The Effects of M&A on Trust and Organizational Innovation on Micro and Macro level

Abstract: The purpose of this study is to gain a deeper understanding of the effects of mergers and acquisitions (M&As) on trust and organizational innovation on micro and macro levels. Since earlier studies of M&As have focused mostly on financial aspects, this study aims to contribute to the understanding of non-financial and organizational aspects of M&As including trust and organizational innovation, especially through microfoundational explanation. According to this, trust is studied by focusing on two specific aspects: interpersonal trust (on individual level) and institutional trust (on the firm level). The organizational innovation is defined as a single concept but is studied both on individual and firm level. The research is conducted by focusing on eight Northern European companies that have gone through M&As and the related data is collected by using qualitative surveys, which included both free-text fields and the opinion scales. The empirics of this study show that M&As have affected trust and organizational innovation through six main factors (CIRCUS) which include communication, employees’ influence, resources, workplace cohesion, capabilities utilization,and streamlining the working methods. Based on this, the findings of the study indicate thatthere is a clear connection between trust and organizational innovation and that the M&As arehaving negative effects on both.