Calm in the Storm: Job Security and Postmerger Performance in Family Versus Non-Family Firms

Academy of Management Journal

76 Pages Posted: 31 Dec 2024 Last revised: 31 Jan 2025

See all articles by Francesco Chirico

Francesco Chirico

Jonkoping University - Jonkoping International Business School (JIBS); Macquarie University, Macquarie Business School

Robert Hoskisson

Rice University

Seemantini Pathak

University of Western Ontario

Massimo Baù

Jonkoping University

Date Written: December 11, 2024

Abstract

Building on social identity theory, we theorize and find that in a merger, paired family firms are better able to retain employees and improve postmerger performance compared to other merger pairs. We contribute to social identity theory by theorizing better postmerger performance as mediated by job security for family firm combinations. We also contribute to the job security and M&A literature by examining how job security and postmerger performance vary based on the paired social identity of owners. In addition to identity similarity, the type of identity also matters in mergers. We argue that family owner social identity similarity fosters greater integration between merging parties while allowing family owner pairs to retain some autonomy through their employees, thereby maximizing postmerger performance. Our data on private Swedish firms, complemented by eleven qualitative interviews across five countries and three continents, confirm that family mergers outperform other merger combinations via job security. In a supplementary critical experiment examining industry dissimilarity, we compare the socioemotional wealth perspective–which emphasizes loss aversion and predicts family firms’ unrelated diversification avoidance–to the social identity theory. Consistent with social identity theory, our results show that both job security and postmerger performance improve with unrelated family firm mergers.

Suggested Citation

Chirico, Francesco and Chirico, Francesco and Hoskisson, Robert and Pathak, Seemantini and Baù, Massimo, Calm in the Storm: Job Security and Postmerger Performance in Family Versus Non-Family Firms (December 11, 2024). Academy of Management Journal, Available at SSRN: https://ssrn.com/abstract=5051656 or http://dx.doi.org/10.2139/ssrn.5051656

Francesco Chirico (Contact Author)

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Jonkoping University - Jonkoping International Business School (JIBS) ( email )

Jönköping, 55111
Sweden

Robert Hoskisson

Rice University ( email )

6100 South Main Street
Houston, TX 77005-1892
United States

Seemantini Pathak

University of Western Ontario ( email )

Massimo Baù

Jonkoping University ( email )

SE-551 11 Jonkoping
Sweden

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