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Last Update: 2007-04-30   Source: Research Headlines
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EU-funded project shows merger success dictated by workers’ willingness to cooperate

The further development of a single economic zone in Europe inevitably led to a spate of cross border mergers in the 1990s. The mergers were seen as a way of trimming the fat off large firms by combining complementary expertise to give shareholders a better return on their investment. The EU-funded EMEP project (European mergers and employee’s participation: Industrial economic and anthropological study of Franco-German cases) decided to take a closer look at what such mergers meant for the work force of each original company. They wondered to what degree the success of such mergers was impacted by the employees’ willingness to accept the work model imposed not only by a different company, but by a different country. Prior to EMEP, comparative studies usually involved investigation of the Anglo-Saxon and ‘Continental European’ models. So to better understand the dynamic in an era of unprecedented cooperation between former rivals, the EMEP consortium chose to focus their sights solely on French and German companies.

Entrenched labour unions proved influential in Franco-German mergers. © Matt+
Entrenched labour unions proved influential in Franco-German mergers.
One objective of EMEP was to determine if a merged company adopted the French ‘worker participation’ model or the German method of ‘co-determination’. A second goal was to define a concrete model showing that employee participation was a central factor in explaining the success or failure of transnational mergers.

The first phase of the project consisted of a survey of other comparative research available at the time. The consortium soon discovered that they were treading unknown territory. They were unable to detect any substantial research into the merger process at all, except for those discussing IT compatibility. As a result, researchers realised they were going to have to develop a completely new set of analytical tools, which they did with shining success.

They compiled a database of 70 mergers undertaken since 1990, from which they chose 4 as detailed case studies: VM Tubes, Europipe, Quante Pouyet and Aventis.

From their analysis, they discovered that attitudes and social norms of each respective company remained relatively intact, and that much attention was paid to ensuring that work, and profit, was distributed evenly between countries. There was no company discussion of social issues, as it was decided that this was best left to national laws and protocol.

The researchers discovered that production systems or wage coordination were only slightly affected on a cross-country basis, but that significant organisational changes did occur in departments such as sales, marketing, R&D, finance and computer systems. It was here where employee’s support was most critical to the success of the merger.

As a result, the project partners concluded that, practically-speaking, the mergers were less the blending of two companies into a single new entity than a partnership between two companies that had decided to closely coordinate activities. National stakeholders, shareholders and unions all served to keep interests rooted in the country of origin, preventing one employee model from predominating. The project was able to confirm that employees’ willingness, or lack thereof, to accept a transnational merger factored significantly into the success of the merger, perhaps soothing the fears of some that mass Europe-wide redundancies were a necessary evil of the common market.


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