning in performing tasks, engage in less deviant behavior such as absenteeism, stealing and bribery that are incongruent to organizational philosophy (Robins et al., 2012 ).

2.4 Measures and Determinants of Job Satisfaction in Merger and Acquisition

A number of studies have identified several work situational factors or determinants that precede employees’ job satisfaction in merger and acquisition (Collins, 2005; Covin et al, 1996; Davies, 2003; Tikanmaki 2001). The key work situational factors include: operating conditions, nature of work, communication, pay system, supervision, and opportunities for promotion, coworkers and fringe benefits. The studies further opined that these work situational factors affecting job satisfaction in merger and acquisition are controlled by the merging firms rather than the employees’ themselves.

Operating Conditions

One way to increase the level of satisfaction among employees is to maintain and enhance comfortable and favourable operating conditions. Operating conditions are key work conditions that are mainly associated with operating systems including technologies which are artifact of culture. It also covers work rules, procedure, safety or security in workplace. The acculturation theory which examines the exchange of cultural attributes between merging firms and how they affect job satisfaction among employees postulated that during integration process between two merging firms, the original culture of one or both firms alters (Emlyon eta el, 2013). Consequently, the higher the perception that post-merger cultural dimensions which include the operating systems and the work procedures are more favorable, suitable and comfortable than pre merger cultural dimensions the higher the job satisfaction. In other words, negative perception of discrepancy between pre-merger and post-merger operating conditions will likely result in job dissatisfaction, while positive discrepancy will likely result in job satisfaction.

Evidence revealed the effect of negative or unfavorable operating conditions create emotional trauma, stress, chronic pains, headaches; heart attack and other psychological impact (Sacek, 2012). Stress, tension and job dissatisfaction may further lead to post-merger conflict. Study have also showed that employees who feel that have lost their accustomed way of doing things by working with new people, new systems and new rules and regulations create a lot of fear of job security (Georgiades & Georgiades, 2014). Moving from familiar to the unfamiliar working conditions in respect to cultural dimensions have also been showed as identity disruption that result in low motivation (Zaheer, Schomaker, & Gene, 2003). Since identity denotes the share ideologies which serve as yardstick and bound employees together in performing task, gauging and measuring actions, behavior and performance, negative perception of operating conditions after merger may result in low motivation for employees to adjust and adopt to post-merger culture, unlike positive perception of operating conditions.

Given that job security is part of working conditions, the feeling or threat of losing job or redundancy which is highly documented in merger literature have been shown to deteriorates employees’ morale and job satisfaction in merger and acquisition (Chambers, 2008) and has negative impact on post-merger working relationship among employees and how they view the success of post-merger and acquisition (Shah, 2009). Marmenout (2010) found that higher perceived uncertainty in job in merger is associated with greater dissatisfaction and dysfunctional outcomes including higher intention to turnover. Since discrepancy between pre and post merger norm is the cause of job satisfaction and dissatisfaction, negative perception of job security will result in job dissatisfaction.

Furthermore, Cartwright and Cooper (1996) revealed for employees to adapt and cope with merger induced procedures, technologies, uncertainty, other operating conditions, one thing is fundamental, which is training. They see training as part of operating conditions as well as practical education through which employee’s knowledge and skills are enhanced in order to cope with organizational change, uncertainty and overcome inefficiencies especially in the areas operation systems or equipment use by individual in work place. Thus, the higher the negative perception between pre and post merger quality job training the lower the job satisfaction. In other words, the more employees perceived that the quality of job training and workshop organize in post-merger are better than when the organization has not merged the more they will be satisfied in merger and acquisition. This view have been empirically demonstrated when a study on satisfaction among employees in merger and acquisition revealed that 95 (56.2%) respondents perceived merger as good as it allows employees the opportunity to learn and use new technologies, help develop untapped skills, competencies and build careers through training and development, while 53 (31.4%) perceived it as not good and twenty-one (12.4%) respondents were unsure whether the merger was good or otherwise ( Sanda & Adjei-Benin, 2011).

However, Georgiades and Georgiades (2014) empirical study on the impact of an acquisition on the employees showed that in spite of the fact that different methods and systems were adopted during the integration of firms involved in merger, the operating system and new ways of working made it difficult for people to function as a team and there was no training or guidance provided to majority of the employees on how to effectively handled the new systems. In addition, the study showed that employees were told to bear the personal responsibilities in learning the new system and the merged firms indulge in reinforcement to make employees to adhere to new customs, patterns of work and others new rules and regulations and those employees who were unable to cope and adhered to the established rules and practices were sacked. More striking, the study revealed that the staff from both companies was constantly been interviewed in order to determine the employees who would be retain and those who were going to be made redundant and this process lasted for about two years which in turn heightening job insecurity among employees from both firms. When Pfizer acquired Wyeth, it management said that twenty thousand (20,000) jobs will be eliminated within three years (Robins, et al, 2011). From the forgoing, we proposed that employees who perceived that the conditions which they operate are less favorable in post merger than pre- merger will be dissatisfaction with jobs while employees who perceived post merger conditions which they operate are more favorable than pre-merger with be satisfied with job. That is, positive perception of dimensions of operating conditions could lead job satisfaction in merger and acquisitions while negative perception of dimensions of operating conditions could lead to job dissatisfaction in merger and acquisition.

Nature of Work

The nature of work performed by employees is a major predictor of job satisfaction (Spector, 1997). It is associated with the tasks and the role demand of the job. Accordingly, employees like job that offers autonomy or allows them to use their skills and abilities in performing tasks, offers equitable or fair workload distribution, provides considerable time to perform and balance work- personal responsibilities. While these job characteristics make work interesting, fulfilling, satisfying and meaningful (Robbins et al, 2011), earlier study on job satisfaction in merger found that most employees engage in multiple roles, increase workloads, and high pressure to perform or meet target after merger (Bebenrouth & Ismail, 2014). Also, many employees who were unable to meet the given target were put under probation or sacked (Bebenrouth & Ismail, 2014). In addition, Davies (2003) reported that employees, who perceived that they have more opportunities to balance work-life responsibilities, were less pressurized in performing tasks and feeling of responsibility and knowledge of how effective they are performing in the resultant firms were more satisfied in merger than others who perceived differently. Study has further indicated that a disparity between post and pre merger workloads could influence the level of job satisfaction and it subsequent behaviour outcomes (Campbell, 2008).

Empirical study conducted by Sanda and Adjei Benin (2011) on post- merger satisfaction demonstrated this when he showed that all employees surveyed acknowledged that merger introduced significant changes in their work situations and majority of the respondents precisely 114 representing 67.5% reported that they were more satisfied with time given to them to perform before merger than after merger. The study also reported that 70% of the total respondents were more satisfied with workloads before merger than after merger. The study further revealed that opportunities to use personal discretion to perform tasks were better in pre-merger than post-merger. Similarly, the study showed that majority of the respondents representing 74.28% of the total respondents agreed that their nature of job before merger allows them to balance work life issues than after the merger.

Against this backdrop, employees who perceived more workloads, more pressure to perform or little time to perform task and feel less personal responsibilities or knowledge of how they are performing (feedback) and opportunities to use personal discretion in performing tasks in post-merger than pre-merger could be dissatisfied in merger and acquisition. In other words, given that employees monitor the discrepancies between pre and post merger dimensions of natures of work, the perceived negative discrepancies between pre and post-merger dimensions of nature of work may result in job dissatisfaction and positive perception of these dimensions of nature of job may result in job satisfaction in international merger and acquisition.

Communication

Job satisfaction is increased among employees when they are given relevant and adequate information to effectively perform job. By sharing or given relevant information, Shuler and Jackson (2004) posit that cooperation, collaboration and job satisfaction among employees are improved which, in turn, could positively affect performance. However, several studies have shown that merger and acquisition affect communication quality which, in turn affect job satisfaction among employees in the resultant firms (Cheng & Seeger, 2012; Schwieger & Denisi, 1991). The empirical study indicated that paucity of information is one major constraint of culture clash and job dissatisfaction in international merger and acquisition (Cheng, & Seeger, 2012). The study further revealed that employees are satisfied with job when information is easily accessible, accurate and adequate to perform jobs. In addition to, goals, roles, responsibility and other aspect of corporate cultures are carefully designed and effectively communicated to employees accordingly.

Zhu, May and Rosenfeld (2004) specifically examined relationships among dimensions of information adequacy and job satisfaction in an organization newly created through the acquisition of one Chinese Internet company by another. Findings highlight differences between former employees of the acquired versus acquiring companies that need to be taken into account when communicating with employees of the new organization. Results revealed that information adequacy is not always positively related to employee job satisfaction and that information should be communicated to employees only when it is carefully designed and delivered purposefully. The study stressed that communication during a merger needs to vary in its openness, depending on the nature of the information to be communicated, the goals of the organization, the specific needs and concerns of the employees, and the different needs and expectations of acquiring and acquired company employees.

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134
Year
2014
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9783668388789
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9783668388796
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English
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employee satisfaction international corporate merger acquisition

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Title: Employee Job Satisfaction in International Corporate Merger and Acquisition