Contradiction and Sensemaking in Acquisition Integration

Abstract

The authors draw on research on acquisitions and on newcomer adjustment to analyze acquired managers’ sensemaking experiences. They pursue three interrelated objectives: how acquired managers, as newcomers, make sense of role changes; how these managers’ frames contrast with new frames encountered at the acquirer; how relationships with acquiring managers influence adjustment to new roles and frames. The authors report on a study of three acquisitions of small firms by a large, bureaucratic, serial acquirer. Findings showed contraction of the managerial role—and the resulting reconfigured role identity—created tensions emanating from managing familiar situations under new frames. Relationships with acquiring managers—a potential source of informational, material, political, and social resources—played a role in mitigating or amplifying the challenges experienced. Comparison of acquired and acquiring managers’ frames showed that absorption of small firms by large, serial acquirers creates in organizations heterogeneous sensemaking spaces characterized by contradiction.

Keywords

acquisition frames newcomer adjustment organizational contradictions sensemaking

“Did you watch Star Trek at all? . . . It was kind of like: Here’s En-Corp. They’re The Borg. They will assimilate you. Resistance is futile. That’s how it felt.”

—Acquired manager, Firm 1

For managers of small, entrepreneurial firms, it is likely that no business event is more radical than the acquisition and integration of their firm by a large, bureaucratic, serial acquirer. As newcomers to the acquiring firm, these managers need to make sense of major changes in status, roles, networks, systems, and other aspects of their work lives in the postacquisition period. Although researchers have written extensively about acquisitions on one hand and newcomer sensemaking and adjustment on the other hand, they have given little attention to integrating these two literature streams. Specifically, there is little research on the sensemaking experiences of acquired managers—as newcomers—involved in one of the many acquisitions by serial acquirers, which are firms that engage in streams of acquisitions aimed at achieving strategic goals (Laamanen & Keil, 2008).

Research on newcomer adjustment has not shown preoccupation with the meanings that acquired managers associate with their adjustment experiences. Yet like other newcomers, acquired managers experience novelty, complexity, and role change, and thus engage in sensemaking (Louis, 1980; Reichers, 1987). This involves bracketing experience and rendering the ambiguous more intelligible and meaningful through the use of frames (Weick, 1995). In this study, we attend to the content of managerial sensemaking and frames and focus on acquired managers who experience integration by a serial acquirer. Analysis of sensemaking provides an opportunity “to incorporate meaning and mind into organizational theory” (Weick, Sutcliffe, & Obstfeld, 2005, p. 419).

Sensemaking and integration experiences of acquired managers are worth understanding. First, literature has shown a predominant interest in the financial aspects of acquisitions. The human aspects are no less important (Birkinshaw, Bresman, & Hakanson, 2000). Acquisitions can affect significantly the work lives of acquired managers who often have to contend with the uncertainty and stress of the transition. It is incumbent on researchers to study these stresses and to analyze how different employee categories are affected and behave in a variety of merger and acquisition settings (Greenwood, 1996). There are “behind-the-scenes” internal dynamics of acquisition that need attention from researchers (Vaara, 2003).

Second, acquired managers can represent a big contingent of newcomers to acquisitive firms. These managers, who must transition to the new organization and possibly a new role, represent an understudied segment in research on newcomers, and yet their adjustment experiences may not be captured well by formulations derived from studies on other types of newcomers. In a literature review, Bauer, Morrison, and Callister (1998) found that the most heavily studied populations are recently graduated students and noted that “important differences might emerge if a greater diversity of newcomers . . . were studied” (p. 158). Acquired managers often transition to a new organization (the acquirer) while maintaining aspects of their past work roles (exhibited through their continuing to manage their previous work units that become part of the new organization). This coexistence of past and present frames is an interesting context in which to understand newcomer adjustment.

Our aim in this study is to direct attention to meanings and frames related to acquisition integration. Specifically, we scoped out three interrelated elements within the wider subject of managerial sensemaking, which the literature that we review next, the data we collected for this study, and our past research on acquisitions revealed to be important components of acquired managers’ experiences. First, we asked how managers, as newcomers, experienced role changes. Second, we attempted to understand the context of acquired managers’ experiences by comparing the past role frames they held and the new frames they encountered at the acquirer. Third, we inquired how acquired managers’ relationships with acquiring managers influenced their adjustment to new roles and frames. We conducted qualitative research, which is well-suited for the study of meanings. The research involved a case study of three acquisitions of entrepreneurial firms by a large, bureaucratic corporation.

Conceptual Overview

When managers of an acquired firm become members of the acquirer through integration, they are newcomers to the acquirer. Louis (1980) stated that newcomer experience consists of change, contrast, and surprise, and that regardless of previous socialization, passage to a new role involves socialization into the new setting. This spurs sensemaking, which is activated when the situation “feels different” (Weick et al., 2005). Weick (1995) stated that there are three elements in sensemaking:

One of the three elements in organizational sensemaking is usually some “past moment” (e.g. socialization, tradition, or precedent) . . . The combination of a past moment + connection + present moment of experience creates a meaningful definition of the present situation. And a lack of prototypical past moments . . . can prolong the search for meaning. Frames [italics added] tend to be past moments of socialization and cues tend to be present moments of experience. If a person can construct a relation between these two moments, meaning is created. This means that the content [italics added] of sensemaking is to be found in the frames and categories that summarize past experience, in the cues and labels that snare specifics of present experience, and in the ways these two settings of experience are connected. (p. 111)

The “specifics of present experience” include the practices in the acquiring firm that acquired managers face postacquisition. These practices are based on frames prevalent in the acquiring firm. Frames or schemas are cognitive templates that guide interpretation of events and help shape the meaning of experience (Bartunek, 1993; Labianca, Gray, & Brass, 2000). Because acquired managers are newcomers, they have not been socialized into the dominant frames of the acquirer. Adjustment to the new situation requires the acquisition of new role frames. However, individuals who subscribe to a given frame may have difficulty adopting or understanding a new frame (Bartunek, 1993).

Ashforth (2001) pointed to factors that make the transition to a new role more or less difficult. Adoption of a new role frame is challenging when the transition is viewed by the individual as being socially undesirable (e.g., a new role that offers less status and complexity). Generally speaking, a role transition representing progress has a positive valence to the role holder (it is seen as attractive), and vice versa. Ashforth also stated that “lack of role blurring may facilitate a relatively clean break such that one can begin anew in the next role” (p. 91). These are important considerations in understanding how acquired managers adjust to new roles at the acquiring firm, given that they may remain in a managerial role that maintains continuity with the past. However, these issues have not been attended to in prior research. Thus, our first research objective was to understand how acquired managers experience role changes.

Sensemaking regarding new organizational roles and practices is facilitated through interaction with insiders who are a rich source of information and assistance in interpreting surprises associated with transitions (Louis, 1980; Reichers, 1987). Research has shown that supervisors play an important role in newcomer adjustment. Such elements as frequency of interaction, strength of ties, types of information sought and/or provided by supervisors have been the focus of research attention (Bauer et al., 1998; Bauer & Green, 1998; Jokisaari & Nurmi, 2009; Morrison, 2002). However, Gersick, Bartunek, and Dutton (2000) pointed out that research on relationships tends to focus on structural and instrumental aspects of relationships and does not give sufficient attention to the meanings that individuals associate with these relationships. They state that relationships play an important role in how individuals experience their work, and these could be experiences of help, support, harm, or others. In their empirical study, they found that some workplace relationships have a dark side associated with harm, an element that is not often addressed in research on relationships, networks, or career development. Indeed, Bauer et al. (1998) indicate that insiders may not be as helpful as they could be in facilitating newcomer adjustment. Approaching the subject of acquired manager adjustment from a sensemaking perspective allows a focus on meanings that these managers construct around relationships with those at the new firm. This is one of the three objectives that we pursued in this study.

In the acquisitions literature, relationships between acquired and acquiring managers have received some attention. For example, Hambrick and Cannella (1993) addressed the importance of deliberations and relationships between managers of the two firms and their lasting effects. Graebner and Eisenhardt (2004) stated that sellers evaluate organizational rapport with the buyer before engaging in the sale of their firms. Krug and Hegarty (2001) showed that acquired managers’ perceptions of interactions with acquiring managers, postmerger, influence their decision to leave or stay and suggested that communications with acquired managers sends signals about status.

The standing of acquired managers relative to acquiring managers has been addressed with a focus on the relative size of the firms (Hambrick & Cannella, 1993). Pablo (1994) stated that size differences may have the effect of marginalizing acquired managers and distancing them from the center of the organization. Given that loss of status and control are common occurrences in acquisitions of relatively small firms, it is important to understand what effects acquired managers associate with these losses, and how they adjust to the changes and contrasts. Acquired managers’ sensemaking occurs in a context where their past frames interact with the acquirer’s frames. We pursued comparison of acquired and acquiring managers’ frames as one of our three research foci.

Method

The Cases

We conducted a qualitative case research of three acquisitions by a multinational engineering and architecture consultancy firm, which we will call En-Corp. (We disguised all names to ensure anonymity.) En-Corp was a publicly owned corporation listed on major stock exchanges. At the time of the study in 2005, it had about 6,000 employees and had posted profitable operations for several years. Its strategy was based on growth by acquisition: In a 10-year interval, it had made more than 30 acquisitions of relatively small firms operating in the engineering and architecture sectors. It engaged in friendly acquisitions, as the intent was to retain owners and employees of acquired companies. None of the senior managers in the acquisitions we studied had assumed a senior managerial position in En-Corp. After the acquisition, they continued to manage their business units, but occupied, at most, middle-level positions in the En-Corp hierarchy.

En-Corp had a policy of integrating acquired firms within its structure and system soon after close. Its approach corresponds to the “absorption” integration that involves full consolidation in Haspeslagh and Jemison’s (1991) framework. Interviewees from En-Corp and the acquired firms stated that En-Corp had an elaborate method of conducting due diligence and systems integration once a firm was acquired, but that it was up to respective vice-presidents (VPs) and regional managers to facilitate integration of acquired members into their divisions and enable collaboration within and across divisions. This led to more or less successful integration, depending in part on the efforts and availability of En-Corp VPs and regional managers.

We chose to study three acquisitions by En-Corp out of a total of 16 acquisitions undertaken within 3 years preceding our data collection. We used purposeful sampling and chose acquisitions that had achieved varying levels of success postacquisition. Based on our reading of the literature (Haspeslagh & Jemison, 1991; Ranft & Lord, 2002), we expected that integration dynamics and managerial sensemaking experiences would vary between successful and unsuccessful acquisitions. Table 1 provides information on the three acquisitions and their performance. Managers viewed Firm 1 as one of the least successful acquisitions. Although it was acquired 3 years before the time of the study, managers reported that they were still facing challenges integrating this firm. Firm 2—acquired 18 months prior to the date of the study—was composed of two divisions. The view was that although a well-known successful firm in the past, in recent years it had achieved a variable level of success. Managers viewed Firm 3—acquired 15 months prior to the time of the study—as one of the most successful acquisitions in recent years. Measures of success and failure that we used in sampling were based on the views of the acquirer. According to En-Corp managers, success of an acquisition was determined on the basis of employees retained, revenue generation, and profitability postacquisition. In later interviews, we found that acquired managers’ evaluation of the acquisition outcomes corroborated the acquiring managers’ views.

Table 1.

Acquired Firms

Acquired firm	Acquired firm’s business operations and En-Corp’s experience	En-Corp’s motive	Number of members^a and performance preacquisition	Evaluation of acquired firm’s performance postacquisition (number of members and revenue and income performance)
Firm 1 (a partnership)	A specialized area in engineering in which En-Corp had limited experience	Addition of a new practice area (or business segment)	250 members at time of acquisition Profitable firm	Loss of more than 50% of members Revenue and income performance deemed unacceptable
Firm 2 (an employee-owned corporation)	Engineering: operated Divisions A and B—each in a different business segment in which En-Corp had experience	Geographic expansion into a region not served by En-Corp	350 members at time of acquisition (roughly equally distributed between the two divisions) Division A was profitable Division B had been profitable in the past, but not at the time of acquisition	Division A lost a small percentage of members Revenue and income performance deemed acceptable Division B reported high loss of members Revenue and income generation deemed deficient
Firm 3 (a partnership)	Architecture: an area in which En-Corp had developed recent experience	Achieving depth in an area of expertise; geographic expansion into a region where architectural services were not provided	130 members at time of acquisition Profitable firm	No loss of members Revenue and income performance deemed acceptable

Members include principals/owners or senior managers, middle managers and/or professional, and other staff.

Data Sources and Analysis

Data collection took place over 5 months. Data sources included interviews with 46 participants, field notes from a shareholders’ meeting in which the CEO outlined the firm’s acquisition strategy, and written documents, including confidential acquisition agreements, internal communications, press releases, and annual reports. Overall, 31 members of the acquired firms and 15 members of the acquirer were interviewed. Acquired firms’ interviewees fell generally into two categories: senior managers who typically held an ownership stake in the preacquisition firm, and middle- and lower level managers who typically oversaw a segment of the business operations, had a project managerial position, or occupied an administrative staff position. Interviewees in the acquirer included the CEO, VPs responsible for corporate development or for integrating the acquired firms in their divisions, regional- or business-area leaders who aided in the integration, and corporate staff directly involved in due diligence and systems integration. We identified initial interviewees, who held senior positions, with the help of Corporate Development and Human Resources. We then used a snowball sampling technique (Miles & Huberman, 1994) asking initial interviewees to suggest the names of other participants involved in the integration.

Interviews were semistructured with open-ended questions. Interviews addressed the following topics: acquisition motives, individual roles and responsibilities before and after the acquisition, similarities and differences between the acquiring and acquired firms, major steps in the integration, enablers and obstacles to the integration, how the interviewee experienced the transition, relationships between acquiring and acquired members, and evaluation of the acquisition outcomes. Interviews lasting from 1 to 2 hours were recorded and transcribed.

In initial analysis, each of three research assistants coded data related to one of the three acquisitions while the authors coded data related to all three acquisitions. Data coding involved assigning descriptive codes that “entail little interpretation” (Miles & Huberman, 1994, p. 57) to chunks of interviews. The group met regularly to discuss findings. The next step consisted of writing an individual case description for each of the three acquisitions. These were sent to a senior member in each of En-Corp and the three acquired firms. The first author followed up with each of these managers through phone conversations. The managers had specific comments that allowed the refinement of issues, though they were in agreement with the general portrayal of the cases.

In more advanced data analysis for this article, the authors focused on acquired managers’ views of their roles and their relationships with acquiring managers and compared central frames held by acquired and acquiring managers. We iterated across the interviews seeking patterns across acquired managers. Next, we compared the themes from acquired manager transcripts with the themes from acquiring manager interviews. We created tables comparing these themes (e.g., see last table). We iterated between data and literature (Eisenhardt, 1989), assigning inferential codes to data. Inferential codes involve a higher level of interpretation than descriptive codes (Miles & Huberman, 1994); they denote more abstract categories. For example, we subsumed under the inferential code of contraction of managerial role the descriptive codes of loss of autonomy and submission to corporate standards. Table 2 shows descriptive and inferential codes as well as representative quotations. We also analyzed other data sources, such as acquisition agreements and internal communications as these sources provide information on the context of managerial sensemaking. Furthermore, we compared the documents pertaining to the three acquisitions.

Table 2.

Descriptive and Inferential Codes

Descriptive code	Representative quotations	Inferential code
Loss of autonomy		Contraction of managerial role
Curtailed operational decision making	There are times we need to think quickly before we lose somebody. And we may request a salary adjustment for somebody . . . something that may be relatively simple . . . But just the fact it’s got to go up five or six levels before you can get anybody to say officially yes causes the delay to go on a little too long.
Curtailed strategic decision making	And I was just about to sign off on a proposal for a job which was like six hundred thousand (local currency). And . . . literally the first week, I was told my budget signing authority was five hundred (local currency).
Inability to respond to subordinates’ requests	Before, you could make your case with a partner and say—this is what I want to do, and will Firm 3 back me in this? And he could bring it to the accounting side, saying—we’re going to pay for this. But now, he would have to go—I can find you an answer to that, because I don’t know . . . He doesn’t have that power.
Submission to standards
Application of overhead rates	We all share in the overhead costs . . . Being a larger organization, the overhead structure is greater . . . We . . . gained a whole bunch of additional overhead that complicated our ability to be profitable.
Compliance with corporate policies	With En-Corp, if you have 100 people, you can have one printer. We had maybe one for every 25 people. . . . So they come in and say—we’re taking all those away from you . . . because our other people don’t have those.
Acquired and acquiring manager frames		Contradictory frames
Autonomy versus control	Firm 2: Before we were making policy decisions and setting direction. Now you’ve got to realize that somebody else does that . . . Maybe someday we’ll help guide the ship. Right now we’re just rowing.En-Corp: (Acquired managers) have to go get that procedure or direction approved by a group of (VPs).
Customization versus standardization	Firm 3: You can’t go across the board (with profit targets). (Another division) makes huge gobs of dough. The nature of our business, you will not make the amount of money these guys make.En-Corp: We have a billing rate table . . . Our accounting system says you’ve got to use billing rate table one.
Radical change versus incremental change	Firm 3: It was a lot to learn in a very short period of time . . . It was daunting in the first several months.En-Corp: We have a very specific plan that we follow—a template. It can get changed depending on the specifics of that acquisition. But there is sort of an overall template that we look to.
Effect of relationships		Relationships as potential source of informational, material, social, and political resources
Information	It would have been beneficial to have sent someone here to get us oriented to how En-Corp works, and where you can find things and who you talk to if you’ve got a question.
Approvals	There were a couple of issues that (the supervisor) worked with me on to resolve, and that was very helpful.
Insertion in the intra-corporate network	I have a good relationship with my boss . . . But in some other areas, there could be a stronger plan for the integration, which would include some education on what sort of capabilities there are in other parts of the company, and some travel to get to know other people in the organization. We were able to do this in (my unit).
Buffers from corporate demands	Then we start getting e-mails from various . . . disciplines in En-Corp saying—we want to have some say in what you’re doing here . . . (The supervisor) got involved, and basically told them to back off, which I appreciated.

In sum, we engaged in multiple iterative and comparative analytical processes and adopted several steps to ensure the credibility of the findings (Creswell, 2007; Lincoln & Guba, 1985). We worked closely with the data, ensuring that conceptual categories derived were grounded in the data. Furthermore, the involvement of multiple researchers in analysis helped ensure that findings were not based on interpretations of one analyst. We used different data sources that enriched our understanding of the dynamics in the sites. And by seeking confirmation from study participants on the researchers’ description and analysis, we ensured that participants’ viewpoints were well represented.

Acquired Managers’ Sensemaking

We present central themes in acquired managers’ sensemaking, and where pertinent, we compare frames of acquired and acquiring managers. Figure 1 summarizes our analysis.

Figure 1.

Acquired manager sensemaking and adjustment experience during integration

Past and Present Frames

Acquired managers contrasted the present experiences with the past, evoking the frames that they subscribed to in the preacquisition situation, and comparing them with the frames that they faced as newcomers at En-Corp.

Loss of autonomy

Managers from all three acquisitions spoke of hardships experienced in encounters with En-Corp’s controls. Managers previously invested with power found themselves managing the same units, but with curtailed authority. They described situations where strategic decisions with a bearing on the sustainability of their divisions’ revenues were made in circuits removed from the unit level. Delays in decision making had negative effects on customer and employee retention and gave acquired managers a sense of futility.

(X) is a service that all our competitors offer. We offered it and did very well. After we were acquired, we were told that En-Corp doesn’t do this work . . . It’s been a very difficult situation with my biggest customer and with my staff. After months of negotiating with the executive leaders, we got permission to pursue a project. In the meantime, it left a terrible taste in the mouth of my senior (employee). He left. And two other (employees) left. If I have to go through a one year exercise every time I want to do a similar project, that business is going to disappear. (Firm 2)

“Extreme frustration” was expressed at dealing with a lengthy corporate process that would result in simple operational decisions that could have been made much more efficiently at the local level.

There are things that are highly bureaucratic, unlike being a small practice, where it’s all under your control. The time frame to have those decisions made is extremely frustrating . . . We wanted to buy (office equipment). We showed that (outsourcing the work) would cost more than buying the (equipment). The response was you can’t do that, it’s not En-Corp policy. I had to go in this great long circle of discussion at higher levels . . . and finally got approval to buy (the equipment). It took weeks, rather than hours. I understand that you need these kinds of controls. But it has had an impact on our ability to make quick decisions and act quickly. (Firm 3)

Furthermore, senior acquired managers and their subordinates saw the curtailment of control as having important ramifications for the manager–subordinate relationship, namely weakening that relationship and creating a sense that managers previously invested with authority now took a diminished role consisting of mediating, but not of providing solutions. A “stick floating in the ocean like everyone else” being tossed by the waves speaks to the disempowerment experienced.

(After) announcing it to our staff . . . people came running into my office and said . . . “We don’t want to be En-Corp . . . Here we can talk to Nick and we know Nick is going to get us the answer because he owns the company.” Well you come over to En-Corp, Nick is an employee, he can’t do nothing for you. I’m just a stick floating in the ocean like everyone else. We just go where the waves toss us. (Firm 1)

In contrast to acquired managers who considered autonomy as a necessity for discharging the managerial role, acquiring managers applied a different frame—that of the need for control. Table 3 provides contrasts between the frames held by acquiring and acquired managers. Acquiring managers showed understanding of the acquired managers’ difficulties; their frames were based on their experience with similar acquisitions (“I’ve observed this with a number of acquisitions”). They interpreted the difficulties as a typical occurrence in an acquisition where managers of small firms who transition to a larger corporation “have a difficult time letting go.” Nevertheless, they made no apologies for En-Corp’s bureaucracy and slow movement, and the fact that operating in its systems required “abdicat(ing)” control.

Table 3.

Contrasting Frames

Acquiring managers’ frames	Acquired managers’ frames
Need for control	Need for autonomy
I’ve observed this with a number of acquisitions. You’ve got a relatively small organization that’s led by a very powerful figure who has built the company up. And that power source has to go from making decisions and leading the company, and it’s theirs. And they have to abdicate that role when they become part of a larger company like En-Corp. That creates problems for that individual because they have a difficult time letting go. It creates problems for people working in the company because they’ve gone from a small, tight group to be a part of a larger bureaucracy. Things move slower, you have different forms of approvals. That can create a lot of conflict . . . The actual reality is tougher than maybe they anticipated.	It was such a huge waste of emotional energy, having to deal with . . . people . . . interfering in a market that only we know as intimately as we do . . . This is the equivalent to, let’s acquire this company because they’re successful, and once we acquire them, let’s tie both hands behind their backs . . .We understand the market that we’re in, we’ve been in it successfully for years . . . There’s a tendency in the corporate structure to say—don’t make any decisions about how you’re going to pursue this opportunity until you’ve spoken to so and so, which makes you not . . . able to jump at opportunities.
Need for standardization	Need for localization
Our leadership . . . tried to fit them all into where we were . . . Everybody’s trying to use guidelines. We have 20% salaried staff in this category. So they (acquiring managers) tried to create 20% salaried staff. Well (Firm) probably only had 5%. So the conflict arose in that 15% that was different.We’re finally getting our minds around the similarities and the differences. Whereas before, we were ignoring the differences and trying to assimilate them directly into how we do business. And it was like trying to fit a square peg in a round hole.	En-Corp has a team of people, a financial person, an IT person . . . that come in and say—okay stop what you’re doing. If your financial is set up this way, stop doing that . . . And I don’t care why you’re doing it, just do it this way . . . Some of the financial people knew that it wasn’t good for us to convert our financial system to En-Corp’s that fast. They recommended that it be done over a year . . . Didn’t matter. It was—convert . . . our other people don’t have that. So you guys don’t need it. . . . It was a battle.
Acquisition as a routine event	Acquisition as a radical change
It is a very detailed plan of steps. It’s almost a cookie-cutter approach to each one (acquisition). And each one we review and set up in conjunction with whatever nuances of that particular acquisition, whatever the cutoff dates are, their pay dates and lining them up with ours. And there’s small modifications. But it’s generally the same plan applied to each acquisition.We lost value in doing that transaction . . . But at the same time that’s part of our acquisition strategy. Not all of them are going to work . . . And that’s why we do a number of them. The odds are pretty good that on balance, over time, we’ll do okay. And that’s certainly been our history.	I had to deal with a huge change: different system, different structure, different level of operation.Suddenly all our corporate functions were stripped away from us.You feel like you’re just one part of another acquisition and another acquisition . . . You’re just part of the process (of acquisition), instead of what that unique process means. . . . They’ve been doing this for years, and they’re going to be doing this for years. It’s this machine that keeps doing it.

Submission to corporate standards

The need to adhere to inflexible corporate procedures was a significant issue for acquired managers. Standard procedures extended to a variety of strategic and operational areas. In all three acquired firms, managers spoke of difficulties involved in adjusting to En-Corp’s demanding financial standards. Furthermore, their move to En-Corp occasioned the application of high overhead rates that compounded the challenge of reporting profits.

Targets are pretty high . . . There’s corporate overhead that comes off of every profit center that supports corporate initiatives before you can start declaring profits . . . The first budgeting exercise we went through came as a shock to us. It was like, what do you mean, what’s that money for? (Firm 3)

En-Corp integrated us totally into their way of doing business, which meant higher overhead rates. That caused our clients to say that we are too expensive. So we didn’t have enough work. (Firm 1)

Using standard practices implied applying similar risk management procedures and human resources policies to units with varying business models. For example, in Firm 2-Division B, application of corporate risk-management procedures negated the possibility of doing design-build that this division relied on to attract business, and in Firm 1, standardizing the pay led to a reduction in remuneration. These events negatively affected revenue generation and employee retention.

Table 3 juxtaposes acquiring and acquired manager frames: the need for standardization and the need for localization. Acquiring managers’ frames were rooted in past experiences and learning from acquisitions of previous firms that followed a business model that was similar to En-Corp’s model. In past acquisitions, it was possible for En-Corp to apply standard policies and procedures that were adopted in the industry. One of the acquisitions we studied (Firm 1) took En-Corp outside its common industry segments. Acquiring managers’ quotes refer to earlier disregard for differences and attempts to subsume the acquired firm under the extant business model, and later understanding of some of the differences in the models. Notwithstanding, En-Corp managers did not appear to be willing to accommodate many differences (using “20% salaried staff,” for example). Acquired managers, while understanding the need for corporate policies, believed that applying standards across the board showed a lack of understanding of local abilities and conditions.

Experiencing Radical Change

Acquired managers made reference to the need “to deal with a huge change” and “the shock(s)” they faced, which point to experiencing radical change. In contrast, for acquiring managers, an acquisition was an evolutionary procedure. Table 3 shows quotes on corporate frames related to routinization and incremental change and acquired managers’ radical change frame.

For corporate managers who had experience with a big number of acquisitions, and who had devised procedures to facilitate the process of acquiring firms, there were routine processes that accompanied every acquisition—the change engendered by an acquisition was an incremental change (“It’s almost a cookie cutter approach . . .”). Corporate documents that we reviewed for each of the three acquisitions revealed that very similar procedures and similar communications texts (with adaptations to the local situations) were used for different acquisitions. Extensive standard pre- and postacquisition checklists were used in each of the acquisitions for financial, legal, human resource, IT, and other matters. Failure to properly integrate an acquisition was seen as part of the strategy of engaging in serial acquisitions (“that’s part of our acquisition strategy. Not all of them are going to work . . . And that’s why we do a number of them.”). Acquired managers, on the other hand, applied a different frame. They had built their firms over the years, and in that historical trajectory, the sale constituted a radical move, placing their firms and their careers at major crossroads. The experience was one of discontinuity.

Relationships With Acquiring Firm Managers

For some acquired managers, the challenges were further exacerbated by the relationships they held with acquiring managers to whom they reported. For others, relationships with acquiring managers facilitated sensemaking and adjustment to changes. It was common for acquired managers to refer to specific individuals in the acquiring firm who had leadership positions and who withdrew or offered assistance as hindering or enabling adjustment postacquisition.

Obstructive/constructive relationships

In Firm 2–Division B and Firm 1, relationships with acquiring managers amplified acquired managers’ adjustment challenges.

I expected more assistance post acquisition . . . Somebody who knows the ropes . . . It would have given the employees in my group more comfort to have had more involvement with the corporate organization . . . When we joined En-Corp, I reported to Bob. And it became pretty apparent that we were not on his radar screen. When I first met with him, it was over two months after the acquisition . . . We were getting absolutely nothing out of Bob . . . His departure and his (recent) replacement by my current boss is the most significant, positive development that has occurred post acquisition. (Firm 2–Division B)

In Firm 1, relationships were particularly tense. After a period marked by acrimonious conflict between the most senior acquired manager, Glen, and his supervisor in En-Corp, Brian, the former left the organization. We were not able to interview Glen and others in the acquired firms who had left. However, we learned about their cases in our interviews, which showed agreement regarding the motive for departure. We pursue the case of Glen here.

En-Corp CEO bought Firm 1, and we became a profit center under Brian’s (corporate) leadership . . . But Brian didn’t want anything to do with us because he didn’t see us as profitable. (Our line of business has a lower profit margin than the rest of his division.) . . . We became part of his problem. And (our leader), Glen, didn’t get support from Brian. That was a huge source of frustration for Glen. You’re teamed up with somebody that doesn’t want you on his team. Glen would write a business plan. No, not acceptable. Go change it . . . (Glen had other plans) that were shot down. So that really knocked the wind out of his sails. (Firm 1)

Interviewees in Firm 1 and En-Corp shared the view that while Glen and Brian remained at the helm and had to interact, the unit continued to deteriorate in terms of revenue generation, employee retention, and profit performance. This contrasts strongly with the view of relationships between acquired and acquiring leaders that prevailed in Firm 2-Divison A and Firm 3. In these two units, managerial accounts included themes of acknowledgment from leaders.

What worked for me was the fact that I had my boss’s encouragement . . . Part of it was his commitment to come here, get to know the people . . . There’s some other corporate leaders that have not been as visible . . . It’s really up to the leaders to handle the integration. So it was successful, or unsuccessful based on the qualities, and the time availability of those people. (Firm 2–Division A)

Acquired managers who reported experiencing positive relationships described acquiring managers as sources of information on procedures, facilitators of networking opportunities, and providers of mentoring opportunities and buffers.

Mark, a VP, was charged with being the point person. I would communicate with him almost on a daily basis. Mark, I’ve got this problem. How do I deal with it? That was a huge help. (Firm 3)

In our group, we were proactive, and we had the support of our leader to be enthusiastic about the integration. We dived in and networked with the rest of the organization and have been able to leverage quite a bit of work out of that . . . Our leader organized a regional meeting in (another city) and we conducted a strategy session with those folks. You stay a couple of days and you have a chance to have a beer and get to know people . . . (Firm 2–Divison A)

It was daunting in the first several months. But I was helped by my regional leader. The first day I assumed the position, I got an email from him saying - why don’t you come over and spend a few days with us and we’ll show you what the position is and how we do it . . . He helped me on a monthly basis with financial issues. And go to bat for us where people would be breathing down the back of our necks saying - why is this profit center losing money? I always could rely on him stepping forward and saying - give them some space and they’ll be okay, trust me. They’re doing well and I’ve got my eye on it. So he was extraordinary actually, very supportive. (Firm 3)

Thus, acquired managers viewed negative/obstructive, neutral/apathetic, and positive/constructive relationships with acquiring managers as having a highly significant impact on their adjustment and integration in En-Corp. Managers indicated that several factors influenced the quality of relationships. One of these factors was the preacquisition negotiation between acquired and acquiring managers. Generally, senior managers who engaged in conversations and negotiations with leaders that they had to report to once acquired, seemed to fare relatively well in terms of relationships. They were able to roughly evaluate whether they shared the same values and approach with the acquiring managers prior to the acquisition, and they used this information as one criterion in deciding to sell. The experience of Glen, described before, stands in stark contrast to establishing contacts in the preacquisition stage. Throughout the negotiations phase, Glen’s firm’s representatives negotiated with a group of representatives from En-Corp that did not include Brian, the executive leadership team member that became Glen’s immediate supervisor once Firm 1 was acquired. Participants reported that after the acquisition, Brian and Glen could not agree on values and on the strategic direction that the acquired firm should take. Each of these two individuals was described as highly inflexible. Thus, the personal styles as well had an impact on building relationships. Another factor that influenced relationship building was the level of availability and concern of the acquiring manager. Whereas helpful acquiring managers were described as “proactive” and as “exerting an effort to help (through the) transition,” others were said not to have paid sufficient attention to the acquisition for a variety of reasons that included lack of time or interest (e.g., Bob, a supervisor—referred to in an earlier quotation—who was waiting to complete his contract in order to leave En-Corp).

Relationships and associated construed outcomes

When acquired managers were asked about their evaluations of the outcomes of the acquisition at a personal-career level and a business-unit level, different evaluations emerged that varied according to several factors, including personal goals, career stage, and quality of relationships held with acquiring managers. It is pertinent to note here that generally acquired managers who mentioned having positive relationships with acquiring leaders referred to opportunities for growth and advancement in the corporate hierarchy. Acquired managers who had negative relationships were less optimistic about the future of their units as part of En-Corp and expressed doubts about the availability of opportunities for career development at the acquiring firm. In sum, there were strong contrasts between the experiences of acquired managers who reported establishing positive relationships with supervisors, and those who felt that they were not on supervisors’ radar screen, or had negative relationships with supervisors.

Discussion

Pre- and Postacquisition Role Identity Frames

One’s entry into an organization is associated with contrast, change, and surprise that spurs sensemaking and involves a period of adjustment to the new role that one assumes (Louis, 1980; Reichers, 1987). Role ambiguity is experienced most strongly during the operational combination stage of an acquisition (Seo & Hill, 2005). Our findings showed that the adjustment experience of acquired managers involves specific challenges worth noting. Unlike other transition situations where one joins an organization and assumes a new role, acquired managers join a new organization while maintaining some of the relationships, networks, and responsibilities that they had in the past, and that now have to be managed in a new context. Acquired managers are called on to manage the familiar aspects of their role under a different frame. Bauer et al. (1998) state that “past experience may not always facilitate newcomer adjustment” (p. 171). Beyer and Hannah (2002) indicate that experienced workers exhibit identities in the workplace that “serve as repositories of a range of attributes that have been developed and enacted in past work experiences,” and that these identities “carry forward into individuals’ conceptions of themselves in new work settings” (p. 638). However, in the present case, the role identity carried forward was disconfirmed. As one participant noted, acquired managers had to “abdicate that role” entailing autonomy and control. The new work setting called for divestment of old role frames and acquisition of new frames prescribing restricted authority. Managers were caught between familiar situations—involving past relationships with customers and employees and calling for continuing to manage their unit’s operations and strategies—and new frames requiring change in practices and policies.

Acquired managers experienced a multifaceted loss of power. Their power prior to the acquisition was derived from their ownership of the firm as many held a partnership stake, their position at or near the top of the organization since their firms had relatively flat structures, and their knowledge of their business. Their preacquisition power was rooted in ownership, structural, and expert bases (Finkelstein, 1992). After the acquisition, they lost ownership and structural power, and their expert power was being undermined by the need to seek approval for operational and strategic decisions. Cannella and Hambrick (1993) noted the loss of power by acquired managers who often have to serve under several layers of management after the acquisition. Elsewhere, these authors state that integration implies that many issues have to be negotiated. “Since acquired executives are generally in a subordinate position in these negotiations, the sheer amount of interaction negotiations require will thus increase the mutual perception of dominance and supplication” (Hambrick & Cannella, 1993, p. 742). This is clear in our study in acquired managers’ views of the “great long circle of discussion” and “months of negotiating” required to accomplish operational and strategic (Ranft & Lord, 2002) tasks. Our study further shows that managers’ loss of autonomy also translated into inability to respond to some employee needs and concerns that they could address before the acquisition. Graebner (2004) found that effective acquired managers were engaged in actions aimed at addressing concerns of acquired employees. Overall, lack of authority was associated with a powerlessness theme.

Acquired managers experienced a contraction in their managerial role as some of the discretion they previously enjoyed moved outside the boundaries of the new roles they assumed. The transition represented a loss relative to the previous role they occupied. These changes were challenging as people tend to seek situations that allow them to exhibit a wider range of the characteristics in their self-concept (Dutton, Dukerich, & Harquail, 1994). Roles entailing less status and task complexity tend to be viewed as less desirable (Ashforth, 2001, p. 94). In the context of diminished managerial discretion, some acquired managers relied on relationships with acquiring leaders to overcome the challenges posed by the new role frames and the contradictions they experienced.

Contradictory Frames

Newcomers engage in sensemaking by comparing their present work situation with their past experience (Beyer & Hannah, 2002). Juxtaposition of the frames held by the acquired managers and the frames they faced at the acquirer revealed a number of contradictions. Poole and Van de Ven (1989) state that contradictions may be embedded in different physical or social loci. Acquiring managers, by virtue of their position at the top of the organization, viewed their responsibilities as consisting of unifying and integrating the disparate parts of the firm. Unlike them, acquired managers viewed their role as consisting of managing their local units and argued that they needed more autonomy and control to do so. Acquiring and acquired managers were embedded in different structural loci in the organization that affected their sensemaking. Furthermore, acquiring and acquired managers were embedded in different temporal loci. Acquired managers’ point of reference to make sense of the new situation was their past autonomous experience in entrepreneurial firms. Acquiring managers, on the other hand, were mainly immersed in the present. Although acknowledging the challenges that acquired managers faced, they evoked present-time frames-in-use at the corporation as a basis for integration.

Acquiring managers viewed an acquisition as an incremental change that did not alter significantly the rhythm of organizational life. They relied on scripts for acquisitions. Scripts help routinize activities, rendering them more structured and less ambiguous (Ashforth & Fried, 1988). By using “templates” or “cookie cutter” approaches, acquiring managers had simplified the acquisition process, made it more manageable, and rendered it less ambiguous. It is this corporate simplicity that was a source of ambiguity and tension to the acquired managers. They were looking for customized solutions to their local integration challenges, but were met with standard scripts. Acquiring and acquired managers were operating from two sensemaking domains, anchored in different structural, temporal, and experiential loci. Indeed, other research has shown that different frames tend to pervade organizations based on level in the hierarchy and/or experience with the change (Stensaker, Falkenberg, & Gronhaug, 2008; Tieram, 2010).

Researchers have proposed different avenues for dealing with contradictions in organizations. Some argue for the need to establish a balance between opposing forces (Das & Teng, 2000), and others point to the need to accommodate contradiction and paradox (Gotsi, Andriopoulos, Lewis, & Ingram, 2010). Gray, Bougon, and Donnellon (1985), who view contradictory meanings as arising from differentiated contexts, including stratification with respect to power, state that social interactions are vehicles through which coincident interpretations emerge. Their view is that modeling and socialization into specific meanings in organizations help the emergence of coincident meanings. Chreim (2006) indicates that subtle and overt controls and influence strategies help induce alignment of frames of members in the lower hierarchical levels with those at the upper echelons. Other authors have also outlined how changes in frames and meanings may occur (cf. Bartunek, 1993; Chreim, 2007; Labianca et al., 2000). From Reichers’ (1987) perspective, adjustment can be viewed as accomplished when, “the meanings that newcomers attach to aspects of organizational life are similar to the meanings that insiders express” (p. 286).

Our study focused on acquisitions that had been undertaken within the preceding 3 years. The fact that acquired managers in all three acquisitions held meanings that diverged from those of acquiring managers indicates that coincidence may take time to emerge. It is telling that most of the managers who had acceded to senior positions in En-Corp had come from earlier acquisitions of entrepreneurial firms that were similar to the ones we studied. Acquiring managers indicated understanding acquired managers’ frames and having had similar integration experiences of their own. All acquiring managers we interviewed had tenures exceeding 10 years in En-Corp. We suggest that with time, managers from acquired firms who remain at the acquirer tend to adopt the corporate frames. Notwithstanding, in the earlier years, contradiction and tension constituted part of acquired managers’ experiences. Mitigating and amplifying these tensions were the positive and negative relationships that acquired managers held with acquiring managers.

Relationships as a Factor Mitigating or Amplifying Sensemaking Challenges

In an article where Gersick et al. (2000) address the importance of studying the meanings that individuals associate with relationships at work, the authors state that “. . . our relationships with individuals and groups constitute the environment in which we live our professional lives. Such environments can be nurturant sources of learning, inspiration, and enjoyment, or they can be destructive sources of frustration and injury” (p. 1026). In moving to En-Corp, acquired managers were confronted with the need to adjust to new frames that prescribed a contraction in their work roles. In this context, they found relationships to play a role in either reducing or increasing the integration challenges they experienced. They saw positive/constructive relationships with supervisors as humanizing an otherwise impersonal, standardized, internal environment. In contrast to accounts that addressed removal of authority and submission to corporate standards, references to these supervisors focused on support and acknowledgment. However, some acquired managers pointed to supervisors who exerted a negative influence either by their absence and apathy or by their explicit attempts at depriving acquired managers and units from opportunities and resources. The darker side of relationships (Gersick et al., 2000) and of the adjustment experience has not received much research attention, although there has been recognition that insiders may not be helpful in facilitating adjustment (Bauer et al., 1998). Acquired managers who spoke about negative relationships with their supervisors expressed doubts about their careers at the corporation and generally held a negative view about their ability to improve the profitability of their units.

Acquired managers who had positive relationships with their supervisors talked about accessing a variety of resources that enabled adjustment and helped overcome the challenges associated with managerial role contraction. These managers had also experienced many of the sensemaking challenges associated with joining a new organization. A manager who had positive experiences with his supervisor summarized the sensemaking challenges by indicating that “it was daunting in the first several months.” To this, however, he added a qualifying statement: “But I was helped by my regional leader.” Supervisors were seen as a source of support on several fronts: They provided information on systems, structures, and procedures that reduced uncertainty; they facilitated cross-site strategic sessions and were a conduit for establishing networks with other groups in the organization; they acted as mentors who could model roles, and thus facilitate socialization; they provided needed buffers from corporate demands and interference; they provided resources needed to achieve operational and strategic goals. In brief, acquired managers who had established positive relationships with supervisors had potential access to a stock of informational, social, political, and material resources that they could mobilize. Acquired managers considered positive relationships with acquiring leaders as empowering at different levels.

The findings regarding the advantages of constructive relationships are not surprising given that studies on newcomers and networks (Ashford & Black, 1996; Morrison, 2002) and research on sensegiving (Smith, Plowman, & Duchon 2010) have addressed benefits that accrue from these types of relationships. For example, Ibarra (1993) argued that a strong relationship with a mentor gives an individual access to the mentor’s network, and that a network that includes supervisors among others “provides greater support for implementation of a manager’s agenda and the development of power” (p. 61). What the present study adds to this line of research is a focus on the meanings that acquired managers associate with these relationships. As Gersick et al. (2000) point out, “existing research has tended to focus on the structure of relationships and not on the meaning of the ties that compose networks” (p. 1029). For acquired managers who experience a contraction in their managerial role, positive relationships play a meaningful part in restoring what was lost through the transition. Relationships played a big role in managers’ feelings of empowerment and disempowerment and in their hopes for or doubts about career continuance and progression at the acquired firm. Furthermore, past research has tended “to allude to negative relationships without examining them or their importance directly” (Gersick et al., 2000, p. 1029). As the findings from this study indicate, some relationships are apathetic or outright obstructive, making adjustment to a new organization a very difficult experience. It is important for researchers of adjustment experiences (and of acquisition dynamics) to understand how newcomers (and acquired managers) frame their relationships with insiders and how these frames influence integration in the new organization.

Conclusion

This study focused on the meanings that acquired managers, as newcomers, associate with their integration in a serial, bureaucratic acquirer. It sheds light on dynamics that have not been the focus of attention in earlier studies (e.g., contradictions of serial acquisition integration) and proposes the importance of turning new theoretical lenses toward important subjects (e.g., studying acquired managers using a newcomer framework and studying the topic of loss of status from a role perspective). It makes contributions and points to future research directions in relation to the literatures on newcomer experiences and acquisitions.

Newcomer Experiences

Researchers have been advised to study diverse samples of newcomers and to attend to other groups than recently graduated students (Bauer et al., 1998). The acquisition context is not well-represented in the newcomer adjustment literature. Yet newcomer adjustment associated with joining an organization through an acquisition has a set of particular dynamics that deserve researchers’ attention. Acquired managers join a new organization while continuing to manage employees, customers, markets, and other elements that they oversaw in the past. Yet these past relationships and markets need to be managed according to new frames. The confluence of past and present creates a different set of sensemaking challenges than would be encountered by individuals who make breaks with their past work-sites and responsibilities and join a new organization. As Ashforth (2001) states, when one exits the role completely, “the very magnitude of the transition may make it easier to psychologically distance oneself from the exited role” (p. 91). This poses interesting questions for future research that may attempt to study whether the experience of contrast is stronger for newcomers through acquisitions, and whether the convergence of past work sites and new role frames poses bigger challenges to newcomer adjustment.

Furthermore, the literature on newcomer adjustment has not given sufficient attention to the meanings that newcomers associate with relationships with supervisors. This study indicates that acquired managers see positive/constructive relationships as compensating for the contraction of the managerial role due to the transition. The findings also point to the importance of studying neutral and negative relationships that develop when a supervisor is absent or is antagonistic toward the newcomer. Research has shown an interest in information-seeking behavior on the part of the newcomer (Morrison, 2002). An equally important line of inquiry involves understanding supervisory behavior (Bauer & Green, 1998), including the availability and willingness of insiders to provide information and open up mentoring opportunities. Newcomers may experience difficulties in establishing positive or strong relationships for reasons outside of their control (e.g., uninterested supervisors, ambiguous lines of authority as in matrix organizations). Thus research on information seeking and relationship building would benefit from attention to a variety of factors, individual and situational, which enable or hinder newcomer activity in these regards.

Acquisition Integration

The literature addresses a number of integration dynamics related to managerial influence and the relative size of the firms in the acquisition. Some research has pointed to the possible loss of control and status by acquired managers of smaller firms (Hambrick & Cannella, 1993; Mirvis, 1985; Pablo, 1994). Other research has shown that it is possible for managers of smaller acquired firms to exert influence on the acquired firm when they accede to cross-organizational or managerial positions in the acquirer (Colman & Lunnan, 2010; Graebner, 2004). As we mentioned earlier, none of the acquired managers in the firms we studied obtained a managerial position with En-Corp. Our findings indicate a relative loss of status and power for acquired managers. Indeed, Graebner (2004) states that senior positions in the acquirer become scarcer as more acquisitions are made. Beyond this, however, we contribute a focus on the meanings that acquired managers associate with their transition. We also propose the notion of managerial role as a fruitful and novel approach to study acquired manager standing. Managerial roles may be reconstructed in desirable or undesirable ways following an acquisition. Future research on acquisitions would benefit from greater attention to sensemaking about role reconstructions. Managers’ views of their reconstructed roles may hold clues to motivations to stay or depart. In the case where managers remain with the acquiring firm, attention to the process of reconstruction of managerial roles would provide useful information on the resocialization of acquired managers.

The findings also shed light on the tensions that acquired managers of small firms integrated in large, bureaucratic acquirers need to make sense of. We contribute a view of acquisition integration as a potential situation of contradiction. We indicated that contradictions emanate from the embeddedness of acquired and acquiring managers in different structural, temporal, and experiential loci. Beyond this, our findings suggest that serial acquirers are likely sites of perpetual paradox where contradictory frames prevail as new firms are constantly brought and integrated into the acquirer. Serial acquirers are excellent sites for the study of meaning and meaning change, and the literature would benefit from longitudinal studies that would map how frames of acquired and acquiring managers diverge and/or converge over time.

On a different note, research on acquisitions has showed a major preoccupation with outcomes. Researchers have studied the impact of a variety of variables on acquisition performance (Haleblian, Devers, McNamara, Carpenter, & Davison, 2009). However, in their meta-analytic study of elements commonly hypothesized to have an impact on acquisition performance, King, Dalton, Daily, and Covin (2004) found that no postacquisition effects exist for these variables. This prompted the authors to conclude that “changes to both M&A research methods and theory may be needed” (p. 196). They further stated that “secondary data have been used to construct the vast majority of variables examined in M&A research as possible predictors of post-acquisition performance,” leading “one to wonder whether data relevance has been sacrificed in favor of data availability in the creation of research models” (p. 196). We hasten to say that our study was not designed to measure performance. However, our qualitative approach, which involved probing into managerial frames and experiences, revealed a number of factors that have been overlooked in acquisition research, but that may have an impact on the acquirer’s performance. Our findings are suggestive of two such factors.

First, our focus on acquired managers’ sensemaking provided a unique perspective on integration dynamics that included quality and dimensions of relationships that acquired managers experience with acquiring managers, and that they believe play a role in how well a firm integrates in the acquirer and contributes to acquisition outcome. We suggest that more attention needs to be given to the impact of positive and negative relationships on acquisition performance. Future research may also benefit from measuring the relative importance of the different resources (informational, social, political, material) derived from relationships on acquisition performance.

Second, studies have indicated that acquisition experience helps prevent integration problems (Haspeslagh & Jemison, 1991), and that knowledge codification from past experience influences acquisition performance positively (Zollo & Singh, 2004). However, in their review, King et al. (2004) point out that “consistent findings on the relationship between acquisition experience and post-acquisition performance do not exist” (p. 190). Barkema and Schijven (2008) state that recent research on deliberate learning mechanisms moves away from “the assumption that learning automatically follows from experience accumulation” (pp. 612-613). Indeed, En-Corp had undertaken a large number of acquisitions and had codified much of the due diligence and integration procedures in manuals. These high levels of experience and codification, however, did not translate into unproblematic or even integration across the cases. Whereas corporate staff involved in due diligence and systems integration applied the codified knowledge consistently, senior acquiring managers responsible for integration devoted varying levels of effort to integration activities, such as helping new divisions link with other parts of the organization. This suggests that future research may benefit from a more nuanced view of codification and of application of codified knowledge.

Limitations and Applications

A limitation of the study is absence of longitudinal data that would allow us to map how acquired managers’ views evolve, and whether and how these managers might adopt the acquiring firm’s frames. We view this as a fruitful direction for future research on acquisitions. We also realize that obtaining longitudinal data is a difficult research endeavor. In our case, for example, our request to conduct a second round of data collection at En-Corp was rejected on the grounds that this would entail a substantial time commitment from the firm’s personnel.

Another limitation is that the study was conducted in a single organization. By using a case study method that provides detailed description of managerial sensemaking and the context in which it occurred, we had to forego the use of a larger sample that would have allowed wider generalization. However, the findings of case studies can be transferred to other situations where the context is comparable with that of the case studied (Denzin & Lincoln, 2000). Thus, we believe that positive and negative relationships with supervisors, and the effects of these relationships, may occur in a variety of entry situations (and not only entry through acquisition). Furthermore, the experiences of acquired managers on which we report are likely to occur in other situations where entrepreneurial firms are acquired and absorbed by bureaucratic firms. For example, we speculate that the routine event versus radical change tension occurs in many cases of serial acquisitions by firms that apply codified knowledge in integration. We also believe that some of our findings apply to acquisition situations in general, and are not particular to the context we studied. It is conceivable that regardless of the size and context of the acquisition, passage from preacquisition owner/senior manager to middle-level manager in the postacquisition firm constitutes a major change that engenders a sense of loss emanating from role contraction.

Managerial Implications

Our study also has implications for managers of acquiring and acquired firms. It is important for acquiring managers charged with facilitating the integration to understand that acquired managers are newcomers who may face radical changes and contradictory frames that pose major demands on their sensemaking abilities. It is important to provide those acquired with attention and recognition in the very early stages of the acquisition. Attempts at forging relationships prior to the acquisition allows the managers from the two firms to gauge the level of fit, an important consideration in whether or not to proceed with the acquisition. Acquiring managers also need to spend time and effort on facilitating the integration. In the case of En-Corp, the issue of integration was left to the respective acquiring managers who applied themselves in varying degrees to the task. Acquiring firms may benefit from (a) providing training in integration, and (b) setting specific integration targets that become part of the performance evaluation of integration managers. As importantly, attention should be given to systemic influences that go beyond the acquiring managers’ discretion. By using a “cookie cutter” approach, acquiring firms may be setting up their managers to think of acquisitions as routine transactions that do not require attention to the specific context and needs of each acquired firm.

As to acquired managers, they would benefit from understanding that acquisition of their firms involves a sense of loss (Mirvis, 1985) and creates uncertainty about relationships and routines, which contributes to anxiety (Astrachan, 1995). For acquired managers whose firms are integrated immediately after close, there needs to be recognition that the acquisition involves a major and sudden transition with significant sensemaking demands and implications for work–life dynamics. These managers need to recognize the difficulties involved in the adjustment and to attempt to forge early positive relationships with acquiring leaders who can provide a variety of resources that enable integration in the new firm.

In closing, we believe that by weaving material from the newcomer sensemaking and the acquisition literatures that have generally developed without much cross-fertilization, we open several opportunities for theoretical, empirical, and practical extensions that should prove useful for researchers of and practitioners in organizations.

Footnotes

Acknowledgements

We thank Denny Gioia, Andy Van de Ven, Margaret Dalziel, Sharon L. O’Sullivan, Barbara Orser, and John Usher for comments on earlier versions of this article.

The authors declared no potential conflicts of interests with respect to the authorship and/or publication of this article.

The authors disclosed receipt of the following financial support for the research and/or authorship of this article.

This research was funded by the Social Sciences and Humanities Research Council of Canada.

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