This paper explores the causes of key personnel turnover in acquired firms from an analysis of post-acquisition structural change in the newly combined firms. Strategic and technological capabilities in acquired firms are likely to be embedded in the knowledge of senior managers and key employees. Thus, the retention of human capital has been recognized as an important antecedent of a successful acquisition. Existing research on the influential factors in the turnover mainly focuses on the transaction type and organizational relationship at the time the acquisition completed. However, the effect of dynamic structural change after acquisition has not been fully understood. It is well known that acquirers continuously change the structure of the target firm after acquisition according to their strategies and policies. We can predict that such a post-acquisition change can be an important background for their decision to remain with or leave the organization. In this sense, the mechanism of turnover needs to be understood based on not only the characteristics of the organization and acquisitions, but a lso the integration process.
We conducted a series of interviews with managers in six acquisitions that aimed at obtaining new technology. Our case analysis indicated that a post-acquisition approach of keeping an acquired firm as a subsidiary unit rather than integrating it into the acquirer’s organization is not necessarily effective for retention of key human resources. This study found that if an acquirer implemented synergy realization with target assets and human resource while maintaining it as a subsidiary, the imbalance for key managers occurs between their position and authority in the unit. Finally, the imbalance resulted in their leaving the firm.
