Peer interaction in mergers : Evidence of collective rumination

Following abundant anecdotal evidence of low morale in mergers and its important detrimental effect on postmerger performance, the purpose of this multimethod experimental study was to find out how employee reactions to a merger evolve over time following peer interaction (i.e., discussion with colleagues). Using a scenario study, initial reactions to a merger announcement were compared with socially influenced reactions. As anticipated, an overall strong detrimental effect of peer interaction on employee reactions was observed. Next, findings indicate that deal characteristics (culture clash potential, announced degree of integration, and position in deal structure) play a moderating role. Indeed, how peer interaction affects outcomes depends on the position in the deal structure. Qualitative data analysis of the group discussions sheds light on how employee reactions become more detrimental. This process is conceptualized as 'collective rumination,' defined as repetitively and passively discussing organizational problems and their negative consequences with a group of peers. The study concludes with implications for practice and identifies three powerful levers (active involvement, distraction, and positive leadership) to influence the way in which employees react to the event.