Dynamics of Organizational Identification in the Wake of a Foreign Acquisition

Abstract

Foreign acquisitions are perceived as threats to organizational identification. Consequently, they trigger members’ sensemaking on their relationship with the organization. Analyzing these sensemaking processes is fundamental to understanding how members interpret identity-threatening events and which logics and motives underlie their identification. We conducted interviews with 28 members of a German company that had been acquired by a Chinese competitor. The study reveals three phases of sensemaking about identification, namely assessment of uncertainty, evaluation of organizational continuity, and reassessment of the organization’s potential for self-enhancement. Initially, concerns for uncertainty reduction are prevalent. Needs for continuity, distinctiveness, and self-verification dominate continuity evaluation. In the last phase, members seek continuous self-enhancement. They hereby evaluate whether they still share the organization's ideology. Furthermore, they reassess the benefits they receive from the organization. The study constitutes a dynamic extension of identification theory. It uncovers salient identification motives and members’ causal reasoning during different sensemaking phases.