Institute for Software Research
School of Computer Science, Carnegie Mellon University


Behavioral Theory of the Merger
Dynamics of the post-merger integration process

Terrill L. Frantz

May 2014

Ph.D. Thesis (COS)


Keywords: Organization behavior, post merger integration, organization learning, organization performance, organizational culture, computer simulation, computational organization theory

Numerous organizational mergers fail because the post-merger integration process fails: this research responds by investigating the concealed relationship of the known, premerger organizational characteristics, on the unknown, post-merger consequences. Various structural and behavioral characteristics of the merging organizations are studied to measure their association with two decisive outcomes: the integration of the distinctive cultures and the combined organization’s performance. Considered are varied antecedent organizational characteristics, which are believed to have an unknown effect on the organizational communication and learning process, and therefore have impact – also to some unknown degree – on post-merger outcomes. This study employs computational organization theory (COT) techniques, such as agent-based modeling and computer simulation, to experimentally manipulate these organizational characteristics in a series of controlled experiments – all conducted within a virtual laboratory. Precise quantitative linear models, derived from the simulated data, are constructed that involve characteristics, such as: (a) organization- and team-level complexity, (b) individuals' predisposition for seeking and sharing information, (c) individual's task focus, (d) the structure of work teams, (e) task-specialization of the workforce, and (f) the level of infrastructure support provided by the organization. This study is comprised of three distinct sub-studies that each report on separate, though closely related, experiments, which are then combined and integrated into a unifying and comprehensive Behavioral Theory of the Merger. Broadly, the studies find and the theory puts forth that there is a higher consequence arising from pre-existing structural characteristics, over those that are cultural. Results also support the common expectation that organizational complexity is a powerfully influential characteristic on integration and performance; there is clear evidence that of the numerous characteristics studied, complexity is the most predominate pre-existing feature associated with the organization's performance and cultural integration – note that it is correlated negatively. The extent to which the organization provides infrastructure support is also quite pronounced; as expected, it has a positive correlation with both of the post-merger outcomes. Counterintuitively, individuals' willingness to share information has little association with the performance and integration of the organization. Many more meticulous findings of this sort are reported and analyzed, leading to a cohesive "A Behavioral Theory of the Merger", which is thus formally put forth. An adjunct of this study is the development of a comprehensive, computational model of post-merger integration dynamics. This mathematical model, and the contemporary methods utilized in this research, paves a way for scholars to study integration dynamics at granularity impractical using traditional organization-research methods. Furthermore, the findings provide qualitative guidance to support managers engaged in the practice of post-merger integration. By considering the theory and using these mathematical models, such managers can ground and inform their actual post-merger integration strategies according to these tools, which are uniquely informed by scientific study and can be tailored to specific real-world circumstances

270 pages

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