A NEW WAY TO LOOK AT THE INTEGRATION CHALLENGE: THE RECONCILIATION OF COLLECTIVE REPRESENTATIONS

Abstract

The diversification phase observed in the American economy since 1975 (Leontiades, 1980) has led to significant questioning about the dimensions constituting related diversification. During the 1980s, the disappointing performances of businesses that had implemented related diversifications pushed researchers to take a closer look at the challenges involved in integration to discover commonalities in progressing from potential synergy to synergy achieved. As a result, many recent research endeavors have attempted to describe the management and integration process best suited to the context (Haspelagh & Jemison, 1991; Marks & Mirvis, 1998; Pablo, 1994; Shrivastava, 1986). Obviously, their attention focused primarily on initiatives targeting integration on the functional, structural, and operational levels, without really taking into account the historical, cognitive, and cultural baggage that each business carries around with it.

This research is intended to provide a better understanding of the factors that contribute to creating synergies between companies undertaking an integration process involving related diversification. Based on the cognitive approach, it is premised on the notion that creating synergy primarily depends on reconciling the collective representations of the companies involved rather than on simply implementing measures designed to achieve technical and operational integration.

This study places particular emphasis on the concept of collective representations, which recognizes that organizational players come to adopt a relatively homogeneous view of the world. It proposes an analysis framework and research method enabling it to go beyond the limits of attempts that, up until now, have strived to quantify and substantiate the mental schemata of organizations involved in merger acquisition. Moreover, these attempts have been criticized as being too vague (Côté, Langley & Pasquero, 1999; Grant, 1988; Lampel & Shamsie, 2000).

In order to characterize the content of collective representations specific to each of the organizations undergoing integration, we propose applying a new approach in the sociology of organizations called the theory of conventions (Boltanski & Thévenot, 1991, 1994). The convention theory posits that organizational players share representation systems that help forge interaction rules. Collective, concerted action is made possible by mobilizing common frameworks, that is, conventions. These conventions are characterized by higher principles specific to each city. The outcome can be agreement or conflict, depending on whether player justifications are rooted in the same city or not.

Through the longitudinal analysis of the case of related diversification, specifically a Canadian chartered bank’s acquisition of two brokerage subsidiaries (1987, 1994), this study examines the evolution of the integration initiatives and collective representations of the businesses involved. We made two significant observations in examining the various integration initiatives undertaken by the bank during the period under study. First, the integration initiatives could be described as falling into the technical, structural, and operational categories. Second, their outcomes, both qualitatively and quantitatively, were far from conclusive.

Concurrent analysis of justificatory fragments of the three organizations, during the period under studied, revealed divergence between the justification modes that each of the businesses opted for. This divergence of dominant collective representations enabled us to interpret the issues encountered during these initiatives and posit a new explanation for their qualified success.

Citation

Roch, J.M. (2004), "A NEW WAY TO LOOK AT THE INTEGRATION CHALLENGE: THE RECONCILIATION OF COLLECTIVE REPRESENTATIONS", Advances in Mergers and Acquisitions (Advances in Mergers and Acquisitions, Vol. 4), Emerald Group Publishing Limited, Leeds, pp. 23-50. https://doi.org/10.1016/S1479-361X(04)04002-5