One Out of Many? Boundary Negotiation and Identity Formation in Postmerger Integration

Abstract

This research investigates how boundaries are utilized during the postmerger integration process to influence the postmerger identity of the firm. We suggest that the boundaries that define the structures, practices, and values of firms prior to a merger become reinforced, contested, or revised in the integration process, thus shaping the firm identity that emerges. In a field study of a series of four sequential mergers, we find that the boundary negotiation process acts as an engine for identity creation in postmerger integration. Our analysis of the process through which postmerger identity is created reveals two stages of identity creation. In the first stage, boundaries are negotiated to leverage and import certain practices and values of the premerger firms; in the second stage, these boundaries are blurred as managers build on the set of imported practices and values to impose further systems that define the postintegration firm. Our research contributes to the identity literature by drawing attention to the important role of boundaries and practices that define the identities of the merging firms. We show how these boundaries get repurposed to create an organization whose identity ultimately represents a departure from the premerger firms while it preserves the aspects of identity that allow members to uphold key values. We also contribute to the literature on postmerger integration by demonstrating the steps through which identity evolves by the staged demarcation and negotiation of boundaries, thus complementing previous treatments of merging firms as a set of fixed organizational attributes in merger contexts.

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