The Effects of Legacy Organization Culture on Post-Merger Integration

by Terrill Frantz* & KM Carley

ARTICLE | Nonlinear Dynamics Psychology and Life Sciences | Vol. 17, 2013

Abstract

We explore the relationship between the characteristics of pre-existing

organization cultures and post-merger integration dynamics; this study involves

examining data produced by computer simulation. Two characteristics of

organization culture, its characteristic complexity and its propensity for

members’ to share information, are controlled in computational experiments. To

characterize post-merger integration dynamics, we measure the transfer of

information with respect to two types: (a) that which is necessary in performing

work tasks, and (b) that which underlies the features of a group’s culture. The

extent to which this information is common in a group is indicative of task

performance and the cultural cohesiveness of its members; leading to the level

of performance for the group. We consider cultural knowledge as it pertains to

both that of the entire organization and at the work-team level; often times,

these can be dissimilar. We find that cultural complexity and exchange

motivation vary in their influence on the diffusion of task and cultural

knowledge: the more complex the culture, the longer for post-merger integration

to complete, while simultaneously task performance suffers. However, the

inclination for an organization to energetically share their culture with another

group does not immensely impact the diffusion of cultural or task knowledge;

moreover, high levels of task focus in a culture can hinder cultural diffusion,

though performance is positively correlated with this characteristic. This study

has relevance to post-merger integration research and practice by providing a

theoretically grounded, quantitative model useful for estimating the post-merger

dynamics of cultural awareness and knowledge diffusion for a specific merger

situation.

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