Perceptions of justice and organizational commitment in international mergers and acquisitions

Purpose: Although there is substantial and accumulating evidence on the link between market entry modes and performance, evidence regarding their impact on employee perceptions and thereby their commitment is scarce. This is more so in mergers and acquisitions (M&As) where employee commitment has a significant impact on post entry performance. This study examines the association between perceptions of justice and organizational commitment in cross-border M&As. Design/methodology/approach: We draw on market entry and M&As literatures and studies on the link between perception of justices and commitment to develop our hypotheses. We test the hypotheses with survey data from a merger of two culturally different partners – British and Japanese. A total of 128 responses were received, out of a sample of 151 non-managerial employees within the firm.Findings: Our results show that a strong association between employees perceptions of justice during the merger and commitment to the new organisation. Surprisingly, the results do not support the widely reported interaction effects between different organizational justices and employees’ commitment. Research limitations/implications: Obtaining data from a single M&A is a potential limitation of this study.Practical implications: The study underscores the importance of post market entry. Our results suggest that particular attention needs to be paid to the way employees of the acquired firm are treated during their interactions with their counterparts. Originality/value: The link between market entry and performance is well documented. However, little progress has been made in understanding the antecedents/factors that influence commitment in foreign market entry and in particular cross-border M&As. This study helps close this gap.