M&A Strategies, HRM Practices, and Postmerger Integration: A Study

This report explores the intricate relationship between mergers and acquisitions (M&As), postmerger integration (PMI), and human resource management (HRM) practices. It identifies three generic M&A strategies—annex & assimilate, harvest & protect, and link & promote—and aligns them with corresponding PMI outcomes: absorption, preservation, and symbiosis. Using the ability-motivation-opportunity (AMO) model, the study develops a conceptual framework that elucidates how AMO-enhancing HRM practices can effectively link M&A strategies with PMI outcomes. The report emphasizes the critical role of HRM in executing diverse tasks and strategies, clarifying how firms can configure their M&A-PMI relations for improved success. It highlights that even well-crafted M&A strategies may fall short without suitable AMO-enhancing HRM practices. This analysis offers valuable theoretical and practical contributions, charting a course for future research and application of the M&A-HRM-PMI triad.

Journal of Management
Vol. XX No. X, Month XXXX 1 –26
DOI: 10.1177/0149206315626270
© The Author(s) 2016
Reprints and permissions:
sagepub.com/journalsPermissions.nav
1
Linking Merger and Acquisition Strategies
to Postmerger Integration: A Configurational
Perspective of Human Resource Management
Nir N. Brueller
University of Haifa
Abraham Carmeli
Tel Aviv University
Gideon D. Markman
Colorado State University
The extant literature tends to frame mergers and acquisitions (M&As) and postmerger integra-
tion (PMI) as strategies and outcomes, but this framing often leaves their underlying processes
underexplored. We address this gap by redirecting attention to the view that M&As are largely
embedded in social and human practices. Our conceptual study identifies three generic M&A
strategies—annex & assimilate, harvest & protect, and link & promote—and matches them with
three well-known PMI outcomes (i.e., absorption, preservation, and symbiosis, respectively).
Using a configurational perspective and drawing upon the ability-motivation-opportunity
(AMO) model, we develop a conceptual framework that reveals why and how AMO-enhancing
human resource management (HRM) practices can link M&A strategies and PMI outcomes.
Finally, we elaborate on the theoretical and practical contributions and chart a course for
future inquiry and research applications for the M&A-HRM-PMI triad and its processes.
Keywords: merger and acquisition; postmerger integration; strategic human resource man-
agement; M&A-PMI relations; ability-, motivation-, and opportunity-enhancing
HRM practices
Acknowledgments: We wish to thank the editor and anonymous reviewers for their helpful and constructive feed-
back, as well as Esther Singer for her editorial comments on earlier drafts of this paper. We acknowledge the
financial support of the Eli Hurvitz Institute of Strategic Management at Tel Aviv University. The authors are listed
in alphabetical order.
Corresponding author: Nir N. Brueller, Faculty of Management, University of Haifa, 119 Abba Khoushy Ave.,
Haifa 31805, Israel.
Email: [e-mail]
626270 JOMXXX10.1177/0149206315626270Journal of Management Brueller et al. / Human Resource Management Practices
research-article2015
at Tel Aviv University on February 11, 2016jom.sagepub.comDownloaded from

2 Journal of Management / Month XXXX
Firms use mergers and acquisitions (M&As) to accelerate their growth, seize and expand
on valuable capabilities, access assets (e.g., human capital) that are costly to imitate, and
even reduce competition—yet most M&A strategies fail to meet their objectives (Haleblian,
Devers, McNamara, Carpenter, & Davison, 2009). Acknowledging diverse factors that may
contribute to such failure (e.g., financial miscalculations, capability misalignment, and cross-
cultural mismatches), many studies and meta-analyses attribute the poor performance of
M&As to the intricate postmerger integration (PMI) phase (Datta, Pinches, & Narayanan,
1992; King, Dalton, Daily, & Covin, 2004). Indeed, the difficult-to-realize synergies and
destroyed value are among the reasons why M&A scholars are coupling their macrofocused
studies with microprocesses related to PMI (cf. Galpin & Herndon, 2014; Hitt, Harrison,
Ireland, & Best, 1998; Larsson & Finkelstein, 1999).
Research on PMI aims to explain the nature of acquirer-acquired relations as a means to
develop a normative theory that would guide future M&A scholarship and PMI practices
(Birkinshaw, Bresman, & Håkanson, 2000; Haspeslagh & Jemison, 1991). Acknowledging
that workplace and personnel issues present a core challenge in M&A-PMI contexts (e.g.,
Aguilera & Dencker, 2004; Chang, Gong, & Peng, 2012), we take a human resource manage-
ment (HRM) perspective to further develop this area of research. Synthesizing research in
management, finance, and economics, we offer a normative framework to explain why and
how HRM practices can configure M&A strategies into PMI outcomes (see Fig. 1 for an
overview of our conceptual model). Thus, our research question concerns why and how
HRM practices that focus on personnel can help translate M&A strategies into more effective
PMIs at the firm level.
Using an HRM perspective, our thesis aims to make two main contributions to the M&A
and PMI literatures. First, HRM is a foundational human capital mechanism for executing
Figure 1
A Broad Conceptual Model of Merger and Acquisition–Postmerger
Integration–Human Resource Management Relationships
at Tel Aviv University on February 11, 2016jom.sagepub.comDownloaded from

Brueller et al. / Human Resource Management Practices 3
diverse tasks and strategies. As an organizational infrastructure, HRM harnesses employees’
engagement to perform their jobs, manage resources, and fulfill firm-level objectives. HRM
practices are instrumental in addressing diverse workplace issues (e.g., recruiting, perfor-
mance assessment, job design and rotation, layoffs, and restructuring, to name a few). We
therefore theorize that an organizational infrastructure that aims to compound and extend
human effort is pivotal in M&A-PMI relations. Second, because an HRM perspective pro-
vides a fine-grained context that infuses microlevel processes into macrolevel theoretical
lenses, it should help clarify and explain how firms can match or configure their M&A-PMI
relations.
Building on the ability-motivation-opportunity (AMO) model (Appelbaum, Bailey, Berg,
& Kalleberg, 2000; Blumberg & Pringle, 1982; Chang et al., 2012), we explain how HRM
practices mediate the M&A-PMI relations. We also elaborate on the reasons behind this phe-
nomenon and show how each M&A-HRM-PMI path takes on different functions, follows
distinct logics, and yields specific interdependencies between acquiring and acquired firms.
Interestingly, this configurational approach also clarifies why even well-crafted M&A strate-
gies and well-intended PMIs are unlikely to fully meet their objectives, unless they are
matched—or configured—by suitable AMO-enhancing HRM practices.
To the best of our knowledge, this is a first attempt to clarify why and how HRM practices
mediate the relations between M&A strategies and PMI outcomes. Indeed, past studies
tended to frame acquisitions as events (e.g., the increased use of event-study methodologies),
but the introduction of an HRM lens stresses that M&A-PMI relations are better viewed as
processes through which HRM practices play a critical role—starting with due diligence dur-
ing the predeal stages through the transition phases that bring M&A strategies into PMI
outcomes.
Background Research: M&As, PMI, and HRM
Research on the M&A-PMI interface and HRM studies are rather vast, and despite their
scope and diversity, they have evolved with relatively limited overlap. To establish a base-
line, we start by synthesizing the M&As, PMI, and HRM literatures into a reasonably con-
densed review (for a full overview see some excellent articles, such as Haleblian et al., 2009;
Shi, Sun, & Prescott, 2012; Wright & Boswell, 2002). We then offer a conceptual elaboration
on why and how variations in HRM practices (i.e., those that leverage on AMO-enhancing
processes) mediate the relationship between M&A strategies and PMI outcomes. For clarity
and ease, Table 1 summarizes key constructs and offers examples.
M&A Strategies
Despite numerous studies, it is difficult to classify M&A strategies into distinct types
because M&As are diverse, have different aims, and thus often call for context-specific con-
siderations, processes, and capabilities. Earlier studies classify M&As on the basis of indus-
try designation, appearance, and objectives, and recent work adopts a more dichotomizing
view (e.g., horizontal vs. vertical, friendly vs. hostile, related vs. unrelated, domestic vs.
global, and even structural—e.g., “platform” vs. “bolt-on” acquisitions; Chatterjee &
Brueller, 2015; Haleblian et al., 2009). Such classifications have certainly improved our
understanding of M&As but do not sufficiently clarify the nature of disruption imposed upon
at Tel Aviv University on February 11, 2016jom.sagepub.comDownloaded from

4 Journal of Management / Month XXXX
acquisition parties, nor do they elaborate on the changes M&As impress on processes, opera-
tion, and HRM practices.
Following more nascent work, we deviate from a dichotomous view and group M&A
strategies into three main types—annex & assimilate, harvest & protect, and link & promote
acquisitions—chiefly on the basis of operational complexity, implications for PMI, and
HRM needs (Brueller, Carmeli, & Drori, 2014; Galpin & Herndon, 2014; Haleblian et al.,
2009; Koller, Goedhart, & Wessels, 2010). We describe each of the three M&A strategies in
more detail and offer examples shortly. As a preview, the annex & assimilate acquisitions
focus on absorbing targets’ assets, the harvest & protect acquisitions aim to capture and inte-
grate capabilities, and the link & promote acquisitions seek to cocreate boundary-spanning,
interfirm synergistic ties.
Table 1
Merger and Acquisition–Postmerger Integration–Human Resource Management
Relationships: Construct Labels, Functions, Definitions, and Examples
Merger and
Acquisition Strategies Annex & Assimilate Harvest & Protect Link & Promote
Merger and acquisition
goals
Absorbing assets
(primarily tangible) from
targets
Capturing and preserving
intangible assets
(e.g., capabilities,
partnerships) from
targets
Linking self-interest to shared
interest by cocreating
boundary-spanning
opportunities for both firms
as they operate independently
Strategic and
operational
leadership held by
. . .
Acquirer Target holds some
strategic and
operational power, but
acquirer sets the tone
Both targets and acquirers hold
ample strategic power and
operational leadership
PMI Outcomes Absorption Preservation Symbiosis
Examples The merger of United–
Continental Airlines
Cisco’s acquisition of
IronPort and Linksys
EMC’s acquisition of VMware
Autonomy of acquired
target
None (target is dissolved) Moderate and usually
operational and tactical
High and strategic
Relationship power Asymmetrical: All power
held by acquirer
Moderate: Most power
held by acquirer
Symmetrical and synergistic
Interfirm trust Minimal Moderate High
Human Resource
Management
Practices Ability Ability & Motivation
Ability, Motivation, &
Opportunity
Examples Recruitment, selection,
training
As in left cell, plus: As in left cells, plus:
Performance and
development
programs, competitive
pay systems, upward
career mobility
Flexible job designs, cross-
firm engagement programs,
transparent management
Practices designed
to . . .
Enhance personnel skills
and abilities of personnel
As in left cell, plus: As in left cells, plus:
Enhance motivation of
personnel
Empower employee to engage at
higher levels across both firms
Human capital focus Removal of redundancies
and integration of human
capital
As in left cell, plus: As in left cells, plus:
Personnel retention and
capability alignment
Reciprocal empowerment and
cause-based programs that
transcend firm boundaries
at Tel Aviv University on February 11, 2016jom.sagepub.comDownloaded from

Brueller et al. / Human Resource Management Practices 5
Annex & assimilate M&As. These acquisitions consume a target firm in its entirety or
reap core assets while dissolving redundant units, dated assets, and/or unneeded personnel
(Brueller et al., 2014). Acquirers aim to consolidate market power by annexing and digesting
targets’ core assets, and when merging parties are of equal size, their integration increases
in complexity (Chakravarthy & Lorange, 2007). When acquirers are exceptionally large and
targets are relatively small, both integration and digestion are reasonably simple, swift, and
fairly undisruptive. For instance, the global Danish cleaning company, Integrated Service
Solutions, has grown mostly by acquiring small local cleaning firms and quickly assimilat-
ing them (Horovitz, 2004). Integrated Service Solutions does not change itself substantively
but instead applies and enforces its own strategic planning, financial controls, culture, and
HRM systems throughout its absorbed targets (Chakravarthy & Lorange). When acquirers
and targets are large, even if their business models are quite similar—as is often seen in com-
modity industries, such as steel or oil and gas—the homogenization process is appreciably
more complex (e.g., BP’s merger with Arco and Amoco, Exxon with Mobil, and Chevron
with Texaco).
Under the “mergers of equals” scenario—especially where parties are quite sizable, have
a wide customer interface, and seek to combine most of their assets—complexity can quickly
become even more daunting. Consider, for instance, the 2010 merger of United and
Continental Airlines, which required the integration of two global networks, eight major
hubs, and 5,500 daily flights serving nearly 400 destinations. This complexity explains why
5 years later, United continued to grapple with myriad integration problems, including hob-
bled operations, angry passengers, and soured relations with employees. Another example is
the $30 billion merger between Ciba-Geigy and Sandoz that created pharmaceutical com-
pany Novartis. The combined firm opted to craft new strategies, processes, and capabilities
rather than adhere to those of either of its predecessors. The new strategy focused on life
sciences (i.e., nutrition, pharmaceuticals, and agriproducts), while the $7 billion Ciba
Specialty Chemicals business was spun off in 1997. The new processes included structuring
R&D by therapeutics (rather than geographic area) and shifting the firm’s compensation
policy from a system based on seniority to one based on performance across all departments
and managerial levels. These new capabilities entailed the creation of Novartis’ oncology
franchise (cf. Koller et al., 2010).
Thus annex & assimilate acquisitions—especially the mergers of equals—are monumen-
tal undertakings, with far-reaching and long-lingering operational complexities. The process
of homogenizing two firms (or more) into one often necessitates the development of new
strategies, retooled operations, restructured systems, and reorganized business models
(Brueller et al., 2014; Zott, Amit, & Massa, 2011).
Harvest & protect M&As. Acquirers use such M&As to seize new capabilities, processes,
and key personnel in order to expand their product offerings, enhance asset utilization, lever-
age on talent (e.g., improve R&D performance), and gain access to new markets (Puranam,
Singh, & Chaudhuri, 2009). For example, such acquisitions give firms flexibility to reallo-
cate personnel to more productive tasks across functions to fulfill new strategic direction
(Swaminathan, Groening, Mittal, & Thomaz, 2014). In these cases, preserving acquired
capabilities—which are often embedded in personnel—takes precedence over efforts to gain
scale advantage. Firms seeking these M&As can pursue either small or large targets. Small
targets are often startups with capabilities critical for product or technology extension, but
at Tel Aviv University on February 11, 2016jom.sagepub.comDownloaded from

6 Journal of Management / Month XXXX
their growth is hindered by insufficient capital infrastructure, scale expertise, or managerial
know-how (Brueller, Segev, Ellis, & Carmeli, 2015; King, Slotegraaf, & Kesner, 2008). For
example, small biotech companies typically lack the sales channels, marketing budget, and
ties with physicians, patients, and regulators needed to bring their products to markets (Mark-
man & Waldron, 2014). Larger firms often acquire smaller ventures for their innovation capa-
bilities, which would be more expensive or too slow to develop internally (Puranam et al.).
Because harvest & protect acquisitions focus on seizing, preserving, and realizing capa-
bilities, which are often embedded in personnel, we later explain why these acquisitions
require distinctly more specialized and involved HRM practices (and different human capital
focus) than those needed for the annex & assimilate M&As.
Link & promote M&As. These M&As are particularly unique because rather than focus-
ing on acquiring assets or capabilities, the primary aim is to cocreate boundary-spanning
and interfirm shared value creation that accelerate the growth and strength of both acquiring
and acquired firms (Chakravarthy & Lorange, 2007). Also, instead of grafting capabilities
of a target firm or force-fitting R&D units onto an acquirer’s asset base, the link & promote
acquisitions aim to accelerate interfirm learning and renewal. It is a regenerative, relational
effort where both firms coleverage complementary assets, capabilities, and know-how (Hale-
blian et al., 2009; Kanter, 2009). Thus, these acquisitions require discipline and foresight
to ensure that targets remain operationally and strategically autonomous, independent, and
self-sufficient. Indeed, the alignment of resources between two parties with complementary
competencies is a major operational challenge, but when executed well, it can bring synergis-
tic gains to both parties (Capron, Dussauge, & Mitchell, 1998; King et al., 2008).
When link & promote acquirers protect and promote their targets’ autonomy, both parties
improve knowledge exchange, mutual learning, innovation, and cross-operational agility
(Haleblian et al., 2009; Karim & Mitchell, 2000). For example, EMC’s $635 million acquisi-
tion of VMware, a computer-server software pioneer, allowed EMC to modularize two func-
tions—storage and server virtualization—that were previously incompatible. This loose
postacquisition governance resembles an alliance or a federation and was viewed by
VMware’s CEO as an optimal management structure (Butler, 2015). Naturally, the concepts
of complementarity, boundary spanning, and synergy are not new (Aldrich & Herker, 1977),
but their execution—particularly in M&A-PMI contexts—remains a challenge. As we show
below, however, it can be alleviated by suitable HRM practices.
To recap, annex & assimilate M&As focus on absorbing targets’ assets and dissolving
redundancies, while harvest & protect acquisitions seek to capture and preserve targets’ capa-
bilities—especially unique processes and key personnel. Link & promote M&As are distinct,
as the cogeneration of interfirm ties, regenerative learning, and synergies among business
units means that parties seek shared value creation by maintaining operational autonomy
while working synchronously on boundary-spanning projects and objectives.
PMI
Recognizing that M&As often trigger substantial restructuring, research that traditionally
asked outcome-focused questions, such as “Which acquisition strategy is likely to succeed?”
(Chatterjee, 1986; Chatterjee & Lubatkin, 1990; Lubatkin, 1983, 1987; Porter, 1987; Seth,
1990), began to shift toward process-related questions, such as “What processes and internal
at Tel Aviv University on February 11, 2016jom.sagepub.comDownloaded from

Brueller et al. / Human Resource Management Practices 7
infrastructures might facilitate capability transfer, cross-firm learning, new value creation,
and synergistic gains?” (Haspeslagh & Jemison, 1991; Larsson & Finkelstein, 1999; Pablo,
1994). The conceptualization of PMI as M&A-derived outcomes stimulated diverse studies
(e.g., Cording, Christman, & King, 2008; Haleblian et al., 2009; Zollo & Singh, 2004), many
of which build on Haspeslagh and Jemison’s popular framework.
Extending earlier studies, Haspeslagh and Jemison (1991) argued that PMIs are marked
by two dimensions: acquirer-target interdependence and target’s autonomy. Then, by plot-
ting the two dimensions into a two-by-two matrix, they identified four main PMI outcomes:
absorption, preservation, symbiosis, and holding (Galpin & Herndon, 2014). PMI absorption
is most suitable when interdependence is high and a target’s assets are insensitive to complete
digestion. Acquirers should seek the PMI preservation when interdependence is low but a
target autonomy is critical (e.g., to preserve capabilities) and seek PMI symbiosis when both
interdependence and target’s autonomy are high. The PMI holding entails no integration per
se, and it accounts for less than 10% of all deals. Therefore, following other M&A studies,
we henceforth focus on the first three PMIs: absorption, preservation, and symbiosis (cf.
Brueller et al., 2014; Ellis, 2004; Nahavandi & Malekzadeh, 1988; Schweiger, 2002).
An important takeaway from PMI research is its conceptual evolution. Initially, PMIs
were underdefined, but Haspeslagh and Jemison’s (1991) introduction of the acquirer-target
interdependence and target’s autonomy dimensions allowed scholars to define PMIs with
greater precision. Indeed, the integration processes associated with absorption, preservation,
and symbiosis differ quite profoundly.
HRM and Human Capital
Going beyond administrative tasks, such as labor relations, payroll, and compliance,
HRM focuses on diverse issues pertaining to workforce management (Lepak & Snell, 2002),
and we suggest that discussion of personnel and HRM should coincide with strategic choices.
Indeed, abundant research corroborates that HRM can improve organizational processes and
effectiveness (e.g., B. E. Becker & Gerhart, 1996; Combs, Liu, Hall, & Ketchen, 2006;
Huselid, 1995; Kehoe & Wright, 2013; Wright, Dunford, & Snell, 2001; Wright, Gardner,
Moynihan, & Allen, 2005). Furthermore, years of scholarly effort to unpack various employ-
ment architectures have led to the development of several HRM taxonomies depicting how
organizations convert human capital into organizational outcomes (cf. Delaney & Huselid,
1996; Guest, 1997; Huselid; Ichniowski, Shaw, & Prennushi, 1997; Jackson, Schuler, &
Jiang, 2014; Lepak & Snell).
This rich literature is summarized in numerous review articles (cf. B. E. Becker &
Huselid, 1998; Delery & Shaw, 2001; Jiang, Takeuchi, & Lepak, 2013). To remain within
reasonable bounds, we briefly elaborate on one area of HRM research that is especially
germane to the M&A-PMI interface—namely, the AMO (ability-motivation-opportunity)
model. As recapped by Jiang, Lepak, Hu, and Baer’s (2012) meta-analysis based on 116
articles (featuring 120 samples representing a total of 31,463 organizations), ability- or
skill-enhancing HRM practices include selection and hiring (Ahmad & Schroeder, 2003),
training (Akhtar, Ding, & Ge, 2008; Appleyard & Brown, 2001; Armstrong, Flood, Guthrie,
Liu, Mac-Gurtain, & Mkamwa, 2010), staffing and recruiting (Bartrajn, Stanton, Leggat,
Gasimir, & Fraser, 2007; Batt, Colvin, & Keefe, 2002), and development practices (Collins
& Smith, 2006). Motivation-enhancing HRM practices focus primarily on personnel
at Tel Aviv University on February 11, 2016jom.sagepub.comDownloaded from

8 Journal of Management / Month XXXX
retention and capability alignment through the aid of compensation systems (Bartrajn et al.;
Batt & Colvin, 2011), career-enhancing practices (Beltran-Martin, Roca-Puig, Escrig-Tena,
& Bou-Llusar, 2008), and performance and development programs (Yang & Lin, 2009).
And finally, opportunity-enhancing HRM practices form opportunity-spawning contexts
and infrastructures through commitment, empowerment, and cause-based programs where
personnel can further develop and accelerate organizational learning. Such practices might
entail decentralized structures and information-sharing protocols (Katou & Budhwar, 2006);
empowerment, engagement, and networking programs (Cabello-Medina, Lopez-Cabrales,
& Valle-Cabrera, 2011); grievance and voice mechanisms (Delaney & Huselid, 1996); and
rotational assignments, to name a few.
Evidence shows that AMO-enhancing HRM practices improve diverse firm-level out-
comes, such as processes, operations, and financial performance (cf. Appelbaum et al., 2000;
Bailey, Berg, & Sandy, 2001; Batt & Colvin, 2011; Batt et al., 2002; Boxall & Purcell, 2008;
Delery & Shaw, 2001; Gardner, Wright, & Moynihan, 2011; Gerhart, 2007; Huselid, 1995;
Jiang et al., 2012; Katz, Kochan, & Weber, 1985; Kehoe & Wright, 2013; Lepak, Liao,
Chung, & Harden, 2006; Liao, Toya, Lepak, & Hong, 2009; Subramony, 2009). Our assess-
ment of this scholarship is that AMO-enhancing HRM practices are a strong organizational
modality to address the economic, social, and operational complexities that M&As demand
and PMIs create.
Increasingly, several HRM studies focus on human capital—for example, personnel
knowledge, skills, ability, creativity, intelligence, judgment, and wisdom that produce indi-
vidual and/or organizational value (cf. B. E. Becker & Gerhart, 1996; Carmeli & Schaubroeck,
2005; Nyberg & Wright, 2015; Wright, Coff, & Moliterno, 2014). We view human capital as
a means to convert personnel-level capacity and effort into organizational-level outcomes.
For example, boundary-spanning effort and firm wealth creation are increased when different
human capital types are combined and matched by or configured with cospecialized organi-
zational resources and capabilities (Mahoney & Kor, 2015). Building on such scholarship
and the view that microprocesses and macro-outcomes create opportunities to address meso-
level processes (Cappelli & Scherer, 1991; Nyberg & Wright), we theorize that understand-
ing human capital at the individual level—and matching and configuring those with
organizational capabilities—can shed light on firm-level processes and outcomes.
Specifically, we blend micro- and macroviews and evince that HRM practices that tap into
and leverage on human capital can catapult M&A strategies into PMI outcomes (Nyberg,
Moliterno, Hale, & Lepak, 2014; Ployhart, Nyberg, Reilly, & Maltarich, 2014).
Having introduced (albeit briefly) the main parts of our conceptual model, the next section
elaborates on and integrates these points into a more detailed conceptual framework (see Figure
2). To recall, our thesis is that each distinct M&A-PMI path is mediated by suitable HRM prac-
tices. Figure 2 offers a configuration view that depicts how firms leverage their HRM practices
to align their M&A strategies with suitable PMIs (Fiss, 2007).
Conceptual Development
We should reemphasize that even the best-crafted M&A strategies and well-achieved PMIs
are rather disruptive and tend to produce substantial uncertainty, identity issues, and stress that
affect employees, suppliers, buyers, and even rivals. To clarify, M&A strategies and their
at Tel Aviv University on February 11, 2016jom.sagepub.comDownloaded from

Brueller et al. / Human Resource Management Practices 9
PMIs represent unusual threat-provoking contexts where personnel in both acquiring and
acquired firms experience daunting pressure and concerns about processes, consequences, and
employability. Indeed, before employees become excited about combined market share or
synergistic gains, they worry about personal consequences, such as job security, potential cuts
in pay or benefits, chain of command, or possible relocation, to name a few.
While loss of job and income are a most salient threat, research shows that other risks—
even if they do not materialize—can be highly demoralizing as well. Examples include nega-
tive changes in incentive systems (Citera & Rentsch, 1993); undesirable transfers and
relocations, as well as changes in job responsibilities (Buunk & Janssen, 1992; Hubbard &
Purcell, 2001); and loss of opportunity, such as derailed career path (Larsson & Finkelstein,
1999). As employees consider the threat, disruption, and consequences of such changes, they
compare their situation to that of referent others—a natural reaction that often exacerbates a
sense of dissociation and hopelessness especially when they perceive themselves to be worse
off compared with others who were affected by the same merger. This leads to an even stron-
ger sense of hopelessness, rejection, demoralization, and even betrayal (Tyler, Boeckmann,
Smith, & Huo, 1997).
The complicated nature of M&A-PMI relations is not new. However, raising awareness
about the stress and anxiety they often induce—for instance, by noting how M&As can dis-
rupt labor relations and introduce new attraction-selection-attrition contexts (Chatman, 1991;
Ployhart, Weekley, & Baughman, 2006; Schneider, 1987)—can clarify and justify the
Figure 2
A Conceptual Model of Merger and Acquisition Strategies and
Goals, Human Resource Management Practices, Human
Capital Focus, and Postmerger Integrations
at Tel Aviv University on February 11, 2016jom.sagepub.comDownloaded from

10 Journal of Management / Month XXXX
decision to explore the M&A-PMI relations through the mediating lenses of HRM practices,
which is the next topic.
Annex & Assimilate—Ability-Enhancing HRM—PMI Absorption
As noted, annex & assimilate acquisitions aim to seize mostly tangible assets (e.g., real
estate, production facilities, intellectual property, and technology) while dissolving or selling
unneeded resources, including excess personnel. Under these M&As, acquired firms cease to
exist but acquirers frequently engage some of their personnel in order to better integrate and
utilize their tangible assets. Naturally, the absorption of personnel is a delicate and time-
consuming process requiring HRM managers to determine—often under time pressure and
budgetary constraints—which employees to retain, and how to integrate them, and which
ones to dismiss. Among the factors often considered are surplus or redundant corporate func-
tions involving management, marketing, information technology, legal, and, yes, even human
resource (HR) personnel. Moreover, acquirers rarely engage HRM executives in premerger
planning, which is a serious oversight given that most annex & assimilate M&As and PMI
absorption entail substantial downsizing (Siegel & Simons, 2007).
It is important to recognize, therefore, that ability-focused HRM practices entail a careful
screening of personnel in order to identify and retain those essential to asset integration while
decisively letting go of the rest. As further clarified below, ability-focused HRM practices
play a critical role in mediating the relationships between annex & assimilate acquisitions
and PMI absorption. Understanding that prescreening and early selection of personnel deter-
mine, to a large extent, the outcome of an acquisition sheds doubt on the common (and crude)
view that acquirers are merely applying indiscriminate cost-containment measures (Haleblian
et al., 2009; Schuler & Jackson, 2003). Our thesis, however, proposes that ability-focused
HRM practices are management tools that must be engaged early, during the due diligence
process prior to the merger, in order to carefully identify and select the skill sets needed to
lower the disruption and cost and to maximize the speed and efficacy of integration.
Many M&A studies and firms underestimate the critical role played by ability-focused
HRM in identifying, extracting, and retaining the right skills from acquired firms while
removing redundancies, curbing overcapacities, consolidating incongruent practices, and
eliminating excess assets (Galpin & Herndon, 2014). Returning to an earlier example, the
United–Continental merger eliminated not only redundant routs and hub services but also
600 front-office jobs and many back-office functions. Certainly, workforce morale is impor-
tant, especially during massive layoffs. Yet in the context of annex & assimilate strategies
and PMI absorption, the focus is on removing duplicate functions, addressing operational
integrations, and meeting payroll needs and contractual obligations. And because redundan-
cies increase costs, acquirers depend heavily on applying ability-focused HRM practices,
such as sorting for fit and mining the able from the less essential personnel.
According to the AMO model, ability-enhancing HRM practices allow acquirers to recruit
and select employees (from each firm) who have the right skills and attitude needed to com-
plete a merger (Delaney & Huselid, 1996). Relatedly, HRM practices such as retraining pro-
grams, selective hiring, and skill-enhancing training help to win the hearts and minds of
capable personnel from acquired firms. All of these practices are critical to improving morale
and raising and integrating the collective human capital base of acquirers (e.g., Cabello-
Medina et al., 2011; Takeuchi, Lepak, Wang, & Takeuchi, 2007; Yang & Lin, 2009; Youndt
at Tel Aviv University on February 11, 2016jom.sagepub.comDownloaded from

Brueller et al. / Human Resource Management Practices 11
& Snell, 2004). Teva Pharmaceutical Industries CEO Vigodman (2015) noted that they
refined their capability for screening and retaining only the most suitable employees and
teams from their targets.
Over and above removing redundancies on the basis of skills, ability-enhancing HRM
practices are useful for selecting a transition team; setting up integration timelines; communi-
cating rules, routines, and expectations; enforcing processes and milestones; and balancing
operational trade-offs while managing the integration of absorbed personnel. Similarly instru-
mental in dissolving a target’s autonomy is the role of ability-focused HRM in identifying and
preventing areas of friction and harmonizing cross-cultural issues, often by attracting, retain-
ing, and deploying the right personnel (while pruning others; Dhanaraj, Lyles, Steensma, &
Tihanyi, 2004). On the basis of this logic, we suggest the following proposition:
Proposition 1: Ability-enhancing HRM practices mediate the relationship between annex & assimi-
late strategies and PMI absorption.
Harvest & Protect—Ability- and Motivation-Enhancing HRM—PMI
Preservation
Harvest & protect acquisitions intend to harness and preserve the capabilities, partner-
ships, and other intangible assets of target firms. For instance, to preserve the capabilities and
vital partnerships of IronPort (a maker of products and services that protect enterprises
against Internet threats), Cisco enabled IronPort to operate almost as it did prior to the acqui-
sition. IronPort was grafted into Cisco’s security business unit by using a PMI preservation
(Yirrell, 2007). It comes as no surprise that harvest & protect acquisitions and PMI preserva-
tion are best paired with HRM practices aiming to safeguard and keep targets’ capabilities
intact so they can then be redeployed by acquirers. Considering the critical role played by
ability-enhancing HRM practices in removing redundancies and preserving human capital,
we suggest that when parties complement their ability-enhancing HRM effort with motiva-
tion-enhancing HRM practices, they can greatly strengthen personnel’s buy-in and, thus,
enable the harvest & protect acquisitions and their PMI preservation. There are several rea-
sons for this prediction.
First, while ability-enhancing HRM practices ensure that personnel possess appropriate
human capital skills, motivation-enhancing HRM practices tend to strengthen the associa-
tion between the work, intentions, effort, and even identity of employees with their rewards,
retention, and commitment. Practices such as performance and career development plans,
competitive pay and benefits, flexible work design, and job security tend to motivate
employees to engage at a higher level (Ryan & Deci, 2000). An important nuance to stress
at this point is that even when training improves individual skills and ability, these benefits
are more likely to produce firm-level outcomes when coupled with motivation-enhancing
HRM practices. This blending of practices tends to expand the abilities, skills, and motiva-
tion of employees (Tharenou, Saks, & Moore, 2007). And, of course, as engagement
increases among personnel, so does their resilience against disruptions, including those
stemming from acrimonious M&As. For instance, studies show that ability- and motivation-
enhancing HRM practices are associated with increased engagement levels and reduced
voluntary turnover (Batt et al., 2002; Gardner et al., 2011; Guthrie, 2001; Huselid, 1995;
Sun, Aryee, & Law, 2007).
at Tel Aviv University on February 11, 2016jom.sagepub.comDownloaded from

12 Journal of Management / Month XXXX
Second, extant research shows that the combination of ability- and motivation-enhancing
HRM practices contributes greatly to a firm’s operational and financial performance (cf.
Chuang & Liao, 2010; Collins & Smith, 2006; Gelade & Ivery, 2003; Gong, Law, Ghang, &
Xin, 2009; McClean & Collins, 2011; Sun et al., 2007). As Figure 2 indicates, harvest &
protect acquisitions and PMI preservation aim to capture the capabilities of target firms to
facilitate their appropriation by the acquirer. However, research shows that many capabilities
are not quite amenable to being suddenly uprooted from their original context and simply
implanted in an acquirer’s business (Dhanaraj et al., 2004). Such grafting may exacerbate the
erosion of capabilities that are embedded in personnel, some of whom may passively resent
their acquirers while others simply quit. Following Chadwick, Super, and Kwon (2015), we
suggest that firms are more likely to preserve human capital, causally ambiguous practices,
and poorly codified protocols—thus facilitating the preservation of PMI—when they rely on
HRM practices aimed at enhancing both ability and motivation.
This logic is further supported by studies showing that the combination of ability- and
motivation-enhancing HRM practices allows firms to develop positive attitudes (as mea-
sured by job satisfaction, commitment, and perceived organizational support) and improve
organizational citizenship behavior (Campbell, McCloy, Oppler, & Sager, 1993; Jiang et al.,
2012). Our view is that such combination is critical to the development of a productive work
relationship between acquiring and acquired firms and preserving the know-how, capabili-
ties, and processes of target firms. Because talent often represents the lion’s share of an
acquisition’s value and potential, ability- and motivation-enhancing HRM practices are also
a useful modality to mitigate personnel turnover (Collins & Smith, 2006). HRM practices
that preserve job contexts also alleviate the stress and anxiety often experienced by employ-
ees during M&As in a phenomenon known as “merger syndrome” (Marks, 1997; Marks &
Mirvis, 1998).
Consider the case of Johnson & Johnson. Rather than combine a harvest & protect strategy
with PMI preservation, it annexed and then absorbed Cordis Corporation into its angioplasty
business, thereby squandering valuable capabilities that were costly to replace and losing key
personnel, know-how, and uncodified processes (cf. Finkelstein, 2003). As noted, capabilities
often reside within the social and professional fabric of a target’s personnel. Particularly in
knowledge-intensive acquisitions, the expertise and potential of key personnel are often more
valuable (ex post) than the technology and intellectual property they have developed in the
past (Bower, 2001; Granstrand & Sjölander, 1990; Mayer & Kenney, 2004). Research shows
that knowledge rooted in employees and human capital can allow acquirers to improve upon
diverse time-consuming processes (Dierickx & Cool, 1989; Leonard-Barton, 1995; Puranam
& Srikanth, 2007). Because ability- and motivation-enhancing HRM entice key personnel to
stay on board and engage, such practices are critical for enhancing the association between
harvest & protect acquisitions and PMI preservation (Birdi et al., 2008).
A final point is that, when compared with annex & assimilate and their PMI absorption,
harvest & protect acquisitions and their PMI preservation require appreciably more interper-
sonal dialogue and interfirm coordination, especially about priorities, how and where a tar-
get’s capabilities might complement or conflict with the acquirer’s processes, and how
human capital is captured and when and where it should be redeployed. For example, acquir-
ers might grant a target’s CEO veto power regarding personnel layoffs, a practice that Cisco
formalized with some of its acquisitions (Paulson, 2001). At the interpersonal level, Cisco
at Tel Aviv University on February 11, 2016jom.sagepub.comDownloaded from