IER-07-04-01-pp007--2051-Polowczyk,Zaks,Trapczynski 2021, Vol. 7, No. 4 10.15678/IER.2021.0704.01 On the role of communication and management engagement for acquisition success: A study of Israeli startups Jan Polowczyk, Ofer Zaks, Piotr Trąpczyński A B S T R A C T Objective: The aim of this paper is to shed light on the effects of communication and management engage- ment on start-up acquisition success. Research Design & Methods: The present paper adopts a behavioural perspective and uses a set of quantita- tive data collected from start-up companies from Israel, which were taken over by international firms, in order to explore the role of acquired firm’s management. Particular emphasis is put on communication and the managerial engagement in the post-acquisition stage. Findings: Partial empirical support for these relationships can be found. Subsequently, a number of avenues for future research are discussed. Implications & Recommendations: Specifically, it is argued that communication and management engagement mediates the influence of a number of employee-related and organisational factors on acquisition performance. Contribution & Value Added: Taking into account the significant failure rate of international acquisitions, the identification of their critical success factors is an important issue. This pertains also to the acquisition of start- ups by established firms, for which it is a strategy for enhancing their technological base. The paper also con- tributes to extant literature by adopting the acquired firm’s perspective. Article type: research article Keywords: international mergers & acquisitions; performance; start-ups; post-merger integration; communication; management engagement JEL codes: L21, M10, M13, M16, M21 Received: 10 August 2021 Revised: 15 November 2021 Accepted: 17 November 2021 Suggested citation: Polowczyk, J., Zaks, O. & Trąpczyński, P. (2021). On the role of communication and management engage- ment for acquisition success: A study of Israeli startups. International Entrepreneurship Review, 7(4), 7-22. https://doi.org/10.15678/IER.2021.0704.01 INTRODUCTION Due to significant competitive pressures in the global environment, firms need to be able to introduce new products and services rapidly (Cefis & Marsili, 2006). Therefore, constant innovation plays a vital role for firm performance in the long run (Cai et al., 2017; Cheng & Yang, 2017). Hence, established companies often recur to mergers and acquisitions (M&A) in order to benefit from the technological assets of smaller companies which pose a source of innovation (Zaks et al., 2018). Indeed, start-up acquisition can be regarded as a crucial way of enhancing the technological know- how by mature organisations (Agarwal & Helfat, 2009; Santos & Eisenhardt, 2009). However, in spite of their vital role for firm competitiveness, a significant number of technological M&A do not meet their objectives (King et al., 2008). This may be related to the fact that the know-how which is accessed by the acquiring firms is mostly complex, contextual and rooted in a interpersonal networks (Ranft &Lord, 2002). Furthermore, M&A targets are often small and medium-sized enterprises (SMEs), as well as start-up companies. Hence, the risk that the business cultures and processes of the acquiring and acquired firms will not be aligned, is even higher (Popli et al., 2017). And yet, in extant literature many International Entrepreneurship Review RI E 8 | Jan Polowczyk, Ofer Zaks, Piotr Trąpczyński M&A-related studies concentrate on the success factors on the side of the acquiring firm (Becker et al., 2016; Cheng & Yang, 2017; Rahman et al., 2016). In fact, the behavioural side of M&A has long been analysed from the viewpoint of various ap- proaches, such as the individual psychological view (Amiot et al., 2006; Angwin et al., 2015), the social view (Terry et al., 1996), or the cultural perspective (Jordão et al., 2014). To a large extent, though, this research has been inconsistent in its approaches and findings (Seo & Hill, 2005). Extant research has indicated that the performance of M&A is indeed dependent on the behaviour of the target firm’s employees, including particularly trust (Inkpen & Currall, 2004; Stahl et al., 2012) and commitment to change (Van Dam, 2005; Wanberg & Banas, 2000). On the other hand, organisational variables affected by the acquirer, such as the extent of know- how transfer towards the target firm (Junni et al, 2015; Zollo & Meier, 2008), or the extent to which the target firm may remain autonomous (Whitaker, 2012), were also examined. At the same time, in light of extant knowledge it seems that those variables in themselves do not guarantee success, since appropriate communications (Galpin & Herndon, 2007; Schweiger & DeNisi, 1991), or a significant in- volvement of the acquired firm’s employees in the entire takeover (e.g. Graebner, 2004) can turn out to be indispensable for the success of acquisitions. Therefore, the aim of this article is to shed some additional light on variables which mediate the influence of employee-related and organisational variables on start-up acquisition success. Specifically, departing from expectancy theory (Vroom, 1964), we concentrate on the role of communication and management engagement as mediators. These research objectives are addressed empirically within the context of start-ups from Israel, which are taken over by foreign firms. For several decades now, Israel has witnessed a massive increase in the number of takeovers in the technological area (Avnimelech & Schwartz, 2009; Dashti et al., 2008). More- over, Israel has developed a strong reputation for a pronounced entrepreneurial culture, top-notch tech- nological know-how and an environment which is conducive to start-up growth (De Fontenay & Carmel, 2004). The relevance of using this research context also resides in the fact that models addressing M&A practices have mostly been proposed based on the experience of bigger transactions. In the present study it is argued that acquired firm-level factors leading to the success of acquisitions may be more accentuated for small and medium sized enterprises (Weitzel & McCarthy, 2011). LITERATURE REVIEW AND HYPOTHESES DEVELOPMENT Success determinants of acquisitions Employee-related determinants Extant research stresses the relevance of trust in the mutual contacts of managers with their employ- ees as a foundation of organisational change (Gomez & Rosen, 2001; Trąpczyński et al., 2018). With regard to acquisitions, the concept of trust is often used in the context of the relationship between the acquirer and the acquired firm. Particularly during the period after the announcement of an acquisi- tion, which is characterised by intensive risk evaluation, trust is easy to erode, yet harder to repair (Krug & Nigh, 2001). A novel team of managers is usually mistrusted, since target firm employees may expect organisational changes which can affect their presence in the company (Hurley, 2006). Trust can pose an alleviating factor in relation to these employee fears (Van Dam, 2005). On the other hand, the readiness for change may be significantly afflicted if leaders behave in a different manner than what had been communicated to their subordinates (Simons, 2002). Therefore, on the whole, it can be expected that the employees’ trust in management will positively affect the outcome of M&A. Further, the readiness and openness to change is crucial from the point of view the results of the change process, since employees may display ambiguous feelings with regard to the change process (Piderit, 2000). The degree to which the members of an organisation can contribute to the change process is significantly dependent on the information sharing across a number of different channels, as well as on the involvement of employees both in the preparation and execution stages of the entire process (Armenakis & Harris, 2002). On the role of communication and management engagement for acquisition… | 9 The results of extant research indicate that participants of the change processes displaying higher commitment, also demonstrate superior readiness to change, as well as the acceptance of change (Madsen et al., 2005). Studies exploring employee commitment have inter alia looked into its effects on turnover, job satisfaction and performance, or overall firm performance (Cooper-Hakim & Viswesvaran, 2005).Existing results point to the fact that negative attitudes of target firm’s employees towards the acquisition may be among important factors explaining the failure of acquisitions. And yet, this relationship has rarely been verified empirically (Datta, 1991; Larsson &Finkelstein, 1999). Organisational determinants Extant studies have particularly focused on the relevance of knowledge flows from the headquarters to its affiliates as an important factor explaining organisational outcomes (Minbaeva et al., 2003; Zollo & Meier; 2008). Such knowledge flows from the acquirer towards the acquired firm are related to the level of resources which employees dedicate to learning from the parent company and implementing the obtained know-how (Minbaeva, 2007). Conversely, transfers to the acquirer are usually related to the know-how possessed by employees, such as their competences and skills (Junni & Sarala, 2013). While knowledge transfers towards the parent firm have usually been connected to start-up takeovers, the flows towards the acquired firm can be conducive to post-merger performance (Junni et al., 2015; Oberg & Tarba, 2013). There is a number of variables influencing the effectiveness of the knowledge transfer, such as the social ties between the members of both organisations (Vaara et al., 2012). On the whole, it can be expected that the knowledge transfer from the acquiring organisation will positively affect acquisition success. Further, we posit that the strategy of the acquirer with regard to the autonomy granted to the target firm is another factor contributing to acquisition success. Although it may be necessary re-con- figure resources and integrate the two organisations so as to reap the benefits of the acquisition (Capron, 1999), the reduction of autonomy which is often triggered at the same time can actually con- tribute negatively to the entire transaction (Very et al., 1997). Also, it should be noted that for an integration process to be successful, it requires significant involvement by the management, diverting the acquiring firm’s attention from its own focus (Schoar, 2002). Indeed, the integration-autonomy dichotomy may be particularly important in acquisitions of tech- nology companies. This type of transactions is often driven by the willingness to gain access to com- pound know-how(Puranam et al., 2002). However, the consolidation of both organisations can ulti- mately compromise the target firm’s know-how if its employees leave the organisation (Ranft &Lord, 2002). And yet, previous studies have often regarded the consolidation of the acquirer and the acquir- ing firm as a phenomenon to which the targetfirm is subjected, instead of acknowledging it as a process in which the management team of the target firm ought to take part to a significant extent. Managerial involvement by the acquired firm It is crucial to note that the success of an acquisition is contingent upon the responses of the manage- ment team of the target firm to any modifications of their mandate and scope of autonomy (Bezrukova, et al., 2012). Thus, in the ensuing subsections, attention is devoted to the significance of communication and managerial engagement on the part of the acquired firm. Acquired firm’s communication in the integration period Effective communication during the process of consolidation of the acquiring and acquired firms en- tails a significant volume of information to be provided in a transparent, understandable and fair man- ner (Gomes et al., 2011). Within the integration stage of M&A, the role of communication is to enable employees to gain insights into the ongoing processes and therefore to adjust their own knowledge of what will be expected from them in the new reality of their organisation (Birkinshaw et al., 2000). Further, among the key factors contributing to an effective management of the acquisition process are the intensity and quality of related communications. The ambivalent responses of an organisation’s members in the wake of an acquisition can be managed more effectively by recurring to well prepared 10 | Jan Polowczyk, Ofer Zaks, Piotr Trąpczyński and executed communications (Marks & Mirvis, 2001). Providing realistic information to staff and man- agement reduces undesirable uncertainty regarding jobs security, career advancement and the ongo- ing benefits associated with the acquisition(Galpin & Herndon, 2007). Acquired firm’s management engagement the post-acquisition integration From a theoretical perspective, expectancy theory emphasises the perceived odds that an outcome would indeed ensue as a consequence of a certain behaviour (Vroom, 1964). In the context of entre- preneurship, the subjective odds that a given new venture would lead to certain results is affected by personal opinions regarding the know-how required to leverage this business chance or the availability of resources which may be necessary for that goal(Feather, 1992). An important dimensions of the acquired firm’s involvement pertains to the presence of the founder of the start-up firm who plays a key role in such organisation and its culture. After the accomplishment of the acquisition, higher com- mitment of the target firm’s employees can help the acquirer to reduce employee turnover in the acquired firm, especially if the founder is also actively involved in the integration process (Rhoads et al., 2012). Accordingly, the acquisition of start-ups poses specific issues with regard to the decision as to whether to keep or replace the original top management team (TMT). Given that the founder is often inherently related to the technology which defines the start-up, as well as to the culture of the organisation, the engagement of him and his management team is a crucial prerequisite to ensure that employee-related factors can translate into success (Baum & Locke, 2004; Rhoads et al., 2012). Analytical framework and research hypotheses To summarise the literature review presented above, we argue that from a behavioural perspective, while a number of employee-related factors, as well as organisational variables pertaining to the ap- proach of the acquirer towards the target firm, are essential for the success of the acquisition, they alone are not able to explain acquisition performance. Indeed, it is the role of the acquired start-up’s manage- ment to design and implement an appropriate programme of communication about the deal, as well as demonstrate its active participation in the consolidation of both organisations, in order to address anxi- ety, doubts and open issues on the part of the members of the organisation. Only then can both the employee attitudes, and objective support from acquiring firm, translate into performance outcomes. Accordingly, in line with our research goals, we propose several hypotheses on the mediating effect of managerial communication and management engagement. H1: The relationship between employee-related variables and acquisition performance is medi- ated by communication delivered to employees by the TMTs of the acquired firm. H2: The relationship between organisational variables and merger success is mediated by com- munication delivered by the TMT of the acquired firm. H3: The relationship between employee-related variables and acquisition performance is medi- ated by the engagement of acquired management during the post-acquisition integration. H4: The relationship between acquired company’s variables and merger success is mediated by the engagement of acquired management during the post-acquisition integration. Figure 1 summarises the hypothesised relationships in a conceptual framework based on extant research. RESEARCH METHODOLOGY Data collection and sample Our empirical study embraced high-tech start-ups from Israel which were taken over by foreign firms in the period 2009-2014 (Trąpczyński et al., 2018). Respondents were identified based on data from a number of sources. The majority of firms were extracted from lists including start-ups acquired during 2009-2014. 125 invitations were sent via e-mail through Qualtrics™ to leaders and top man- agers during the first quarter of 2015. While 105 surveys were opened, 53 respondents completed the survey, which corresponds to a 58% response rate. On the role of communication and management engagement for acquisition… | 11 Figure 1. Conceptual framework Source: own elaboration. The size of the target firms varied from 5 to more than 200 employees, whereby 48% had 5-50 employees (see Table 1). Table 1. Sample characteristics % # (N=53) Thresholds Characteristics 45.3 24 5-50 Number of employees (in the acquired company)/size 24.5 13 51-200 30.2 16 201+ 47.2 25 0 Previous experience in M&A 26.4 14 1 26.4 14 2+ 11.3 6 20-39 Age (group) 79.2 42 40-59 9.4 5 60+ 35.8 19 Bachelor degree Education 64.2 34 Master degree + 30.2 16 1-4 35.8 19 5-9 Tenure (years) 34.0 18 10- 30.2 16 -2 Time since the merger announcements ( years) 41.5 22 -4 less 28.3 15 4+ more Source: own study. Variables operationalisation Dependent variable Firstly, perceived performance was adopted as a measure of acquisition performance. Numerous studies pointed to the fact that the evaluations delivered by executives are correlated with perfor- mance items based on objective data (e.g. Homburg & Bucerius, 2006). While M&A outcomes are to a certain degree inherently unpredictable, there is certainly a link between the TMTs’ genuine motivations and post-M&A performance (Coff, 1999). In the current study, out of nine potential questions regarding ‘perceived performance’, five were eventually chosen (Cronbach alpha= 0.87). Two examples of items for ‘perceived performance’ are: “To which extent your merger expectations before the acquisition were fulfilled?” and “Based on your perception, how many targets were ac- complished?” The scale ranged from, 1(low) to 5(high). 12 | Jan Polowczyk, Ofer Zaks, Piotr Trąpczyński Further, acquisition satisfaction was conceptualised as the degree to which an employee antici- pates feeling satisfied in the aftermath of the transaction. Participants were asked to indicate their satisfaction with the acquisition process, their satisfaction with their involvement in the implementa- tion of the acquisition and their satisfaction with management performance (1 = very dissatisfied to 5 = very satisfied). Out of seven potential questions five were eventually chosen to measure satisfaction (Cronbach alpha = 0.89). Mediating variables The first mediator pertains to communication within the stage of integration of both companies, which can be described as the provision of information to employees with regard to various issues related to the integration process (see e.g. Jimmieson et al., 2004). The overall reliability alpha for integration characteristics amounted to0.79. Further, the quality of information pertaining to the change process was also captured with a four-item measurement scale adapted from Wanberg and Banas (2000). Questions were asked on a 5-point Likert-type scale, whereby 1 = strongly disagree and 5 = strongly agree. Six questions representing the quality of communication variable were chosen for this present study (out of fourteen potential questions). The alpha obtained was 0.75. Secondly, with regard to management engagement, in line with Graebner (2004) it was operation- alised as a binary variable, set up as a dummy variable depending on whether the target firm retained its management team or whether they were substituted for by professional managers hired by the acquirer. Another item was added in order to measure the time period of the TMT presence following the acquisition public announcement. Independent variables As far as employee-related variables go, questions on trust were related to employees’ beliefs with regard to the management’s trustworthiness and fairness. Out of eleven potential questions based on extant literature (Oreg, 2006), the survey ultimately included six questions regarding trust. Items were operationalised on a five-point scale (with Cronbach’s alpha amounting to 0.63). Readiness for change was operationalised by the use of two types of scales: the first one by Holt et al. (2007) to evaluate the readiness at an individual level and the second by Meyer and Allen (1997) to assess affective organizational commitment. Seven questions represent this variable in our study (out of twelve that were judged and evaluated). As far as organisational variables are concerned, autonomy removal was operationalised with three items regarding asymmetric shift in control from one firm to the other: (a) financial control , (b) administrative control and (c) operational control. After adding three further questions adopted from earlier studies (Ranft, 2006; Very et al., 1997), we finally constructed a scale with altogether six items and the alpha of 0.88. Moreover, in line with Schoenberg’s (2006) study, we measured knowledge transfers between both organisations with regard to 11 areas. Ten items were chosen with Cronbach’s alpha 0.88. The scale consistently ranged from 1 to 5. Control variables Acquired company’s size was evaluated by asking respondents to provide the employment size be- fore the acquisition. Prior experience with M&A was operationalised as a binary variable(presence or lack of experience). Managers were also requested to provide the information how many M&A they had experienced. Finally, respondents were requested to provide the sector in which their company is active. Analytical procedures This section presents the statistical procedures that were used in order to obtain a first understand- ing and then to analyse the data obtained through the Qualtrics survey system. It is important to present the basic descriptive statistics, presented in Table 2. The table includes the basic data (min, max, mean & standard deviation- S.D.) of the quantitative research variables: dependent, independ- ent and mediators. On the role of communication and management engagement for acquisition… | 13 Subsequently, several Pearson correlation tests were carried out to provide an initial understand- ing of the relationships between the research variables. As indicated in Table 3, Pearson correlations are in general in line with the expectations formulated in the research hypotheses, hence providing some initial support for the studied relationships. Table 2. Descriptive statistics S.D M Max Min Variable 0.88 2.61 5.00 1.00 Retained autonomy 1.03 3.15 5.00 1.00 Knowledge transfer 0.88 3.27 5.00 1.33 Trust 0.68 3.75 4.80 1.80 Readiness and commitment to change 1.17 3.08 5.00 1.00 Intention to leave 0.86 3.31 5.00 1.00 Communication 0.95 3.00 5.00 1.00 Perceived performance 1.12 2.99 5.00 1.00 Satisfaction with acquisition 0.32 0.89 1.00 0.00 Management engagement after acquisition Source: own study. Table 3. Pearson correlations 8 7 6 4 3 2 1 Variables Retained autonomy (1) 0.038 Knowledge transfer (2) 0.184 0.267* Trust (3) 0.516** 0.144 0.188 Readiness & commitment (4) -0.253* -0.359** -0.176 -0.364** Intention to leave (5) -0.337** 0.586** 0.709** -0.003 0.221 Communication (6) 0.398** -0.516** 0.245* 0.524** 0.362** 0.058 Performance (7) 0.834** 0.519** -0.508** 0.327** 0.704** 0.382** 0.150 Satisfaction with acquisition (8) Levels of significance: * p < 0.05. ** p < 0.01. *** p < 0.001 Source: own study. Before focusing on the main results, it is crucial to note that most control variables had no significant influence over the study variables. However, some significant relationships were de- tected between the employment size of the acquired company and the other variables. More spe- cifically, it was found that in large companies (more than 200 employees), there was a significant lower engagement of management participation in the integration process. Similar results emerged in relation to the variables of ‘trust’, ‘readiness and commitment’, ‘communication’ and ‘satisfac- tion’, where significant differences between small and large size organisations were detected. No significant effects were identified in relation to ‘previous experience with acquisitions’. After conducting descriptive statistical tests, we recurred to a series of path analyses which offers the advantage of directly testing the specified mediation model (Edwards & Lambert, 2007). While path analysis can be regarded as a particular form of structural equation modelling (SEM), it has be- come widespread in research in which small sample size limits the application of a complete structural equation (Chaudhuri & Holbrook, 2001). Path analysis is a form of multiple regressions focusing on causality. Overall, this method entails verifications of direct, indirect, and total effects of various values of the mediating variables. In order to address our hypotheses regarding the mediation effect of man- agement’s communication, as well as management engagement, separate path analyses were con- ducted. The models presented in the ensuing section consist of diagrams that specify the independent, mediating, and dependent variables, whereby regression weights are predicated by each computed model. Single-headed arrows show the causality between all variables. 14 | Jan Polowczyk, Ofer Zaks, Piotr Trąpczyński RESULTS In the first path analysis, shown in Figure 2, the mediating effects of management’s communication on the linkages between independent variables and acquisition performance, was examined. The findings indicate that management’s communication is a significant mediator, although it has a rel- atively weak effect. Among the independent variables out of the five studied ones, only ‘trust’, ‘intention to leave’ (among employee-related variables) and ‘knowledge transfer 1’ (among organ- isational variables) turn out to be statistically significant. Figure 2. Path analysis model for ‘perceived performance’ Annotation: dependent: W1 – perceived performance; mediator:Z1 – management’s communication), inde-pendent varia- bles: (X2.1 – retained autonomy, Y1 – trust, Y3 – intention to leave). Source: own elaboration. In the second analysis, depicted in Figure 3, the mediation of management’s communication on the relationships between independent variables and satisfaction with acquisition was examined. The model illustrates management’s communication to be a significant mediator, albeit with a limited in- fluence. Similar to the first analysis, mediation for only three independent variables turns out to be significant: ‘trust’, ‘intention to leave’ and ‘knowledge transfer 1’. Based on the two path analyses, it can be concluded that Hypotheses 1 and 2 were only partially supported by the results. The empirical evidence points to partial mediation, whereby the mediat- ing variable accounts for a part of the relationship between the main research variables. In fact, there is not only a statistically significant linkage between managerial communication and both performance and on the other hand its antecedents, but also some direct relationships between our dependent and explanatory variables. So as to examine Hypotheses 3 and 4, we first examined the direct influence of the mediating variable on the research variables. Because ‘managements’ engagement’ is a dichotomous (cate- gorical) variable, a series of t-tests were conducted. As demonstrated in Table 4, ‘trust’ was the only significant difference between the groups, indicating that in companies where management was present during the acquisition process, the level of trust was higher than in companies where management was not present. No other significant differences were found between companies with or without management engagement during the acquisition process. On the role of communication and management engagement for acquisition… | 15 Figure 3. Path analysis model for ‘satisfaction with acquisition’ Annotation: dependent: W2 – satisfaction with acquisition; mediator:Z1 – management’s communication), independent variables: (X2.1 – retained autonomy, Y1 – trust, Y3 – intention to leave). Source: own elaboration. Table 4. T-test for independent groups to analysis between ‘managements’ engagement’ and the other research variables t Yes No Variables (n=48) (n=5) S.D M S.D M -0.95 0.90 2.65 0.53 2.26 Retained autonomy -0.33 1.05 3.16 0.85 3.00 Knowledge transfer -2.73 ** 0.86 3.37 0.41 2.30 Trust -1.34 0.66 3.79 0.89 3.36 Readiness & commitment 1.29 1.16 3.01 1.22 3.72 Intention to leave -0.76 0.86 3.34 0.86 3.03 Communication -1.09 0.93 3.05 1.13 2.56 Performance -1.43 1.11 3.06 1.02 2.32 Satisfaction with acquisition * p < 0.05. ** p < 0.01. *** p < 0.001 Source: own study. Next, two path analyses were conducted. In the first analysis, shown it Figure 4, the mediating effects of managements’ engagement on the relations between independent variables and perfor- mance after merger were examined. The findings indicate that both direct prediction and mediation are significant. Nevertheless, the level of mediation is relatively weak. Again, only three variables (out of six) are significant: ‘trust’, ‘intention to leave’ and ‘knowledge transfer 1’. In the second path analysis, presented in Figure 5, the mediating effects of management’s engage- ment on the relationships between employee-related and organisational variables and satisfaction with acquisition were examined. This model indicates that both the direct prediction and mediation are sig- 16 | Jan Polowczyk, Ofer Zaks, Piotr Trąpczyński nificant. Accordingly, the level of mediation is relatively weak. Like in the path analysis above, mediations for only three variables are significant: ‘trust’, ‘intention to leave’ and ‘knowledge transfer 1’. Based on the two preceding path analyses, it can be stated that Hypotheses 3 and 4 were only partially supported, as the empirical data point to partial mediation. To summarise the main results of this study, it appears that both employees-related variables and organisational variables have some direct influence over acquisition success, and that management’s communication and engagement has a partial mediating effect on these relationships. This is consistent with our theoretical reasoning and findings from the literature review, as the employee reactions and the organisational arrangements between the acquirer and the acquiring company determine success, yet they require effective com- munication and involvement of the local management to fully secure performance. Figure 4. Path analysis model for ‘perceived performance’ Annotation: dependent: W2 – satisfaction with acquisition; mediator:Z1 – management’s communication), independent variables: (X2.1 – retained autonomy, Y1 – trust, Y3 – intention to leave). Source: own elaboration. DISCUSSION AND CONCLUSION Contribution to extant research Various approaches common in studies on acquisitions have adopted individual or collective levels of investigation in order to explore behavioural aspects. Merely a limited amount of researchfocused on the firm level in order to explore behavioural issues related to the acquired firm. Furthermore, unlike the majority of the aforesaid studies, which concentrate on the acquiring firm’s standpoint, this paper explores the target firm’s view. In this paper we hypothesised the mediating effects of management engagement during the acquisition processes and the quality of communication delivered to the ac- quired company’s employees by the management team. Our hypotheses were partly supported, as we found evidence of a partial mediation. On the role of communication and management engagement for acquisition… | 17 Figure 5. Path analysis model for ‘satisfaction with acquisition’ Annotation: dependent: W2 – satisfaction with acquisition; mediator:S1 – management’s engagement), independent varia- bles: (X2.1 – retained autonomy, Y1 – trust, Y3 – intention to leave). Source: own elaboration. The mediating influence of management’s communication resonates with earlier findings from literature, although this variable was mostly explored as a direct influence. Extant M&A research has asserted that communication is crucial for a successful execution of the change process in an organisation (Schweiger & Denisi, 1991). Mistakes in managing the communications may lead to rumours, which can aggravate negative emotions accompanying the change process and add to resistance to change among organisational members. Hence, in the event of lacking or delayed communication from the management team, the mem- bers of an organisation may gain knowledge about the change process through other channels, such as media (Richardson &Denton, 1996). Thus, start-ups, just like any other organisation, need to for- mally inform their employees on any critical change, including M&A intentions. Indeed, as Vinten (1999) argues, the idea that in smaller organisations communication is appropriately addressed through informal channels is no more than a myth. Aleader’s social competences are focal when at- tempting to pre-empt reactions on the part of the participants of the change process (Oreg, 2006). On the other hand, while the related studies have agreed on the pivotal role of thoughtful com- munications, a number of researchers (e.g. Weber et al., 2012) demonstrate that over communica- tion ought to be evaded, since organisational members have to retain a certain degree of ambiguity so as to remain flexible and able to deal with a dynamically changing situation. In practice, the mem- bers of an organisation may tend to refuse to discuss the challenging issue of the acquisition, due to limitations of the possessed information or due to the pre-occupation with negative side effects of the deal. However, such avoidance on the manager’s part, or a manger’s negative attitude, may in itself be perceived as information by employees (George & Zhou, 2007). With regard to the second of the stated mediation effects, our study corroborates earlier argu- ments about the relevance of the engagement of an appropriate leadership steering the change process. In fact, the main managerial competences which are crucial for a successful merger or ac- quisition pertain inter alia to carefully planning the timing of the integration process so as to com- plete it effectively. Not least, also the competence to motivate the members of both organisations 18 | Jan Polowczyk, Ofer Zaks, Piotr Trąpczyński to demonstrate cooperative behaviour, is of vital importance. In particular, the founder of the target firm is a key individual who had shaped the organization in a significant manner (Shane et al., 2003). It is the founder who is often closely associated with the sources of competitive advantage of the firm (Baum & Locke, 2004), thus having more influence over employee motivation and over the com- pany culture than professional managers. Limitations and future research It must be noted that this paper focused on the post-acquisition stage. Although extant research has indicated that the said stage is focal for the overall success of the deal, there are numerous other factors operating simultaneously at various stages of an acquisition. Thus, future studies measuring the influence of our research questions at various other parts of an acquisition deal may prove to be productive. The inclusion of the most influential contributors affecting each M&A stage will probably allow the construction of a more holistic model. The conclusions of this paper may also be to some extent confined by the culture of start-up or- ganisations in Israel. in fact, a national culture determines the ways in which international investors are perceived (Moschieri & Campa, 2014). Therefore, exploring the influence of national cultures on the acculturation process and outcomes of start-up acquisitions might yield different conclusions with regard to communication and management engagement during the integration after the acquisition deal. 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Employee self-perceived creativity after mergers and acquisitions: Interactive effects of threat—opportunity perception, access to resources, and support for creativity. The Journal of Applied Behavioral Science, 44(4), 397-421. Zollo, M., & Meier, D. (2008). What is M&A performance? Academy of Management Perspectives, 22(3), 55-77. 22 | Jan Polowczyk, Ofer Zaks, Piotr Trąpczyński Authors The contribution share of authors is equal and amounted to 33% each of them. Jan Polowczyk Habilitated doctor, Associate Professor at the Poznań University of Economics and Business, Department of International Competitiveness. He spent 15 years in the corporate sector, holding senior managerial positions in Polish affiliates of international companies. The main field of his interests is strategic management. He is a member of Strategic Management Society. Correspondence to: Prof. UEP, dr hab. Jan Polowczyk, Department of International Competitiveness, Poznań University of Economics and Business, Al. Niepodległości 10, 61-875 Poznań, Poland, e-mail: jan.polowczyk@ue.poznan.pl ORCID http://orcid.org/0000-0002-0613-6924 Ofer Zaks PhD, lecturer and researcher at the Department of “Management of Service Organizations” in the Jerusalem Hadassah college, Israel. He was previously employed as a management team member (VP HR) in various firms – low & high-tech. In his research he concentrates on factors that influence the success of M&A processes- mainly in high- tech & start-ups companies & on Industry 4.0. Correspondence to: Dr Ofer Zaks, Jerusalem Hadassah College, HaNevi’im 37, HaHavatselet 8, Jerusalem, Israel, e-mail: zaks-@013.net.il ORCID http://orcid.org/0000-0001-8154-9174 Piotr Trąpczyński Habilitated doctor, Associate Professor at the Poznań University of Economics and Business, Department of International Competitiveness. He acts as one of directors at the Knowledge Transfer Company of the same university, supporting firms in their international expansion. In his research work, he concentrates on the per- formance outcomes of firm internationalisation. His work has been published inter alia in the Journal of Busi- ness Research, Journal of World Business, International Business Review, or the European Management Jour- nal. He is board member and co-founder of the AIB-CEE Chapter. Correspondence to: Prof. UEP, dr hab. Piotr Trąpczyński, Department of International Competitiveness, Poznań University of Economics and Business, Al. Niepodległości 10, 61-875 Poznań, Poland, e-mail: piotr.trapczynski@ue.poznan.pl ORCID http://orcid.org/0000-0001-8154-9174 Conflict of Interest The authors declare that the research was conducted in the absence of any commercial or financial relation- ships that could be construed as a potential conflict of interest. Copyright and License This article is published under the terms of the Creative Commons Attribution – NoDerivs (CC BY-ND 4.0) License http://creativecommons.org/licenses/by-nd/4.0/ Published by Cracow University of Economics – Krakow, Poland