How Foreign Acquisitions Shape Organizational Identity: Paper Summary

Imagine being a member of a globally recognized German automotive supplier. One day, you find out that your firm, with its rich history and presence in 20 countries, has been acquired by a competitor from China. The acquisition is not just a change in management; it's a potential collision of two vastly different national identities with their unique values and ways of working.

At the outset, the immediate reaction is uncertainty. Will I lose my job? Will our organization's ethos change overnight? Will we be outsourced? A primary concern for members is the very existence of their roles and the identity they have built within the organization. Especially when the perception involves foreign acquisitions leading to outsourcing, the worry is palpable.

Once the initial wave of uncertainty settles, there's a longing for familiarity. Employees yearn for continuity, a sense that some parts of the organization remain untouched. It's not about resisting change per se, but about preserving the essence of what the organization stood for.

The final layer of the puzzle is about self-growth and aligning with the organization's evolving ideology. As the dust settles, members seek avenues for personal growth within the transformed organization and reassess the benefits they derive from it.

Researchers conducted interviews with 28 members of a German automotive supplier, referred to as "organization A", which was taken over by a Chinese competitor, “organization B”. At the time of the acquisition, Organization A boasted 13,000 employees spread over almost 20 countries, with a quarter of them based in Germany. The story of organization A isn't unique. It reflects the narrative of many mid-sized manufacturing firms in Germany that have been acquired by Chinese firms, a phenomenon characterized often by "light touch" integration.

Phases of Identification Sensemaking

• Assessment of Uncertainty: Initially, the employees are primarily concerned about the future - will their roles be secured, and what changes might be afoot?
• Evaluation of Organizational Continuity: Once past the immediate concerns, employees then evaluate the changes. They desire consistency, holding onto the familiar elements of their previous organizational identity.
• Reassessment for Self-Enhancement: In the final stage, employees look inward, assessing whether their personal and professional growth aligns with the organization's evolving ideology and benefits.

Shift in Identification Motives

Traditional models place self-enhancement as the prime motive. However, in the wake of identity-threatening events, the primary concern shifts to ensuring the continuity of the organization and preserving their role within it.

Interactions Between Various Identifications

Not every change impacts all levels of identification equally. Some changes, like organizational ideology shifts, can filter down and alter departmental values and culture. Yet, if the changes don't touch the parts of the organization employees most identify with, the larger shifts might be less impactful than anticipated.

Nested Structure of Identification

Changes at higher organizational levels can impact identifications at the lower levels. However, some events might not affect all levels of identification. For example, a foreign acquisition might not alter an individual's identification with the broader industry.

Employees don't just identify with the organization; their identity is multifaceted. Some might equate their organizational identification with broader identities, such as the industry or the region. For others, the strongest bond might be with their immediate team or department. How employees perceive a foreign acquisition can be vastly different based on which "identity" is most threatened or altered by the change.

Given the complexity of emotions and perceptions during a foreign acquisition, how can business leaders guide their teams effectively? Here are some strategies:

1. Before negative perceptions take root, leaders must step in with transparent and consistent communication. Address fears, clarify reasons for the acquisition, and highlight potential benefits. The sooner this happens, the better.
2. Emphasize common values that remain untouched post-acquisition. Highlighting shared values fosters a sense of unity and reduces resistance to change.
3. If national identities are strong, consider investing in cross-cultural training. Such initiatives can bridge understanding, bust stereotypes, and forge a unified organizational culture.
4. Launch communication campaigns to showcase the organization's evolving identity. Highlight the complementary strengths and values that the acquisition brings to the table.

Foreign acquisitions are more than just mergers of businesses – they merge cultures, values, and identities. As the corporate landscape becomes increasingly global, understanding and navigating the intricacies of organizational identification becomes paramount. Business leaders, equipped with these insights, can steer their teams toward a future where both business and identity thrive.