**1. Introduction**

Although 80% of mergers and acquisitions (M&As) results are reported as failures based on the desired profitability [1, 2], M&A is still one of the most essential methods for an organisation to quickly attain corporate growth in order to gain market share or achieve synergies and innovation [3]. As M&A activities continue to rise, 'human factors' are often blamed for disappointing M&A outcomes. A substantial body of literature has examined various facts of the integration models and HR issues [4, 5]. In particular, HR is recognised as one of the critical factors after the M&A period (post-M&As) for success or failure outcomes [6–9]. However, research in this area is more focused on emotive moments in the initiation of M&As [10], little research literature has looked at post-integration from a human resource (HR) process perspective [11].

Chinese overseas mergers and acquisitions (M&As) have a relatively short history [12], beginning with the Go Global policy in 1999 [13]. The golden age for Chinese-Western M&A deals was made between 2005 and 2017 [14], after which the Chinese government changed its policies on overseas investments, and M&A activity dropped dramatically. There was significant interest among Chinese companies to acquire the advanced technology used by Western companies [15], along with their more modern management systems [16, 17], market resources, and innovation capacity [13]. High-income countries, particularly those of North America and Europe, attracted 65.6% of Chinese foreign direct investment outflows during this period [18]. However, only a small amount of these outward-bound investments by Chinese firms has shown successful performance after the M&As. [19–22].

Very few studies have examined integration during and following Chinese overseas M&As [23], and they lack a clearly defined process or an overview of content involved in this important phenomenon [24]. Further, a consistent perspective regarding the human resource integration process (HRIP) is absent as are the interaction steps. While most studies on M&As consider the human factor critical for integration [24], few scholars have considered HRIP as a dual process that is undertaken simultaneously with integration as a whole. This study focused on the Chinese -Western overseas M&As, posits that complete integration is necessary for practitioners to realise more successful merger outcomes [25]. It propose to answer the critical question: What is the HRIP and what factors should be incorporated into the HRIP after cross-border M&As?

In order to perform the investigation over post-M&A integrations, where one firm has a dominant position over the other, and simplify the interactions and process [26]. Thirty interviews were conducted using the critical incident (CI) approach [27], with representatives of 13 Western firms acquired by Chinese companies during the period from 2010 to 2016 (including the Netherlands, Germany, United Kingdom, Canada, and Australia), to understand the process. Secondary data from newspaper articles, internal HR policies, and managerial documentation were also reviewed.

This study makes two main contributions to the field of interests. The first is to analyse with preliminary information from selected companies the HR integration process through integration leadership, change and restructuring, personnel resistance, and valuable personnel retention factors. This process influences the success or failure of the M&A integration stage. The second contribution is to present a framework that can determine the success or failure factors, the actions, and some examples of HR management and behaviour during the M&A process. This study focuses entirely on Chinese overseas M&As, where a business from an Eastern culture enters a Western culture environment. Therefore, the scope is limited to predefined national characters, and does not exhaust all possible types. A discussion of the validity of the proposed framework in other contexts is also presented in this paper.

#### **2. Literature review and selection**

Following Pablo's [28] definition of integration, HR integration can be defined as the post-M&A change in an organisation's technical, administrative, and cultural configuration [11]. Many studies have addressed the causes and outcomes of HRIP, and some studies have also focussed on the integration of HR management practices [11, 25]. For instance, the failure to find consistent relationships may stem from an over-emphasis on either the pre-M&A stage (characteristic of early research in strategic management) [29], the post-M&A stage (a focus of early cultural studies) [30], and strategic management research at the expense of the interconnection between the pre- and post-M&A stages [31, 32].

The integration of organisations is the process by which two companies are combined after an M&A is announced. Often, the degree of interaction and strategy between the two companies is defined before the integration begins [33]. Therefore,

#### *Define the Process of Human Resource Integration in Cross-Border Acquisitions: Evidence… DOI: http://dx.doi.org/10.5772/intechopen.97132*

the decision-making process for HR factors in the pre-M&A stage is critical in understanding the integration process [34]. Following the literary traditions on human factors in post-M&As, four central themes have been studied: leadership [33] and the integration team [35]; change [36] and the restructuring process [37]; personnel resistance [3]; and valuable personnel retention [38].

There are few systemic or structured methodological frameworks available for the study of integration itself [25]. Although several researchers have focused on a process approach [39–42], this perspective has not been widely taken up as anticipated. For example, Caiazza and Volpe [43] proposed a three-staged integration process: a multi-level due diligence negotiation, an organisational culture integration, and atmospheric competences [43]. Steigenberger [38] presented an integrative framework of the general process of business integration in an M&A, which underlines the interactions between the conditions and interventions that are critical for understanding M&A outcomes. Advocates of a process approach have focused on post-acquisition management rather than examining linkages throughout the entire M&A process [39, 44]. A multidisciplinary review is needed to examine all of the critical variables that appear throughout the M&A process. While some resources are considered prerequisites for the development of a firm, such as absorptive capability [45] and integration capability [35], two critical dimensions identified by Haspeslagh and Jemison [39] are essential: the need for strategic interdependence and the need for structural autonomy [46]. Gomes and Angwin [47] summarised the critical success factors for the pre- and post-M&A phases and their inter-relationships. Furthermore, no clear linkage between the steps of the post-M&A processes and human factors has been established [48].

Most studies have investigated the human side of M&As by focusing on influential human factors within organisations [45]. These include cultural fit, the relationship between management styles, cultural tolerance, and stress-related emotions experienced by employees during and after an M&A [49–52]). Other works have investigated the importance of managerial practices, such as cultural learning interventions and communication initiatives [53, 54]; openness and willingness in leadership [55]; and transparency to trust between the acquirer and the employee [56]. Although integration of human resources is important, there is a dearth of studies on HRIP practices during M&As [32, 57, 58]. Further, the current understanding of when and how human resource integration leads to cross-border acquisition success is limited and extant literature does not investigate remedies for conflicts in cross-border acquisitions.

In this study, the link between the structural, processual, and strategic dimensions of integration is also expressed through the use in the strategy literature [59– 62]. Integration's strategic dimension influences its structural dimension and specifies the direction for its processual dimension. Granlund [63] also suggests that structure and action are inseparable in post-merger integration (PMI). **Table 1** presents an overview of leading theories related to post-M&A HR integration taken into consideration during this study.

Despite the diverse methodologies used by the studies reviewed, elements related to integration were identified in relation to the three stages of the M&A: the pre-integration stage, the integration stage, and the evaluation stage [39]. A conceptual framework for post-M&A HR integration was proposed by Chang-Howe [99], which categorises the HRIP from pre-integration (HR due diligence and determining the factors of an integration strategy) to HR integration (system integration, personnel integration, and change management) and integration outcome (success and failure indicators). It offers a clear overview of all tasks and discusses HR functions in an M&A, however, the interactional relationship between the stages remains unclear.

This study posits that a more integrative approach is required. Therefore, introducing a design management control system [97] to design a human resource intergration process (HRIP). The post-M&A HRIP can be understood as a performance management control system for the combination of two existing HR systems



*Define the Process of Human Resource Integration in Cross-Border Acquisitions: Evidence… DOI: http://dx.doi.org/10.5772/intechopen.97132*

#### **Table 1.**

*Overview of main theories related to post-M&A HR integration.*

and two organisational cultures. This management control system incorporates a combination of competitive advantages [30] to maximise outcomes. The methodology used provides a logical workflow for organising and guiding the development of an HRIP [100]. The most important considerations for an HR management system in M&As are the level and speed of integration [41], and HRIP should be assessed with the post-merger concepts of integration strategies [50], integration planning [18], resource-based theory, and institutional theory [71, 72]. These key elements provide the content for the framework that will be used to develop the HRIP in the sections below. Previous studies on M&A integration do not differentiate between post-merger and post-acquisition integration, therefore, we employ the neutral term post-M&A integration [48].
