Companies Can Benefit from Emotions in Mergers and Acquisitions

​– Corporate acquisitions and mergers often leave too much space for frustration, uncertainty, fear, anger and sorrow, whereas the potential of positive feelings – joy, relief, pride, and contentment – is not utilised in full, says Professor of International Business Niina Nummela from Turku School of Economics.

Professor Nummela and her research group have studied international mergers and acquisitions for over ten years. The research has been conducted in close collaboration with companies.

– When studying integration processes, we have observed that individuals should be taken more often into account in corporate acquisitions. Companies that make a great deal of acquisitions tend to have rather detailed operation manuals for how to carry out the integration process, but soft values related to personnel are not often addressed in them.

Companies Face Similar Challenges

In their EmoMA research project, the group is studying the role of emotions in international mergers and acquisitions. The project is carried out in collaboration with companies that want to develop their practices involving emotions and managing people.

– We analyse the acquisitions and consider what could be learned from the process. Even though the study focuses on the challenges of the companies that are part the research project, other companies face many of the same challenges.
The researchers' premise is that communications and utilising positive feelings are factors that should be invested in considerably more often than what the companies are doing at the moment.

– You cannot overemphasise the importance of communications in a merger. When people do not know what is happening, it stirs uncertainty which can cause many problems. This applies to the companies on both sides of the deal.

Nummela (in the photo) argues that positive emotions are a resource that is not put to use – companies seem to neglect their significance and the discussion revolving around corporate acquisitions is negative.

– If, for example, the personnel were heard when Meyer's acquisition of Turku Shipyard went through, many positive emotions, such as joy, relief and pride, would have emerged in the discussion. If a company has managed to create a positive atmosphere, they should strive to maintain and develop it.

In the EmoMA project, the researchers measure the emotional atmosphere of the company with a simple thermometer metaphor: the temperature rises to plus degrees with positive feelings, whereas negative ones make it drop below zero. By analysing the temperature graph, the researchers can find out what caused the emotions and how the challenges related to them could be solved.

According to Nummela, the collaboration with the companies has been particularly fruitful from the researchers' point of view.

– Mergers and acquisitions are matters that are not usually shared with outsiders. In this project, the companies have been very open-minded and there haven't been any issues we could not ask about.

First Multidisciplinary Research on Mergers and Acquisitions

In addition to International Business, many units of Turku School of Economics, such as Accounting and Business Law, conduct research on corporate mergers and acquisitions. The Faculty has strong expertise in the integration process after the acquisition, but the researchers in the EmoMA project wanted to include emotions research experts  from different disciplines in their study.

In addition to the researchers of international business, four professors who are top, international experts in their own field also participate in the research.

– The project includes approximately ten researchers from Turku School of Economics. As there isn't much earlier research on the topic, it was easy to get international professors to join the project. Professors Michael Boiger, Sir Cary Cooper, Zoltan Kövecses and Asifa Majid provide expertise in organisational psychology, communication and cultural cognition, sociolinguistics, and cultural psychology.

The EmoMA project consists of four studies whose topics range from expressing emotions in different cultures, management in global virtual organisations, and emotional competence of the management in different situations. Questions that interest both the researchers and companies are, for example, the role of the integration manager, dialogue between different parties, and creating trust during the integration process.

Focus on the Individual in Company Management

The research has only just begun, but it is already evident that, in the recession following the financial crisis, Finnish companies strive to rationalise their operations by cutting down expenses and developing their processes. The primary goal has been to improve their competitiveness in the international market.  Managerial approach to solving the problems has proven to be ineffective as well as rather short-sighted in most cases.

– A more permanent, lasting competitive edge can be created only by developing management in concert with efficiency and by ensuring that employees feel like an important part of the organisation. This is a necessary prerequisite so that the personnel will commit themselves to the company and to its strategy and goals. Ignoring the individual perspective leads inevitably to a situation where the personnel's contentment and motivation decrease and the company can even lose valuable staff resources when employees leave the organisation.

According to Nummela, the companies that manage to combine managerial approach and efficiency with management that takes individuals into consideration will be successful in the international market. The committed employees of these companies are more productive than others, and, at the same time, a reputation as a good employer will attract the most talented individuals to seek employment in the company.

– This will be very important in the future when the new candidates in the job market represent the Y and Z generations, to whom the meaningfulness of the employment and the atmosphere at the workplace are more important motivators than economic compensations.

Text: Taru Suhonen
Illustration: Milla Risku
Photo: Hanna Oksanen
Translation: Mari Ratia