The Leadership Quarterly 20 (2009) 130142

Contents lists available at ScienceDirect

The Leadership Quarterly

j o u r n a l h o m e p a g e : w w w. e l s ev i e r. c o m / l o c a t e / l e a q u a

Alternative forms of charismatic leadership in the integration of mergers and acquisitions

David A. Waldman a,, Mansour Javidan b,1
a b

Department of Management, W. P. Carey School of Business, Arizona State University, P.O. Box 37100, Phoenix, AZ 85069-7100, United States The Garvin Center for Cultures and Languages of International Management Thunderbird, School of Global Management, 15249 N 59th Ave Glendale, AZ 85306-6001, United States

a r t i c l e

i n f o

a b s t r a c t
It is becoming increasingly clear that post-merger and acquisition (M&A) performance, especially in terms of achieving the integration of merging rms, is strongly affected by organizational factors, such as leadership. This paper presents a theoretical model showing how alternative forms of charismatic leadership can be relevant to the implementation of M&As. A unique aspect of our conceptualization is that we recognize the distinction between charismatic leaders with more of a personalized versus socialized power motive, the behaviors emanating from each respective type, and likelihood of resulting effects on the postcombination organization of an M&A. We also propose that personalized charisma will result in an absorption strategy and accompanying stress, resistance to change, and turnover that vary in degree between acquiring and acquired rms. Conversely, socialized charisma will result in collaborative vision-formation and decision-making processes that will ultimately achieve transformation in both of the combining rms. We further argue that absorption strategies can result in effective integration of the target rm into the acquiring rm when the pre-merger condition of the former is unfavorable. 2009 Elsevier Inc. All rights reserved.

Keywords: Charismatic leadership Mergers and acquisitions Strategic management

The centerpiece of Ms. Fiorina's tenure has been her controversial takeover of Compaq, which H-P continues to defend as a smart plan for improving its competitive edge with cost efciencies. That Get-Big strategy to compete with International Business Machines hasn't been a panacea for the complex and myriad problems H-P faced the drubbing its PC unit was taking from Dell, its faltering ability to compete with IBM in servicing big corporate clients, its lack of any big new consumer gadgets. Mr. Hewlett and many others argued at the time that H-P was diluting its printing business to double down on a chancy bet that it could beat Dell and IBM in businesses they dominated. With Ms. Fiorina at the helm of the conglomerate she created, its stock will be lucky to continue stagnating. (Eisenger, 2005, p. C1). DaimlerChrysler AG chief executive Juergen Schrempp, whose 1998 takeover of Chrysler Corp. wiped out half of the company's market value, will step down. Mr. Schrempp is leaving two years earlier than expected and DaimlerChrysler shares rose as much as 12% to their highest in three years on the news (Boston Globe, 2005, p. C2). These are just two examples of CEOs of large corporations that are largely credited with, at best, questionable performance of high-prole mergers. But in general, mergers and acquisitions (M&As) have a less than stellar record, and a high percentage of

Corresponding author. Tel.: +1 602 543 6231; fax: +1 602 543 6221. E-mail addresses: waldman@asu.edu (D.A. Waldman), javidanm@t-bird.edu (M. Javidan). 1 Tel.: +1 602 978 7013. 1048-9843/$ see front matter 2009 Elsevier Inc. All rights reserved. doi:10.1016/j.leaqua.2009.01.008

D.A. Waldman, M. Javidan / The Leadership Quarterly 20 (2009) 130142

131

M&As either fail or do not realize expectations. Indeed, the conventional wisdom is that M&A failure rates run as high as 50% with the success of M&As being assessed as no better than an even bet (Hunt, 1990). Of course, the issues of how to measure M&A success and over what time frame are important considerations and ones that are not without controversy (Stahl & Voigt, 2005). For example, while Fiorina lost her job as CEO of HP due to her failure to turn the merger with Compaq into a success, her successor has been credited with turning the company around and creating synergy out of the merger with Compaq and overtaking DELL as the largest PC supplier in the world (Businessweek.com, 2/27/07). The measurement issues notwithstanding, the track record of M&As is not encouraging, but despite their lackluster performance, M&As are still quite popular. In an attempt to understand this disparity, Morosini (1998) noted that in the area of post-M&A performance, most research has focused on strategic and nancial issues. Yet it is becoming increasingly clear that research models focusing narrowly on such issues cannot adequately address the human elements that can make or break the successful implementation of an M&A (Birkenshaw, Bresman, & Hakanson, 2000; Larsson & Finkelstein, 1999). These elements include such factors as leadership, commitment to change, and organizational and cultural integration (Bastien, 1987; Buono & Bowditch, 1989; Cartwright & Cooper, 1993). The Economist magazine, in a review of the track record of mergers and acquisitions, noted that: Success will depend more than ever on the merged company's ability to create added value. And that will depend on what happens after the deal has been done. Yet many deal makers have neglected this side of the business. (Jan. 9, 1999, reported in Tetenbaum, 1999, p. 23). A 1996 survey by Booz Allen and Hamilton reported that European and Asian managers assessed their American merger partners as effective in deal making skills but ineffective in planning and executing the rms' post-merger integration (Tetenbaum, 1999). Furthermore, a 1998 Conference Board study found that over half of the companies studied did not examine people issues until after the merger became ofcial (Tetenbaum, 1999). As suggested by the above examples, leadership may be a logical driver of the human elements associated with an M&A implementation, and thus, its ultimate success. Unfortunately, leadership issues have taken a back seat in scholarly efforts. The M&A literature tends to either ignore leadership or make cursory reference to it (Morosini, 1998; Sitkin & Pablo, 2005). To be sure, researchers have explored the impact of managerial actions and decisions on the success of M&As, but they have not focused on the role of leadership (Greenwood, Hinings, & Brown, 1994; Haspeslagh & Jemison, 1991; Hunt, 1990; Shrivastava, 1986). Sitkin & Pablo (2005), in their review of the M&A literature, concluded that theory and research have not systematically examined leadership variables in the M&A implementation process despite its potential importance, as illustrated by Clemente (2001, p. 35): Corporate mergers too often continue to disappoint by failing to meet management's strategic and nancial expectations and enhance shareholder value. Scores of problems have been identied, and skilled acquirers have tried to combat them by improving all facets of the M&A process. But a key reason why the casualty list remains high is the persistent failure of CEOs to provide strong leadership while the deal is being done, especially in the critical post-merger integration phase. The overall goal of this paper is to focus on the role of top management leadership in the success of an M&A. While there are many drivers of the success of an M&A, our focus in this paper is on the under-explored role of leadership. Before proceeding, we should note that two boundary conditions are relevant to the theoretical model presented in this paper. First, our focus is on the most common types of M&As which are called strategic M&As (Healy, Palepu, & Ruback, 1997). Such acquisitions take place based on the pre-merger expectation or hope of developing synergies between merging rms through integrating the management teams, organizational structures and cultures, systems, and processes of the two pre-merger organizations. In contrast, the less common nancial M&As are not the focus of this paper. Financial M&As are based on pure transaction or the buying of a stream of revenues for the purpose of better asset management; little if any synergies or integration processes are expected. Second, by focusing generically on leadership at the strategic level, we are not delineating specic managerial levels. Rather, our reference point is the top decision-maker accountable for the successful implementation of an M&A. In the case of the acquisition of a relatively large rm (i.e., relative to the size of the acquiring rm), the CEO will be the accountable strategic leader. In contrast, some acquisitions may be relatively small in relation to the overall size of the acquiring rm, in which case a lower-level business unit manager may be the person accountable. In other cases, the acquiring company might designate an integration manager who is responsible for the success of the post-merger integration of the two companies (Koch, 2002). 1. The importance of organizational and cultural unication in an M&A M&As represent a strategic option for a rm to enhance its competitive position. As a result of an M&A, the rm can enhance its position through learning (Ghoshal, 1987; Haspeslagh & Jemison, 1991; Vera & Crossan, 2004) and access to new or improved resources (Barney, 1991). The learning can be generalized, in the form of cross-pollination resulting in a diverse set of skills, competencies, and resources (Morosini, Shane, & Singh 1998), or it can be specialized, focusing on the new markets that have been accessed through the acquisition. In short, the CEO and other senior executives may pursue strategic synergistic goals through increased efciency (Walter & Barney, 1990), enhanced corporate learning (Ghoshal, 1987), or monopolistic market power (Trautwein, 1990). However, achieving such goals often requires intensive efforts aimed at integrating the two organizations. Increasing evidence points toward organizational integration as being a key ingredient of the effective implementation of an M&A, but nevertheless, it is also a challenging goal (Haspeslagh & Jemison, 1991; Larsson & Finkelstein, 1999; Pablo, 1994). While there are many reasons for failed attempts at post merger integration (e.g., lack of a transition plan), organizational and cultural integration are generally viewed as critical success factors. For example, over time, there is an inverse relationship between cultural

132

D.A. Waldman, M. Javidan / The Leadership Quarterly 20 (2009) 130142

differences (i.e., lack of integration) and shareholder gains (Chatterjee, Lubatkin, Schweiger, & Weber, 1992; Very, Lubatkin, Calori, & Veiga, 1997). However, there is little theory to guide our understanding of the development of organizational and cultural integration when two rms merge in an M&A process. Indeed, knowledge is especially lacking with regard to the relevance of alternative forms of leadership. In subsequent sections, we will consider the precise nature of both organizational and cultural integration, as well as leadership, intervening, and moderator variables. 2. Why charismatic leadership? Leadership styles and qualities have been conceptualized and compared in a number of ways, so a justication of our particular focus on charismatic leadership is in order. For example, Mumford & Van Doorn (2001) contrasted pragmatic and charismatic forms of leadership. The former involves the identication of problematic needs of people and social systems, objective analysis of the situation, and development and implementation of solutions. Some key issues were identied by Mumford and Van Doorn (2001) that would suggest the more limited applicability of pragmatic leadership to an M&A. Specically, such leadership is not especially relevant when goals are unclear and consensus is not evident and straightforward. In the realm of M&As, the implementation direction is oftentimes not clear, and there can be much room for disagreement, debate, and even conict. Moreover, pragmatic leadership may not be effective when there are markedly different vested interests (Mumford & Van Doorn, p. 283), as is often the case with an M&A, especially with regard to acquiring versus acquired rms. In contrast, a common aspect of charismatic leadership is the articulation of vision in an attempt to integrate multiple groups and achieve consensus. Strange and Mumford (2002) compared charismatic and ideological leadership as a basis for the formation of vision. They concluded that there is a high degree of overlap in terms of charismatic behaviors (e.g., vision articulation, identication of change requirements, and so forth), and that ideological leadership might simply be viewed as a subtype of charismatic leadership involving a somewhat greater emphasis on values and standards in vision formation. In sum, it would seem that the work of Mumford and colleagues would point toward charismatic leadership as being highly applicable to the type of change and integration efforts commonly associated with M&A implementation. Other research would also suggest the applicability of charismatic leadership to M&As, and that work along these lines might be especially timely. First, Yukl (1999) criticized recent theorists of organization-based, charismatic leadership for focusing too heavily on dyadic processes, rather than leader inuence over group and organizational processes. He listed examples of the latter as including the extent of coordination of inter-related group activities, mutual trust and cooperation among members across groups, and member agreement regarding objectives and priorities. Each of these examples is likely to be relevant to the effective implementation of an M&A. Along similar lines, Beyer (1999) suggested that more charismatic theory and research should be devoted to achieving organizational-level change and outcomes, an assertion agreed upon by House (1999). There is a dearth of specic theory or empirical evidence, although a range of neo-charismatic conceptualizations have considered organizational change processes as a likely outcome (House & Aditya, 1997). An M&A represents a major attempt at organizational building and transformation (Child, Faulkner, & Pitkethly, 2001; Hitt, Harrison, & Ireland, 2001; Pablo & Javidan, 2004). As such, we contend that a consideration of its implementation context will help to build charismatic leadership theory. Second, charismatic leadership theory will help move the eld of strategic management forward, in general, and work on M&As, more specically. Strategic management as a discipline has become increasingly concerned with top-level management characteristics and their effects on strategy formulation and change. In its earlier development, Hambrick & Mason (1984) focused on background and demographic characteristics of CEOs, although more recent considerations have suggested the importance of charismatic leadership processes (Cannella & Monroe, 1997; Finkelstein & Hambrick, 1996). We agree that a large M&A may act as a revealing litmus test that highlights the quality of leadership (Haspeslagh & Jemison, 1991, as reported in Sitkin & Pablo, 2005, p. 212). In sum, based on the above arguments and literature, we conclude that charismatic leadership is likely to be a form of leadership especially relevant to the implementation of an M&A. Below, we identify a theoretical model of alternative forms of charismatic leadership, and their relationships with post-combination change strategies that accompany an M&A. 3. A model of charismatic leadership in an M&A integration Over the past quarter century, there has been an increasing interest in a school of leadership theory, alternatively referred to as charismatic (Conger & Kanungo, 1998; Waldman & Yammarino, 1999), transformational (Bass, 1985; Pawar & Eastman, 1997; Tichy & Devanna, 1986), visionary (Sashkin, 1988), and inspirational leadership (Nanus, 1992). Despite some differences, the various theories share the view that outstanding leaders go beyond a simple performance vs. reward transaction and have a deep impact on followers and their organizations, including the potential for being a major force in the realization of an M&A integration. Since the core of these theories is the concept of charisma, several authors have used the general rubric of charismatic leadership for all of them (Conger & Kanungo, 1998; House & Howell, 1992; Shamir, House, & Arthur, 1993). Our denition of charismatic leadership is based largely on the work of House and colleagues (e.g., House & Shamir, 1993; Waldman, Ramirez, House, & Puranam, 2001; Conger & Kanungo, 1998). Specically, charisma can be dened as a relationship between an individual (leader) and one or more followers based on leader behaviors that engender intense reactions and attributions on the part of followers. We use the term relationship broadly to include both physically proximal and distant, or even nonexistent, interactions (Waldman & Yammarino, 1999). In other words, an emotional or cognitive connection can be felt

D.A. Waldman, M. Javidan / The Leadership Quarterly 20 (2009) 130142

133

on the part of a follower toward a leader even if no direct contact is ever realized. Further, while reactions and attributions can be highly favorable, as we will describe below, they also have the potential for being highly negative on the part of some followers. Key behaviors commonly associated with the charismatic leader include: (1) providing a sense of mission or purpose based on opportunities and constraints in the larger environment, (2) articulating an inspirational vision that challenges the status quo and is based on powerful imagery and a sense of purpose, (3) showing determination when accomplishing goals or change, including acting decisively, (4) unconventional action or behavior, (5) showing condence, and (6) providing insights (Bass, 1985; Bass & Avolio, 1994; Conger & Kanungo, 1998; House & Shamir, 1993; Locke, 2003; Yukl, 1999). As argued below, all of these behaviors are likely to be relevant to the effective implementation of an M&A, although their actual manifestation can vary in nature, depending on the form that charisma takes (see below delineation). Favorable attributional effects on the part of followers include the generation of condence, making followers feel good in his/her presence, instilling optimism, the alleviation of stress or uncertainty, and strong admiration, respect, or trust (Bass, 1985; House & Aditya, 1997; Shamir, 1991). Theoretical models of the effects of charismatic leadership at strategic levels have begun to emerge in the literature (Pawar & Eastman, 1997; Waldman & Yammarino, 1999). However, our model goes beyond prior work in three key ways. First, we focus specically on M&A implementation variables, and as such, we attempt to bridge the charismatic leadership and M&A literatures. Second, as dened below, we provide a distinction between socialized and personalized charismatic leadership, rather than a carte blanche suggestion of the uniform or positive effects of charisma. Third, our model is representative of cross-level frameworks whereby the behavior of an individual leader can be seen affecting phenomena, both directly and indirectly, at higher levels of analysis (Klein, Dansereau, & Hall, 1994). The model in Fig. 1 focuses attention on the mediating and moderating variables that can help us understand the effects of alternative forms of charismatic leadership on the ultimate transformation of rms involved in an M&A process. The model shows how charismatic leadership will drive vision formation strategies which, in turn, help to determine the nature of organizational alignment processes in an M&A. Those processes will then lead to various types or degrees of transformation, as moderated by the degree of favorability of the pre-merger context of the acquired rm. In the below discussion, we rst dene: (1) alternative forms of alignment as a result of the newly-formed organization resulting from an M&A, and (2) alternative forms of charismatic leadership that may help to drive such change. We then proceed to address the various paths in the model by forming a number of propositions (as shown in Fig. 1), and then nally, we consider additional implications and research issues. 3.1. Organizational alignment processes In an M&A, differences in organizational elements between the joining rms may be evident early on. One of the partnering rms may be highly centralized in its operations; the other, highly decentralized. One rm may be highly bureaucratized, while the other is more organic. Numerous decisions become relevant during the implementation of an M&A, such as those pertaining to the potential unication of organizational systems (e.g., purchasing, information systems, payroll, and so forth). We pose two possible paths toward alignment: (1) integration, and (2) absorption. Pablo (1994) suggested that organizational integration is likely to be an important aspect of an effective M&A process (Pablo, 1994). Organizational integration can be dened as the unication of relevant organizational elements (i.e., assets, structures, employees, operating procedures, reward systems, and so forth) between merging rms through the use of collaborative processes. Collaborative processes are those that are not enigmatic, but instead are transparent and entail criteria for change that are explicit and clear. In addition to organizational differences, cultural differences may also be present in an M&A. Cultural integration can be complex because it may involve not only the cultures of two organizations, but in the case of an international M&A, it also involves

Fig. 1. A model of charismatic leadership and post merger M&A unication.

134

D.A. Waldman, M. Javidan / The Leadership Quarterly 20 (2009) 130142

the blending of national cultures. Merging rms with opposing cultures will differ in terms of values, beliefs, and assumptions all of which help to dene desirable behaviors and decision-making processes. Cultural differences could spawn alternative perspectives and culture clashes, especially on the part of the acquired rm, which may see itself as the loser in the deal. As an example, the Daimler-Chrysler merger was somewhat tortuous from the start. Cultural differences between the Germans and Americans proved difcult to overcome. Little wonder that in September 1999, Schrempp (the CEO) decided it was best to let Chrysler and Mercedes operate as separate business units (Tierney et al., 2000), with little attempt at either organizational or cultural integration. How exactly might cultural differences manifest themselves? Pablo & Javidan (2002) provide the example of differences in partners' risk propensities, which occurs when they have opposing tendencies to take or avoid risks. Less conservative rms in terms of risk propensity tend to have the accompanying values of individual freedom and initiative, while more conservative rms tend to value compliance and stability. Indeed, Pablo and Javidan attribute problems in the Daimler-Chrysler merger largely to risk propensity differences. They further note that underlying societal cultural differences can also come into play in the case of crossnational mergers. For example, rms from societies high on uncertainty avoidance are likely to prefer making choices based on more predictable outcomes, rather than taking risks to maximize gains. Further, they are likely to engage in detailed planning in anticipation of unknown events. In contrast, rms from societies low on uncertainty avoidance will have more of a tendency to accept risk and assume an action-orientation, rather than engaging in such detailed planning. The second path toward alignment is absorption, which occurs when one rm's culture attempts to assimilate the other (Marks & Mirvis, 2001). For example, the acquiring rm may bring in new management or force the target rm to adhere to organizational policies and structures, and even cultural aspects, of the acquiring rm. This strategy may seem desirable to the acquiring rm, but as described below, it could entail negative ramications, such as resistance, when one structure or culture is inappropriately forced onto another. We identify such problems in our below discussion. One other possibility exists with regard to the end state of rms which are joined as a result of an M&A. Specically, preservation may occur, which involves little commitment to change on the part of either preexisting rm (Marks & Mirvis, 2001). As such, the partners coexist, thus maintaining their separate organizational structures and cultures. Preservation may make the most sense when the combining rms display vastly different businesses and cultures, and more modest or gradual integration is desirable or feasible, in what Marks & Mirvis (1998, p. 201) would refer to as one plus one equals two. Such is the case when the pre-merger driver is purely nancial in nature. As noted earlier, our model assumes a pre-merger expectation of the development of synergies between merging rms, which also represents the most common strategy (Healy et al., 1997). In addition, as argued below, charismatic leadership is more likely to be associated with either integration or absorption. Thus, preservation is not considered in our model. 3.2. Charismatic leadership and its relevance to an M&A implementation Recent thinking in the charismatic leadership literature would seem to suggest caution in assuming that charismatic leadership will be necessarily predictive of integration with regard to an M&A, and instead, in certain forms it may be more linked to absorption. To understand the complex nature of charisma and its potential effects on the end state of an M&A, it is necessary to describe two types: (1) personalized charismatic leadership (PCL), and (2) socialized charismatic leadership (SCL). At its core, the distinction deals with the nature of the leader's power motive, or the extent of an individual's desire to have an impact on others or one's environment (House & Howell, 1992; Strange & Mumford, 2002). It also deals with the extent to which an individual has a strong responsibility orientation, or beliefs and values reecting high moral standards, a feeling of obligation to do the right thing, and concern about others (Winter, 1991). To better understand such phenomena, it is necessary to more carefully delineate the behaviors of PCL versus SCL. Table 1 shows how several behaviors or personal qualities of charismatic leaders, as listed above, can manifest themselves in a somewhat different manner. As a caveat, we should note that although Table 1 provides a black-and-white delineation, in reality, there may be more of a continuum with regard to behaviors differentiating PCLs and SCLs. Thus, the PCL/SCL distinction may be one of degree, and actual leaders may show signs of PCL at times, while at other times appearing to be more SCL in their nature. Although both forms of charisma reect a strong power motive, in the case of SCL, it is more self-controlled or restrained and directed toward the achievement of goals and objectives for the betterment of the collective entity, rather than for personal gain (House & Howell, 1992). Similarly, stewardship theory would suggest that steward managers will choose to act in the best interests of the organization instead of behaving opportunistically (Davis, Schoorman, & Donaldson, 1997; Shen, 2003). In contrast, the PCL uses power largely for personal gain, is somewhat exploitative or manipulative of others, and narcissistic (Conger, 1990; Hogan, Curphy, & Hogan, 1994; Kets de Vries, 1993; Maccoby, 2004). Thus, the PCL will act as an agent manager, potentially putting his or her self-interests before that of the organization's (Fama & Jensen, 1983). It is interesting to note that similar to the SCL, Collins (2001) refers to the Level 5 leader as one who channels his/her ego and ambition into building a great organization. S/he is humble at the personal level but extremely ambitious at the organizational level. The good-to-great leaders never wanted to become larger-than-life heroes. They never aspired to be put on a pedestal or become unreachable icons. They were seemingly ordinary people quietly producing extraordinary results. (Collins, 2001, p. 28). As another element of humility, Collins points out that Level 5 leaders are eager to attribute credit for their success to luck and other individuals, while accepting responsibility for failure. In contrast, the PCL is more likely to follow the Genius with a thousand helpers model whereby the leader possesses the grandiose ideas, and others are designated to simply implement them (Collins, 2001, p. 45).

D.A. Waldman, M. Javidan / The Leadership Quarterly 20 (2009) 130142 Table 1 Personalized versus socialized charismatic leadership Behavioral qualities Visionary and inspirational Personalized charismatic leaders Stressing the righteousness of the leader's own vision. Emphasis on, attraction to, and reverence for the leader, more than the vision. Socialized charismatic leaders Involving people in developing shared vision based on socially-responsible values. Emphasis on ideas and attractiveness of the vision, rather than the leader.

135

Characterizes challenges in the environment as Superior assessment of the environment (internal and external) and discontent external threats and rallying points for defending the organization. with the status quo Seeks change for the purpose of furthering a personal agenda. Unconventional action w/ boundaries Generation of condence Unconventional actions become instrumental for the leader's image and personal advantage. Personal projection of the leader's ideas and less concern for diversity of opinions. Condence primarily in the leader's own personal ability to take the organization to a better future. Leader is somewhat narcissistic and oftentimes impetuous. Knowledge and information secrecy for the purpose of building an image of power. Sharing information selectively.

Views challenges in the environment as opportunities to improve or expand the organization. Seeks change for the purpose of moving the organization forward in a mutually benecial manner. Unconventional actions are linked to the enhancement of the broader organization and the vision. Condence to include diverse and different perspectives. Condence in people in the organization for deriving and attaining a shared vision. Displays emotional stability and selessness. Knowledge and information sharing for the purpose of developing individuals and the organization. Open sharing of information.

Dissemination of knowledge and information

3.3. Propositions Fig. 1 depicts the distinction between PCL and SCL in terms of leader motivation and vision formation strategy. Thus, as shown in both Table 1 and Fig.1, vision represents a key aspect of both PCL and SCL. Yet the underlying desires or motivation of these two forms of charisma are likely to differ, resulting in differential vision formation strategies. Marks & Mirvis (1998) discuss the importance of positive vision coupled with an articulation of the principles, values, and priorities behind an M&A. Vision is also prominent in the discussion of M&A leadership recently presented by Gadiesh, Buchanan, Daniell, & Ormiston (2002). In line with the enunciation of a sense of mission or purpose mentioned earlier, we propose that both the PCL and SCL will initially articulate an M&A vision in terms of its purpose, what the M&A plans to achieve, and the timeframe of implementation (Gadiesh et al., 2002). Pablo & Javidan (2002) refer to this as strategic intent, which they dene in terms of how merger partners augment or complement each other's strategy, thereby contributing to the goals of the combined rm. Strategic intent can be characterized according to a variety of themes such as growing economies of scale, building adjacent businesses, broadening the scope of products or technologies, and perhaps even redening a business or industry (Gadiesh et al., 2002). The common denominator of all of these themes is value creation through growth. Without a clear theme or content specifying value creation, an M&A vision is not likely to energize and build condence among followers. However, while the SCL stresses the building of a shared vision based on ideas and such processes as social or collective identity (Shamir et al., 1993; Hogg, 2001) the PCL will stress conformance to the leader's vision, image-building, and personal identity with the leader (Howell & Shamir, 2005). The PCL will emphasize the initial glamour and accomplishment of the M&A deal. In addition, the leader is likely to use the publicity surrounding the M&A deal as a means of managing his or her image and personal accomplishment in the eyes of followers, shareholders, and industry analysts. That is, the leader will orchestrate the event and its aftermath to symbolize his or her own capabilities (Gardner & Avolio, 1998). We further suggest that the PCL's preference for action is anathema to the avoidance of vision formation and decision-making in the post-combination M&A. However, at the same time, we would not expect such a leader to be worried about extensive buy-in from followers. The PCL is likely to view a participative process in vision formation as a possible threat or sign of weakness, thus potentially damaging his/her image. Such a leader represents the classic, heroic leader who projects superiority and condence, and accordingly, would not be so concerned with producing a diversity of opinions regarding the possible directions that an M&A might take (Manz & Sims, 2001). That is, the PCL would have the condence in his or her own personal ability to form the strategic intent and vision of the newly-formed organization resulting from an M&A. Indeed, PCLs are likely to be narcissistic and even thinskinned when faced with criticism or threats to their own self-condence (Kets de Vries, 1993; Maccoby, 2004). The SCL will also recognize the importance of vision formation and decision-making processes in a post-combination M&A. However, in contrast to the PCL, we propose that the SCL will be motivated to take a more collaborative approach by emphasizing three processes. First, even prior to the consummation of the M&A, the SCL may spend time with due diligence attempting to understand compatibility between the joining entities. Indeed, some rms may put together diverse staffs of people to examine compatibilities and potential areas where integration would be challenging. Along these lines, a number of authors have recommended that senior management should respect pre-merger, organizational cultures, including that of the acquiree. As stated by Dr. von Pierer, the CEO of Siemens, it's important that the buying company doesn't try to overrun and completely change the corporate culture in the acquired company (Javidan, 2002, p. 15). Such consideration is likely to generate reciprocal respect for the acquirer's culture, as well as for senior management.

136

D.A. Waldman, M. Javidan / The Leadership Quarterly 20 (2009) 130142

Second, as depicted in Table 1, the desire of the SCL is to create a shared vision based largely in values to which followers can readily connect. A vision becomes shared when it builds upon a desire on the part of followers to pursue a common important undertaking (e.g., the creation of a new organization as a result of an M&A), and when it connects to their own values and visions (Senge, 1990). Shamir et al. (1993) put forth a theory of charismatic leadership that was based on the self-concepts of followers and how such leaders may communicate or symbolize messages that contain many references to values and moral justications. The vision of an SCL will engender collective identity on the part of followers by helping to link their self-concepts to an identity with a larger social collective and purposes. That is, their visions are likely to stress actions on the part of the organization that, at least in part, further a socially-based purpose (Donaldson & Preston, 1995; McWilliams & Siegel, 2001). These actions will imply a moral imperative to unite the organization toward a collective identity to pursue goals that go beyond the immediate, task-specic interests of individuals or small groups. Third, the SCL may increase the likelihood of shared vision by being collaborative with regard to vision formation, perhaps even sharing such leadership functions with followers at different organizational levels, in both of the joining entities (Pearce, 2004). Thus, unlike the PCL, we would expect an emphasis on the part of an SCL to engage in ongoing presentations of fact-based and wellreasoned arguments pertaining to the strategic intent of the M&A to employees at various hierarchical levels (Morosini, 1998). There is evidence to suggest that effective vision formation may actually involve a somewhat participative process whereby, in the case of an M&A, the leader shares the original strategic logic and vision triggering the M&A (Collins, 2001; Sashkin, 1992; Yukl, 2006). Subsequently, the leader would structure a dialogue that involves followers in the shaping or re-shaping of that vision, perhaps through the use of transition teams, as well as a consideration of fears regarding the changes required for vision implementation (Senge, 1990). We should clarify that the SCL is not merely practicing participative leadership, as has been characterized elsewhere (e.g., Yukl, 2006). Specically, the SCL does not enter the process as simply a facilitator with no more inuence over nal vision formation, as compared to any other organizational member. Instead, the SCL proceeds with a strong sense of values and purpose tied largely to a greater social interests (e.g., improving the quality of life for customers), as well as vision for the direction in which the newlycombined entity may proceed. The difference between PCL and SCL is that the latter will allow and even encourage dialogue that could reshape his/her original vision. In this manner, the SCL is likely to practice the principle of advocacy combined with inquiry, as espoused by Senge (1990). That is, Senge suggested that to attain ultimate commitment to a vision, as opposed to mere compliance, a leader should inquire about whether an initial vision put forth by the leader can be modied or expanded based on shared leadership processes. As an example of such behavior, Clemente (2001, p. 35) suggested: CEOs must take frequent road trips to various facilities of the newly combined organization not only to promote the new vision and teamwork but to forge a productive dialogue with all employees. Only then will the acquired workforce feel like a part of the new company. Only then will employees feel that their input and ideas are being heard and acted on. It is possible that through discussion, individuals could take strong advocacy positions, attempting to convince or even beat down the arguments, proposed solutions to problems, or visions of others (Conger & Pearce, 2003). However, the SCL will stress a dialogue whereby convictions are suspended, while individuals attempt to build common ground and shared meaning (Daft, 2005). The end result is likely to be common values and vision guiding decisions for the newly-formed entity. It should be noted that time may be devoted to the communication of vision to various groups by the PCL, but the purpose is primarily for advocacy or persuading others of the righteousness of the leader's own vision. In sum, we propose that: P1. Socialized, rather than personalized, desires and motivation on the part of the key manager responsible for the M&A's success will be associated with collaborative vision-formation and decision-making processes in the post-merger phase of an M&A. Given that the PCL is not so concerned with shared vision, we do not expect attempts at integration efforts, as dened earlier. To the contrary, we would expect absorption as the end state of a post-combination M&A. The PCL will show less concern for building trust across units and individuals, and instead will demonstrate an insistence on organizational and cultural assimilation. That is, the dominant organization of the acquirer (from which the leader is likely to emerge) is forced on the less dominant organization of the acquiree, rather than being integrated in a collaborative manner. While this may work in the short term, it may be unsustainable in the long term because of a high degree of resistance to change, as described below. We again refer to Table 1 and Fig. 1 to understand how PCL behavior can affect an absorption strategy of change. Accompanying his or her lack of emphasis on collaborative decision-making, the PCL is more likely to use selective, rather than open, communication as a way of convincing followers that such decisions make sense, and at the extreme, even instilling fear (Kets de Vries, 1993). Especially with regard to managers and employees of the acquired rm, in an attempt to inuence in a dominating manner (i.e., absorb), the PCL may be prone to using selective or ltered information sharing. For example, the PCL may resort to wooing the other side with pledges of a merger of equals when their true intention is to dominate (Marks & Mirvis, 2001, p. 86). The most accurate and important information will only be shared with a relatively narrow set of entrusted individuals. Morosini (1998) pointed toward the necessity of keeping information secret during the pre-combination phase of an M&A. Morosini argued that any leakage of information could lead to various entities such as the press reporting innuendo and halftruths. The end result is likely to be misunderstandings on the part of such important constituents as shareholders of the merging rms. As well, the share price of the targeted rm is likely to increase. Nevertheless, the need for secrecy is greatly alleviated in the post-merger combination, and its practice is a likely precursor to absorption.

D.A. Waldman, M. Javidan / The Leadership Quarterly 20 (2009) 130142

137

In contrast, collaborative vision-formation and decision-making are likely to give rise to a common commitment to pursue integration for the purpose of organizational alignment. As a result of such processes, individuals' fears and uncertainties are likely to be allayed, and they should feel informed and involved. For example, in the acquired rm, attention of individuals will be diverted from what they are giving up. Instead, they will be provided information to better understand the time horizon of implementation processes, as well as the potential for impact on such human resource issues as job security, benets, and reward systems. In addition, despite the term merger, most M&As involve an acquiring rm and an acquired rm. However, as a result of collaborative processes, the psychological mindset will be more in the direction of a merger of equals, thus fostering a common commitment to pursue integration. It is clear that in a large organization, not all employees may be reached directly by the leader. However, we propose that both the SCL and PCL will have an impact on the evolving culture of the newly formed entity through various possible mechanisms identied by Schein (1992). First, the leader will communicate priorities and values simply on the basis of what s/he pays attention to, asks about, comments upon, and so forth. For example, by repeatedly mentioning the importance of building shared vision that takes into account broad input, the SCL will be sending a signal throughout the culture that integration, rather than absorption, is the desired goal. Second, the leader will role model certain behaviors. As an example, the PCL may make statements regarding the desirability to build shared vision, but if his or her actions only stress the repeating of the leader's own vision in numerous settings, it will seem clear that s/he is not seeking collaboration or inquiry and that the vision has already been established. Furthermore, the lack of collaboration will send a signal throughout the newly-formed entity that an absorptive process will ensue. Third, reward mechanisms represent the means by which certain behaviors or outcomes are valued. The SCL is likely to reward subordinate managers and employees who attempt to achieve integration, while the PCL will be more supportive of those who quickly move toward absorption. Fourth, various authors have stressed symbolic communication effects because of how stories are likely to be passed on regarding leaders and their actions and statements through social contagion processes (Gardner & Avolio, 1998; Schein, 1992; Waldman & Yammarino, 1999). Such stories describe important events during which the beliefs or values of leaders (e.g., the importance of building shared vision, the leader's degree of openness and tendencies toward inquiry, and so forth) may be perceived and interpreted by followers. Those interpretations may, in turn, be spread throughout the organization by, for example, word-of-mouth. In sum, we expect that: P2. Collaborative vision formation/decision-making processes and open sharing of information in the post-merger phase of an M&A will be associated with greater attempts at integration, as compared to absorption or assimilation. Post-merger transformation is portrayed as the dependent construct in Fig. 1. We consider two types of transformation here. First, transformation could be focused primarily on the acquired rm and the extent and timeliness of its adoption of current organizational and cultural facets of the acquiring rm. Second, as described by Marks & Mirvis (2001), transformation can be more far-reaching, involving synergies that come from reinventing both the acquiring and the target rm. In other words, both companies undergo fundamental organizational and cultural change in the pursuit of synergies. Absorption is oriented toward the rst type of transformation. Unfortunately, absorption is likely to yield two important sideeffects: (1) resistance to change, and (2) withdrawal behavior. Absorption, and its accompanying withholding of information, is likely to heighten the uncertainty of individuals, especially in the acquired rm. People may begin to wonder what exactly management is trying to hide, and imaginations are likely to suggest the worst in terms of reorganizations, job loss, and so forth. But why is resistance a likely occurrence? Several authors have focused their attention on the stress accompanying an M&A (Birkenshaw et al., 2000; Cartwright & Cooper, 1993; Schweiger & DeNisi, 1991). They note that stress in an M&A is due to such factors as a highly uncertain future, job insecurity, a loss of personal control or autonomy, and simply the notion that change is stressful, whether or not that change will ultimately evolve into something for the better. The greatest stress and resistance should logically be seen on the part of the acquiree (Larsson & Finkelstein, 1999). Employees may liken it to a rape and [describe] their buyer as an attacker or barbarian (Marks & Mirvis, 2001: 87). Schweiger & DeNisi (1991) showed that in the absence of effective communication, the negative effects of mergers seem to get more serious over time. For those whose condence and trust is low, perceptions of uncertainty and stress will be elevated, which only serves to heighten potential resistance to change (Richardson & Denton, 1996). The upshot could be hostility among survivors (Weber & Schweiger, 1989), or the type of withdrawal or voluntary and involuntary turnover behavior on the part of managers at the acquired rm that is often documented in an M&A (Hambrick & Cannella, 1993; Light, 2001; Lubatkin, Schweiger, & Weber, 1999). The possible exception is the case where the managers and employees of the acquired rm see a clear possibility of new positive outcomes for them as a result of the merger, such as better job opportunities or new market opportunities. In such a case, they are likely to show less resistance. In the acquiring rm, the PCL is likely to create a sense of superiority and winning, thereby enhancing follower self-esteem (Shamir, House, & Arthur, 1993). As such, we would expect little resistance and withdrawal behavior in the acquiring rm. In sum, we propose that: P3. An absorption strategy will lead to levels of resistance to change and withdrawal behavior that will stie the extent and timeliness of the adoption of current organizational and cultural facets of the acquiring rm on the part of the target rm. Resistance and withdrawal are likely to be most prominent in the target rm. As depicted in Fig. 1, the pre-merger performance of the target rm may represent a moderating inuence in the relationship between absorption processes and transformation. Specically, if the target rm enjoys strong nancial, strategic, and organizational conditions, it may be particularly resistant to absorption processes. A rm in such a condition tends to enjoy a high

138

D.A. Waldman, M. Javidan / The Leadership Quarterly 20 (2009) 130142

degree of marketability and would have alternative options. For example, the target rm might have options to either remain a viable, independent entity, or alternatively to be taken over by a rm other than the initial suitor. Under such conditions, we would expect an especially high degree of resistance and withdrawal on the part of the target rm in response to absorption attempts. Conversely, if the target rm is in a less favorable position, individuals at that rm may be more susceptible to the domination attempts and persuasive communications of a PCL. In turn, subsequent absorption processes will be seen as more palatable, since individuals will recognize their lack of options and the fact that performance is more solid at the acquiring rm. This may especially be the case for those with low self-concept clarity (Howell & Shamir, 2005). As suggested by Marks & Mirvis (2001, p. 88), we expect such people to cozy up to new management and pitch their importance and value to the organization. Furthermore, acquired rm members may have their fears allayed by assurances that their positions within the new entity will be secure as long as they remain loyal to the leader and his/her attempt at absorption processes. In total, these arguments suggest that: P4. The pre-merger performance of the target rm will moderate the relationship between the use of absorptive processes and resistance to change and withdrawal behavior on the part of the target rm. Resistance and withdrawal are likely to be more prominent in reaction to absorptive processes when there is a higher degree of pre-merger performance. In turn, integration of the target rm into the acquiring rm will be more time consuming and problematic. We suggest that commitment to pursue collaborative integration processes will coincide with a cohesive top management team aligned toward the desired level of integration (Collins, 2001; Waldman & Yammarino, 1999). Such alignment helps to demonstrate credibility and conciliation, and it shows the remainder of the newly merged entity that the senior management staff is unied in their commitment to integration. Further, we expect a cascading effect of building commitment to organizational integration across organizational levels. Employees in the acquired rm should feel less of a threat as a result of integration, and they are likely to feel empowered to establish and implement organizational changes to ultimately achieve integration. Even when the premerger context is favorable for the target rm, employees will feel motivated to work for synergistic change because such change will not be perceived as forced or one-sided. Specically, transition teams composed of individuals from both the acquiring and target rms may use the establishment of collaborative decision-making processes as a role model to avoid counter-productive disagreements and conict. Thus, individual agendas are less likely to come to the forefront. Because of the uniform commitment to pursue integration, transition teams will work through disagreements and avoid the type of compromises or avoidance behavior commonly associated with a preservation strategy (Marks & Mirvis, 2001). At the same time, we recognize that achieving cultural change and synergies is likely to be more complex. Commonly shared norms, values, beliefs, and assumptions form the basis of culture, and such phenomena may not be readily malleable. That is, individuals are not predisposed to quickly change or adapt such things as their values (Daft, 2005). Thus, as compared to postmerger organizational transformation, we suspect that cultural transformation will be especially challenging and will take longer to achieve. However, as a result of a common commitment to pursue collaborative integration processes, we expect the evolution of a gradual, common belief in the strategic intent of the M&A on the part of both of the merging entities. At the same time there will be respect and sensitivity for the other side (i.e., the other, pre-combination rm), and mutual trust will develop resulting in greater information sharing. Free and unobstructed ow of information and knowledge is crucial in the generation of synergy in a strategic merger (Clemente, 2001) and will result, over time, in a reasonably unied or strong culture in which the norms, values, and beliefs are in line with the strategic intent of the post-merger rm (Kotter & Heskett, 1992). In other words, cultural synergies are realized. In total, these arguments suggest that: P5. Top management commitment to pursue collaborative integration processes will lead to achievement of the expected postmerger synergies as a result of the development of a unied or strong culture in the post merger rm. 4. Additional considerations and implications The conceptual model described above portrays the likely effects of alternative forms of personalized versus socialized charismatic leadership in an M&A implementation process. In so doing, several issues are worthy of additional consideration. First, as mentioned earlier, for the sake of espousing our theory, we have made a sharp delineation between PCL and SCL. Nevertheless, we acknowledge that it is more of a continuum, and that over time, a given leader can show evidence of both forms of charisma. In addition, we acknowledge that for the most part, we have painted a more favorable picture with regard to the effects of socialized, as compared to personalized, charisma in relation to the implementation of an M&A. Our portrayal needs to be tempered. For example, the SCL who attempts to build shared vision could get bogged down in terms of the articulation of conicting visions and values which, in turn, might heighten fears and anxiety, rather than lowering them. On the other hand, a clear and forceful statement of strategic intent/vision on the part of a more personalized charismatic leader might actually be helpful in terms of allying fears due to the uncertainty of the merger. Moreover, we have considered how the pre-merger position of the target rm with regard to performance can come into play, potentially lessening any negative effects of PCL and absorptive alignment strategies.2
2

We wish to thank an anonymous reviewer for pointing out the issues raised in this paragraph.

D.A. Waldman, M. Javidan / The Leadership Quarterly 20 (2009) 130142

139

Second, we suggest the potential relevance of heterogeneous perceptual processes in the implementation of an M&A. The extent of heterogeneity may be driven by: (1) whether employees belong to the acquiring versus targeted company, and (2) the hierarchical level of employees. For example, members of the acquiring rm may show relatively homogeneous and favorable charismatic perceptions of the leader, while those of the acquired rm may not, especially when an absorption strategy is used. In addition, top management team members of the newly formed M&A may be relatively homogeneous in terms of favorable perceptions of the leader, while such sentiments are not widely shared by those at lower managerial levels. In short, research addressing our model may need to address the precise nature of the conguration of charismatic leadership perceptions, as well as how conguration could affect other phenomena such as stress, resistance to change, and the perceived pursuit of integration. Third, the proposed model does not take into account the extent of pre-merger differentiation in terms of organizational or cultural integration. That is, it is possible for pre-merger rms to vary in terms of the extent of their differentiation, and thus vary in their need for socialized charisma to achieve integration. Organizational mechanisms (e.g., autonomous transition teams) or even external entities (e.g., management consultants) may sufce in an effort to achieve organizational integration when pre-merger differentiation is low. Under such circumstances, the merging rms are largely mirror images of each other in terms of structures, procedures, and human resource systems. At most, transactional forms of leadership could be relevant in terms of monitoring and rewarding effective transition behavior and actions (Bass, 1985; Bass & Avolio, 1997). In cases where the pre-merger differentiation between the two rms is very high, top management of the acquiring rm needs to be cautious. To begin with, the merger may not be a good idea because of complications in post merger integration. Or, if the target company is acquired, it may be best left alone with little integration attempted. If despite high levels of differentiation, the decision is to pursue synergy through integration, then SCL may be particularly necessary to establish a clear vision of the new organization and set the tone in terms of strategic intent. SCL is also needed to articulate how structures, procedures, and systems will need to change to be in line with the vision. Moreover, under such conditions, the leader may need to be an enthusiastic champion to make sure that priorities are established, and effective integration comes to fruition in a timely manner through the mobilization of employees (Gadiesh et al., 2002; Morosini, 1998). In short, when pre-merger differentiation is high, without an SCL to establish a clear, shared vision and priorities, trust and condence in the leader may be mixed, resulting in mixed commitment to pursue organizational integration in the merging rms. In a similar manner, achieving effective cultural integration will not be an especially challenging issue when pre-merger differentiation is low since the cultures will be able to meld together without a great deal of initial leadership stimulus. Very et al. (1997) suggested that when the cultures of organizations are similar, performance problems are minimized. Conversely, when premerger differentiation is high, SCL may be essential to set the future tone in terms of values and beliefs, to articulate a vision focused on what the company can be best at, what it is passionate about, and how the culture will drive its nancial success (Collins, 2001). Fourth, there is an assumption in our model that integration will tend to yield the best results in terms of an M&A implementation. However, we should acknowledge that there is a particular type of acquisition where the acquiring company buys an underperforming rm that is believed to be poorly managing its assets. In 2001, close to $100 billion in hostile deals were announced, over twice the amount for the year 2000 (Businesweek.com, Jan. 3, 2002). Indeed, hostile takeovers are now becoming more popular in Europe (Businessweek.com, April 21, 2006). These are offers of acquisition toward which the top management of the target company are opposed. The essence of a hostile bid is that the two management teams do not agree either on the path for the post merger rm, or the price that should be paid to the shareholders of the target rm. One of the major points of divergence is that the management of the acquiring rm has a different view on how to run the target rm. In such cases, if the buying rm's offer is accepted by the shareholders of the target rm, the buying rm may have an up-front intention of releasing many, if not all, of the senior management at the target rm. As such, turnover is viewed positively, and there is no interest in integrating organizations and cultures in such a manner that would necessitate the acquiring rm to change. Rather, using more of an absorptive strategy, the acquiring rm is simply interested in imposing its ways of doing things to maximize asset utilization in the acquired rm. In such circumstances, once again, personalized charismatic leadership and an absorptive strategy may indeed be most benecial in terms of ultimate success. 4.1. Research and measurement issues There are challenging research issues relevant to the assessment of socialized versus personalized charismatic leadership in an M&A process. Researchers have generally attempted to distinguish between PCL from SCL based largely on the nature of their power motives (House & Howell, 1992). However, the scoring requires text-based material illustrating the leader's beliefs, values, plans, and so forth. Such material may not be readily available. As an additional approach, we propose that survey measures of charismatic leadership, such as those used in recent research (e.g., Conger & Kanungo, 1998; Waldman et al., 2001), may have some promise to at least reveal patterns that are consistent with SCL versus PCL. For example, we suggest two possibilities: (1) examine changes in leadership perceptions over time, and (2) examine within-leader variance in leadership perceptions. Regarding the former, the work of Kets de Vries (1993) would suggest that the socialized charismatic is able to maintain consistently favorable attributions over time on the part of followers because of the leader's consistent values and sense of purpose. In contrast, the personalized charismatic may experience some waxing and waning of favorable leadership attributions as initial charm and positive image give way to the apparent narcissism and self-serving motives of the leader. As suggested above, such would likely be the case in an M&A as the initial excitement of the M&A gives way to the realization of absorption, rather than integration, processes.

140

D.A. Waldman, M. Javidan / The Leadership Quarterly 20 (2009) 130142

Furthermore, some followers may be enamored by the leader's accomplishment in securing the M&A deal, and they may trust the leader and feel secure in terms of their own positions as long as they remain loyal. Conversely, other followers may not be so enamored, and they may attribute personalized goals to the leader, especially in the absence of a shared vision or clear, ongoing elaboration of the strategic intent of the M&A. Thus, it may also be benecial to examine within-leader variance in perceptions since the personalized charismatic is more likely to polarize followers, commanding allegiance and reverence among some followers, while generating animosity or resistance among others (Howell, 1988). An M&A is a likely context for the PCL to foster such polarization because of the tension between acquiring and acquired rms. In short, in line with the work of Klein & House (1995) and Kozlowski & Klein (2000), we propose that it may be important to examine variance in leadership perceptions, and that heterogeneity may signal PCL. As a recent example, Bono & Anderson (2005) reported that a high degree of variance in transformational leadership ratings was negatively associated with being sought out for advice, as well as inuence network centrality. Their ndings would suggest that it may indeed be important to examine variance in leadership ratings. As an additional measurement challenge, it might be difcult to assess organizational alignment processes in terms of the degree of organizational or cultural integration versus absorption. A relatively simple approach toward measuring organizational integration would be to identify the specic systems (e.g., planning), structures (e.g., sales forces), and policies (e.g., human resources) that are expected to be integrated in a merger. Using survey methods, one could then ask the various executives in a participating rm to evaluate the nature (e.g., collaborative versus forced or mandated) and outcome (e.g., changes at the target rm versus changes at both rms) of integration in the identied systems, structures, and policies. Measuring cultural integration is a greater challenge because the literature on organizational culture is fragmented and inconclusive. Authors have dened and operationalized a variety of cultural dimensions (Chatterjee et al., 1992; Kotter & Heskett, 1992; Schein, 1992; Weber, Shenkar, & Raveh, 1996). One possible approach is to simply ask the participating executives to report on how divergent the two cultures were prior to merger, and to what extent, and how effectively, they have been integrated. The drawback with this approach is that it does not shed light on the nature of cultural differences and integration, and instead would only provide a broad-brush assessment. Another alternative, and one that is more informative, would be to provide a list of culturally relevant dimensions and ask the respondents (e.g., from both acquiring and targeted rms) to assess the cultures of the pre-merger companies. They could then be asked to report the extent and outcome of cultural integration intended and achieved, as well as how change is achieved (e.g., through collaboration versus forced change). Inter-rater agreement could be assessed using Rwg indices (James, Demaree, & Wolf, 1984), comparing the scores of individuals from the acquiring versus target rms, as well as at sub-unit levels. These comparisons might be highly informant regarding agreement around emerging norms, values, and expectations in the newly-formed entity. 5. Conclusions The fact that so many M&As evolve with less than satisfactory performance suggests that opportunities exist for researchers to form a better understanding of M&A implementation effectiveness. Heretofore, M&As have been studied primarily through economic or nancial lenses. While research of a more organizational nature has been growing (e.g., Birkenshaw et al., 2000), it now appears that some key variables, such as charismatic leadership, may need to be examined in an attempt to more fully develop research models. The current model would suggest the consideration of alterative forms of such leadership in the postcombination organization of an M&A, which may or may not include the organizational and cultural integration of the merging rms. References
Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99120. Bass, B. M. (1985). Leadership and performance beyond expectations. New York: Free Press. Bass, B. M., & Avolio, B. J. (1994). Introduction. In B. M. Bass & B. J. Avolio (Eds.), Improving organizational effectiveness through transformational leadership (pp. 19). Thousand Oaks, CA: Sage. Bass, B. M., & Avolio, B. J. (1997). Transformational leadership development: Manual for the multifactor leadership questionnaire. Palo Alto, CA: Consulting Psychologists Press. Bastien, D. T. (1987). Common patterns of behavior and communication in corporate mergers and acquisitions. Human Resources Management, 26, 1733. Beyer, J. M. (1999). Taming and promoting charisma to change organizations. The Leadership Quarterly, 10, 307330. Birkenshaw, J., Bresman, H., & Hakanson, L. (2000). Managing the post-acquisition integration process: How the human integration and task integration processes interact to foster value creation. Journal of Management Studies, 37, 395425. Bono, J. E., & Anderson, M. H. (2005). The advice and inuence networks of transformational leaders. Journal of Applied Psychology, 90, 13061314. Boston Globe (2005, July 29). Daimler-Chrysler chief to quit: Head of US unit to take the reins (pp. C2). Buono, A. F., & Bowditch, J. L. (1989). The human side of mergers and acquisitions. San Francisco: Jossey-Bass. Cannella, A. A., Jr., & Monroe, M. J. (1997). Contrasting perspectives on strategic leaders: Toward a more realistic view of top managers. Journal of Management, 23, 213237. Cartwright, S., & Cooper, C. L. (1993). The role of culture compatibility in successful organizational marriage. Academy of Management Review, 7, 5770. Chatterjee, S., Lubatkin, M., Schweiger, D., & Weber, Y. (1992). Cultural differences and shareholder value in related mergers: Linking equity and human capital. Strategic Management Journal, 13, 319334. Child, J., Faulkner, D., & Pitkethly (2001). The management of international acquisitions. Oxford: Oxford University Press. Clemente, M. N. (2001, Nov. 1). A take-charge CEO to spearhead the M&A process: Front-line CEO leadership, especially during integration, is critical to setting tone and direction so an acquisition pays off for a newly created organization. Mergers & Acquisitions: The Dealmakers Journal, 35. Collins, J. C. (2001). Good to great. New York: Harper Business. Conger, J. A. (1990). The dark side of leadership. Organizational Dynamics, 19(2), 4455. Conger, J. A., & Kanungo, R. N. (1998). Charismatic leadership in organizations. Thousand Oaks, CA: Sage. Conger, J. A., & Pearce, C. L. (2003). A landscape of opportunities: Future research on shared leadership. In C. L. Pearce & J. A. Conger (Eds.), Shared leadership: Reframing the hows and whys of leadership (pp. 285303). Thousand Oaks, CA: Sage.

D.A. Waldman, M. Javidan / The Leadership Quarterly 20 (2009) 130142

141

Daft, R. L. (2005). The leadership experience (3rd ed.). Mason, OH: South-Western. Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management Review, 22, 2047. Donaldson, T., & Preston, L. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20, 6591. Eisenger, J. (2005, January 26). Long & short: Carly Fiorina fails at Hewlett-Packard after betting badly. The Wall Street Journal, C1. Fama, E., & Jensen, M. (1983). Agency problems and residual claims. Journal of Law and Economics, 26, 301325. Finkelstein, S., & Hambrick, D. C. (1996). Strategic leadership: Top executives and their effects. Minneapolis: West Publishing. Gadiesh, O., Buchanan, R., Daniell, M., & Ormiston, C. (2002). The leadership testing ground. The Journal of Business Strategy, 23(2), 1217. Gardner, W. L., & Avolio, B. J. (1998). The charismatic relationship: A dramaturgical perspective. Academy of Management Review, 23, 3258. Ghoshal, S. (1987). Global strategy: An organizing framework. Strategic Management Journal, 8, 425440. Greenwood, R., Hinings, C. R., & Brown, J. (1994). Merging professional service rms. Organization Science, 5, 239257. Hambrick, D., & Cannella, B. (1993). Relative standing: A framework for understanding departures of acquired executives. Academy of Management Journal, 36, 733762. Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reection of its top managers. Academy of Management Review, 9, 193206. Haspeslagh, P. C., & Jemison, D. B. (1991). Managing acquisitions: Creating value through corporate renewal. New York: Free Press. Healy, P. M., Palepu, K. G., & Ruback, R. S. (1997). Which takeovers are protable? Strategic or nancial. Sloan Management Review, 38(4), 4557. Hitt, M. A., Harrison, J. S., & Ireland, D. R. (2001). Mergers and acquisitions: A guide to creating value for stakeholders. New York: Oxford University Press. Hogan, R., Curphy, G. J., & Hogan, J. (1994). What we know about leadership effectiveness and personality. American Psychologist, 49, 493504. Hogg, M. A. (2001). Social identication, group prototypicality, and emergent leadership. In M. A. Hogg & D. J. Terry (Eds.), Social identity processes in organizational contexts (pp. 197212). Philadelphia: Psychology Press. House, R. J. (1999). Weber and the neo-charismatic leadership paradigm: A response to Beyer. The Leadership Quarterly, 10, 563574. House, R. J., & Aditya, R. (1997). The social scientic study of leadership: Quo vadis? Journal of Management, 23, 409474. House, R. J., & Howell, J. M. (1992). Personality and charismatic leadership. The Leadership Quarterly, 3, 81108. House, R. J., & Shamir, B. (1993). Toward an integration of transformational, charismatic and visionary theories of leadership. In M. Chemmers & R. Ayman (Eds.), Leadership: Perspectives and research directions (pp. 81107). New York: Academic Press. Howell, J. M. (1988). Two faces of charisma: Socialized and personalized leadership in organizations. In J. A. Conger & R. N. Kanungo (Eds.), Charismatic leadership: The elusive factor in organizational effectiveness (pp. 213236). San Francisco: Jossey-Bass. Howell, J. M., & Shamir, B. (2005). The role of followers in the charismatic leadership process: Relationships and their consequences. Academy of Management Review, 30, 96112. Hunt, J. W. (1990). Changing patterns of acquisition behavior in takeovers and the consequences for acquisition processes. Strategic Management Journal, 11, 6977. James, L. R., Demaree, R. G., & Wolf, G. (1984). Estimating within-group interrater reliability with and without response bias. Journal of Applied Psychology, 69, 8598. Javidan, M. (2002). Siemens CEO Heinrichs von Pierer on cross-border acquisitions. Academy of Management Executive, 16(1), 1315. Kets de Vries, M. F. R. (1993). Leaders, fools, and imposters. San Francisco: Jossey-Bass. Klein, K. J., Dansereau, F., & Hall, R. J. (1994). Levels issues in theory development, data collection, and analysis. Academy of Management Review, 19, 195229. Klein, K. J., & House, R. J. (1995). On re: Charismatic leadership and levels of analysis. The Leadership Quarterly, 6, 183198. Koch, T. (2002). Post merger integration. In G. Picot (Ed.), Handbook of international mergers and acquisitions (pp. 271291). London: Palgrave. Kotter, J. P., & Heskett, J. L. (1992). Corporate culture and performance. New York: Free Press. Kozlowski, S. W. J., & Klein, K. J. (2000). A multilevel approach to theory and research in organizations: Contextual, temporal, and emergent processes. In K. J. Klein & S. W. J. Kozlowski (Eds.), Multilevel theory, research, and methods in organizations (pp. 390). San Francisco: Jossey-Bass. Larsson, R., & Finkelstein, S. (1999). Integrating strategic, organizational, and human resource perspectives on mergers and acquisitions: A case survey of synergy realization. Organization Science, 10, 126. Light, D. A. (2001, January). Who goes, who stays? Harvard Business Review, 3544. Locke, E. A. (2003). Foundations for a theory of leadership. In S. E. Murphy & R. E. Riggio (Eds.), The future of leadership development (pp. 2946). Mahwah, NJ: Lawrence Erlbaum Associates. Lubatkin, M., Schweiger, D., & Weber, Y. (1999). Top management turnover in related M&A's: An additional test of the theory of relative standing. Journal of Management, 25, 5573. Maccoby, M. (2004). Narcissistic leaders: The incredible pros, the inevitable cons. Harvard Business Review, 82(January), 92101. Manz, C. C., & Sims, H. P., Jr. (2001). The new SuperLeadership: Leading others to lead themselves. San Francisco: Berrett-Koehler. Marks, M. L., & Mirvis, P. H. (1998). Joining forces: Making one plus one equal three in mergers, acquisitions, and alliances. San Francisco: Jossey-Bass. Marks, M. L., & Mirvis, P. H. (2001). Making mergers and acquisitions work: Strategic and psychological preparation. Academy of Management Executive, 15(2), 8092. McWilliams, A., & Siegel, D. (2001). Corporate social responsibility: A theory of the rm perspective. Academy of Management Review, 26, 117227. Morosini, P. (1998). Managing cultural differences: Effective strategy and execution across cultures in global corporate alliances. New York: Elsevier Science. Morosini, P., Shane, S., & Singh, H. (1998). National cultural distance and cross-border acquisition performance. Journal of International Business Studies, 29, 137158. Mumford, M. D., & Van Doorn, J. R. (2001). The leadership of pragmatism: Reconsidering Franklin in the age of charisma. The Leadership Quarterly, 12, 279309. Nanus, B. (1992). Visionary leadership. San Francisco: Jossey-Bass. Pablo, A. L. (1994). Determinants of acquisition integration level: A decision-making perspective. Academy of Management Journal, 37, 803836. Pablo, A. L., & Javidan, M. (2002). Thinking of a merger Do you know their risk propensity prole? Organizational Dynamics, 30(3), 206222. Pablo, A. L., & Javidan, M. (2004). Mergers and acquisitions: Creating integrative knowledge. Malden, MA: Blackwell Publishing. Pawar, B. S., & Eastman, K. K. (1997). The nature and implications of contextual inuences on transformational leadership: A conceptual examination. Academy of Management Review, 22, 80109. Pearce, C. L. (2004). The future of leadership: Combining vertical and shared leadership to transform knowledge work. Academy of Management Executive, 18, 4757. Richardson, P., & Denton, D. K. (1996). Communicating change. Human Resource Management, 35, 203216. Sashkin, M. (1988). The visionary leader. In J. A. Conger & R. N. Kanungo (Eds.), Charismatic leadership: The elusive factor in organizational effectiveness (pp. 122160). San Francisco: Jossey-Bass. Sashkin, M. (1992). Strategic leadership competencies. In R. L. Phillips & J. G. Hunt (Eds.), Strategic leadership: A multiorganizational-level perspective (pp. 139160). Westport, Connecticut: Quorum Books. Schein, E. H. (1992). Organizational culture and leadership (2nd ed.). San Francisco: Jossey-Bass. Schweiger, D. M., & DeNisi, A. S. (1991). Communication with employees following a merger: A longitudinal eld experiment. Academy of Management Journal, 34, 110135. Senge, P. M. (1990). The fth discipline: The art and practice of the learning organization. New York: Doubleday. Shamir, B. (1991). The charismatic relationship: Alternative explanations and predictions. The Leadership Quarterly, 2, 81104. Shamir, B., House, R. J., & Arthur, M. B. (1993). The motivational effects of charismatic leadership: A self-concept based theory. Organization Science, 4, 577594. Shen, W. (2003). The dynamics of the CEO-board relationship: An evolutionary perspective. Academy of Management Review, 28, 466476. Shrivastava, P. (1986). Postmerger integration. Journal of Business Strategy, 7, 6576. Sitkin, S. B., & Pablo, A. L. (2005). The neglected importance of leadership in mergers and acquisitions. In G. K. Stahl & M. E. Mendenhall (Eds.), Mergers and acquisitions: Managing culture and human resources (pp. 208223). Stanford, CA: Stanford Business Books. Stahl, G. K., & Voigt (2005). Impact of cultural differences on mergers and acquisition performance: A critical research review and an integrative model. Advances in mergers and acquisitions, Vol. 4 (pp. 5183). Strange, J. M., & Mumford, M. D. (2002). The origins of vision: Charismatic versus ideological leadership. The Leadership Quarterly, 13, 343377.

142

D.A. Waldman, M. Javidan / The Leadership Quarterly 20 (2009) 130142

Tetenbaum, T. J. (1999). Beating the odds of merger &acquisition failure: Seven key practices that improve the chance for expected integration and synergies. Organizational Dynamics, 28(2), 2235. Tichy, N. M., & Devanna, M. A. (1986). The transformational leader. New York: Wiley. Tierney, C., et al. (2000, August 7). Business Week, 9094. Trautwein, F. (1990). Merger motives and merger prescriptions. Strategic Management Journal, 11, 283295. Vera, D., & Crossan, M. (2004). Strategic leadership and organizational learning. Academy of Management Review, 29, 222240. Very, P., Lubatkin, M., Calori, R., & Veiga, J. (1997). Relative standing and the performance of recently acquired European rms. Strategic Management Journal, 18, 593614. Waldman, D. A., Ramirez, G. G., House, R. J., & Puranam, P. (2001). Does leadership matter?: CEO leadership attributes under conditions of perceived environmental uncertainty. Academy of Management Journal, 44, 134143. Waldman, D. A., & Yammarino, F. J. (1999). CEO charismatic leadership: Levels-of-management and levels-of-analysis effects. Academy of Management Review, 24, 266285. Walter, G. A., & Barney, J. B. (1990). Research notes and communications management objectives in mergers and acquisitions. Strategic Management Journal, 11, 7986. Weber, Y., & Schweiger, D. (1989). Implementing mergers and acquisitions: The role of cultural differences and the level of integration. University of South Carolina working paper. Weber, Y., Shenkar, O., & Raveh, A. (1996). National and corporate cultural t in mergers and acquisitions: An exploratory study. Management Science, 42, 12151227. Winter, D. G. (1991). A motivational model of leadership: Predicting long-term management success from TAT measures of power motivation and responsibility. The Leadership Quarterly, 2, 6780. Yukl, G. (1999). An evaluation of conceptual weaknesses in transformational and charismatic leadership theories. The Leadership Quarterly, 10, 285305. Yukl, G. (2006). Leadership in organizations (6th ed.). Upper Saddle River, NJ: Prentice-Hall.