A corporate's responsibility to employees during a merger: organizational virtue and employee loyalty

Abstract

Purpose A company may ignore its non‐obligatory responsibilities to employees during a major change such as a merger, leading to their disaffection and feeling of insecurity. The purpose of this paper is to explore how employee views of the merged organization differ by their pre‐merger background, and to explain the impact of the poorly perceived organizational virtue on employees' emotional response to the merged organization including satisfaction, emotional attachment, job security and loyalty. Design/methodology/approach The methodology involved a questionnaire survey of employees from an organization in crisis following a merger due to poor employee morale and high labor turnover. Findings The two major findings were: first perceptions of organizational empathy, warmth and conscientiousness were strongly correlated with employee loyalty, perceived job security, satisfaction and emotional attachment. Second, company background prior to the merger had a contrary effect to that expected from existing literature; employees from the acquiring companies had more negative feeling towards the merged organization. Practical implications The research findings highlight the importance of promoting the virtues of empathy and warmth as keys to ensuring the emotional attachment and loyalty of key employees to ensure the long‐term success of the merger. Originality/value Despite growing interest in applying virtue ethics into business, empirical studies assessing organizational level virtue are rare. This empirical study of the organizational virtue advances, complements, and distinguishes itself from existing studies on merger, by demonstrating the importance of non‐obligatory virtues (those beyond legal and economic responsibilities) perceived by employees.

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