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The Role of Business Ethics in Merger and Acquisition Success: An Empirical Study

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Abstract

The purpose of this paper is to explore job performance, mergers and acquisitions (M&A) from an ethical perceptive. A great number of studies have extensively discussed the link between M&A and performance; however, most focused on the financial functions and strategy selections. Although ethical issues emerge in the M&A process, it is a less studied area. This study adopted the structural equation modeling approach to empirically test our hypotheses. Based on 264 samples from financial companies, data analyses indicated that ethical conduct in M&A is significantly correlated with employee job performance. Ensuring employment security and caring practices can significantly explain organizational commitment. Organizational commitment also plays a significant mediating role between a company’s ethical conduct and employee job performance. Managerial implications are also provided.

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Authors and Affiliations

  1. Department of Business Administration, National Chengchi University, 64, Zhi-nan Rd., Sec. 2, Wenshan, Taipei, 116, Taiwan

    Carol Yeh-Yun Lin & Yu-Chen Wei

Authors
  1. Carol Yeh-Yun Lin
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  2. Yu-Chen Wei
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Corresponding author

Correspondence to Carol Yeh-Yun Lin.

Additional information

Carol Yeh-Yun Lin is a Professor of the Department of Business Administration at National Chengchi University in Taiwan. She received her Ph.D. in Human Resource Development from the University of Texas at Austin in 1992. She has published previously in the Journal of Small Business Management, Journal of Psychology, Journal of Engineering and Technology Management, Industrial Relations Journal, International Journal of Human Resource Management, and a number of other scholarly journals. Yu-Chen Wei is a doctoral candidate of the Department of Business Administration at National Chengchi University. Her research interests include intellectual capital, high-performance work system and business ethics.

Appendices

Appendix A – M&A ethics and job performance question items

M&A Ethics

Employment security

  • During M&A, the new company did not layoff employee at will.

  • After M&A, the new company provided employees with job security.

  • After M&A, the new company assigned me clear tasks.

  • After M&A, I felt that my right was damaged.

  • After M&A, the new working environment enabled me to work at ease.

Justice

  • After M&A, the new company implemented a fair performance appraisal system.

  • After M&A, the new company announced clear compensation and reward policy.

  • My colleagues who were laid off had a fair separation package.

  • The new company placed managerial positions fairly for both employees from acquiring and acquired companies.

Caring practices

  • The new company set up a sound communication and grievance system.

  • When I had difficulty adapting to the new organizational culture, there is always someone to help me out.

  • After M&A, the new company acknowledged my efforts and supported me.

  • The new company oriented me about company vision and future goals.

  • The new company familiarized me with the new organizational culture through various activities.

  • As long as we work efficiently, the new company respects our way of working.

  • After M&A, the new company cheered us up via various activities.

  • After M&A, I felt I was respected.

Job performance

  • Comparing before and after M&A, my quality of work is better.

  • Comparing before and after M&A, my working attitude is better.

  • Comparing before and after M&A, my attendance rate is better

  • Comparing before and after M&A, I become more cooperative

  • Comparing before and after M&A, my communication ability is enhanced

  • Comparing before and after M&A, I work more efficiently now

Appendix B Sample distribution

Company ID

No. of branches

No. of samples

A

2

17

B

3

25

C

4

32

D

2

12

E

2

14

F

2

9

G

4

27

H

5

39

I

1

10

J

2

8

K

2

28

L

3

19

M

2

24

Total 13 companies

34 branches

264 respondents

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Lin, C.YY., Wei, YC. The Role of Business Ethics in Merger and Acquisition Success: An Empirical Study. J Bus Ethics 69, 95–109 (2006). https://doi.org/10.1007/s10551-006-9070-0

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