ROUGH WINDS?
EMOTIONAL CLIMATE FOLLOWING ACQUISITIONS
Riikka Harikkala-Laihinen
Turku School of Economics at the University of Turku
This is a post-peer-review, pre-copyedit version of  Harikkala-Laihinen, R. (2020), "Rough Winds? Emotional Climate Following Acquisitions", Härtel, C.E.J.,
Zerbe, W.J. and Ashkanasy, N.M. (Ed.) Emotions and Service in the Digital Age (Research on Emotion in Organizations, Vol. 16), Emerald Publishing
Limited, pp. 153-171. https://doi.org/10.1108/S1746-979120200000016013
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Emotional climate 2
ABSTRACT
Despite growing literature, many companies struggle with post-acquisition integration. In the last three
decades, the discussion has turned towards how employees’ emotions complicate the process. This
chapter discusses those emotions paying special attention to the emotional climate surrounding change.
The focus is on examining how an organization’s emotional climate influences employees’ emotions
following an acquisition. This chapter explores how organizations can influence the emotional climate
surrounding change, and thereby encourage the emergence of positive rather than negative emotions.
The chapter takes the acquired company point of view, following a German–Finnish deal completed in
January 2017 over one year. The theoretical contribution lies in the introduction of emotional climate
rather than organizational culture as a key factor for employees during the early integration period. The
findings reveal that employees are likely to have emotional reactions even when relatively little
integration is intended. In addition, the surrounding emotional climate – whether positive or negative –
is likely to trigger similarly valenced emotions. For positivity to dominate, organizations need to make
the benefits of the deal and the future of the company clear to the employees.
Keywords: Emotion, Emotional Climate, Positivity, Organizational Change, Post-acquisition
Integration, Mergers and Acquisitions
Emotional climate 3
INTRODUCTION
Acquisitions are increasing in popularity as an international growth strategy, yet often fail to fully reach
the set objectives (e.g. Graebner et al., 2017). Over decades of research, many reasons have been
suggested for such failure. One critical factor seems to be post-acquisition integration. During
integration, a functioning whole is built from two previously separate organizations. Over the last three
decades, the human side of acquisitions has received increasing interest among researchers (e.g.
Cartwright & Cooper, 1993; Sarala et al., 2017). Integration may trigger major organizational changes,
which employees often experience as threats to the organizational identity. Such perceptions increase
employees’ protectionist attitudes, at the same time potentially endangering sought synergy benefits
(Menges & Kilduff, 2015). Consequently, acquisition researchers have turned to employees’ negative
emotions as a potential cause of integration problems (Clarke & Salleh, 2011).
An emotion is a transitory, multicomponent response to an appraisal of an event (Fredrickson, 2013).
Emotions in general are an underresearched area in acquisition literature (Sarala et al., 2017).
Nevertheless, studies have shown that negative emotions can encumber integration (Kusstatscher &
Cooper, 2005), whereas positive emotions enhance cooperation and encourage organizational
identification (Fischer & Manstead, 2008). While researchers have found that acquisitions also raise
positive emotions (Kusstatscher, 2006), previous acquisition literature focuses largely on negative
emotions such as stress and anxiety (Graebner et al., 2017). An underlying assumption is that emotions
altogether are something harmful that must be minimized. However, emotions cannot be simply switched
off. Following an acquisition, for example changes in organizational values or goals can trigger emotions
(Sinkovics et al., 2011). A positive emotional climate supports the emergence of positive emotions (Bar-
tal et al., 2007). It is therefore important to create and maintain a healthy emotional climate during
organizational change (Ashkanasy & Daus, 2002).
Emotional climate 4
Through emphasis on emotions and particularly the means to increase positivity in the organization’s
emotional climate this chapter questions the dominance of negative outcomes as the focus of integration
research (cf. Raitis et al., 2017; Harikkala-Laihinen, 2018). Unlike previous research, however, this
chapter emphasizes the influence of the organizational climate in which emotions emerge. The focus here
is on examining how the surrounding emotional climate influences the emotions emerging during the
integration period. More particularly, this chapter answers how organizations can influence the emotional
climate surrounding change, and thereby encourage the emergence of positive rather than negative
employee emotions. This question is examined from the acquired company point of view in a German–
Finnish deal completed in early 2017.
The findings reveal that even when relatively little integration is intended, employees are likely to react
emotionally. The surrounding emotional climate – whether positive or negative – is likely to trigger
similarly valenced emotions. However, for positivity and motivation to dominate, the benefits of the deal
and future of the company must be made clear to the employees. The emotional climate surrounding
change is dynamic, and thus maintaining positivity requires constant attention from integration
management – for example through boosting team spirit and investing in employees’ well-being.
EMOTIONAL CLIMATE FOLLOWING ACQUISITIONS
Post-acquisition integration
Integration includes the activities and resources used to achieve the desired level of unification between
the acquirer and the target (Pablo, 1994). Often the process is divided into two spheres, task and human
integration, where focus on only one aspect causes sub-optimal success. A focus on human integration
increases employee satisfaction but at the cost of operational synergies, whereas a focus on task
integration will enable synergy realization but potentially decrease employee wellbeing. A successful
acquisition thus is achieved when both task and human integration at a satisfactory level. (Birkinshaw et
Emotional climate 5
al., 2000.) The human side of acquisitions has been of increasing interest to scholars since the 1990s,
revealing the nature of acquisitions as softer, human processes rather than mere hard cold facts
(Cartwright & Cooper, 1995). Although this chapter focuses on the emotional climate surrounding both
integration streams, as emotions are an innately human experience, the theoretical focus is on the softer,
human side of acquisitions.
Rather than singular life-cycle events, from the human point of view acquisitions can be considered as
adaptation processes (Cartwright & Cooper, 1995), or acculturation. Acculturation refers to the meeting,
clashing, and eventual coexistence or joining together of separate cultures (Nahavandi & Malekzadeh,
1988). Following acquisitions, acculturation most often refers to a unified culture emerging through the
amalgamation of two previously separate sets of organizational beliefs, assumptions and values. This
process is largely dependent on the success of social controls utilized during integration. Successful
social controls in turn center on the socialization of affected employees for example through information
exchange, training or social gatherings (Larsson & Lubatkin, 2001).
Organizational socialization essentially means the process through which employees learn the social
knowledge and skills to fulfill their organizational role (van Maanen & Schein, 1979). Such socialization
is most intense, when an employee joins a new organization – such as following an acquisition. When
successful, organizational socialization has significant benefits for integration: a decrease of employee
turnover, an increase of commitment, ensuring the continuity of organizational values and norms, and
establishing the power dynamics of the organization to new members. (Bauer et al., 1998.)
Fundamentally, socialization is how new members learn the organizational culture.
From organizational culture to emotional climate
Organizational culture offers consistency to organizational practice and behavior, enabling harmonious
coexistence (Cartwright & Cooper, 1993). Organizational climate, in turn, “constitutes the collective
Emotional climate 6
mood of organizational members toward their jobs, the organization, and management” (Ashkanasy,
2003, p. 38). It entails the visible features of organizational culture (Momeni, 2009). The emotional
climate is a subcategory of a company’s organizational climate, and reflects the experienced working
atmosphere. Although socially constructed, it is independent from employees’ individual emotions, and
thus forms an objective entity (DeRivera & Páez, 2007).
An emotional climate is born out of shared values, objectives, and beliefs, and dictates which emotion
experiences and expressions are appropriate within the organization. Thus, it can be considered the
outcome as well as the rule of individual emotions within an organization (Tran, 1998). An emotional
climate thereby connotes both emotional reactions to organizational events as well as the sensemaking
tools necessary for interpreting the social reality and govern behavior within the organization (Ruiz,
2007). For example, they entail the experienced power dynamics within an organization, as well as
perspectives on trust and security (DeRivera & Páez, 2007). Although relatively stable, emotional
climates are dynamic, and thus change more easily than organizational cultures. For example, new
leadership can influence the emotional climate of an organization. (DeRivera, 1992.) Thus, it is possible
for an acquisition to prompt a change also in the involved organizations’ emotional climates.
As post-acquisition integration essentially connotes change, it is important to remember that during
organizational change creating and maintaining a healthy emotional climate is crucial (Ashkanasy &
Daus, 2002). More particularly, positivity can be the key to successful integration (cf. Birkinshaw et al.,
2000). For example, positive emotions can enhance organizational identification and support cooperation
(Fischer & Manstead, 2008). Moreover, positive emotional climates can support organizational
transformation (Sekerka & Fredrickson, 2008).
Emotional climate 7
The importance of a positive emotional climate
A positive emotional climate means “an organizational environment where managers take into
consideration the emotional needs and personal growth of employees and encourage the sharing of
positive emotions” (Ozcelik et al., 2008, p. 187). It therefore does not refute the existence of negative
emotions, but emphasizes the effect of positive features in the climate (Bar-tal et al., 2007). Aiming at
employee contentment, ensuring the efficiency of the physical workspace, and paying attention to
leadership are key ways for organizations to influence the development of a positive emotional climate
(Maimone & Sinclair, 2010). This can include compassion for employees’ emotional needs, positive
feedback, or active initiative to create a pleasing atmosphere at work (Ozcelik et al., 2008).
A positive emotional climate is beneficial for change efforts in many ways. It can improve strategic
growth (Ozcelik et al., 2008), ease organizational identification, improve performance, and increase
relational strength. This, in turn, facilitates change (Vacharkulksemsuk, Sekerka, & Fredrickson, 2010).
In addition, a positive emotional climate encourages harmonious coexistence with colleagues, and
highlights encouragement and inspiration in daily work (Geue, 2018).
Nevertheless, acquisitions raise a myriad of emotions in both acquirer and target employees. For
example, employees can experience satisfaction with improved conditions, or sadness – even pining over
the pre-acquisition identity. Very often, also anxiety and worry arise (Lawlor, 2013). Therefore it is
significant that both positivity and negativity are contagious (cf. Hatfield et al., 1994; Tran, 1998;
Maimone & Sinclair, 2014). This reflects the emergence of group emotions, which refer to a number of
individuals experiencing an emotion sufficiently similar to be labelled collective (Kemper, 2002). Group
emotions are most often triggered either by group membership (e.g. national pride), or out of co-presence
(e.g. the crowd energy at a sports event or rock concert) (Menges & Kilduff, 2015). Following
acquisitions, positive emotions therefore are likely to predict positive work-related events, whereas
Emotional climate 8
negative emotions often lead to increased negativity (cf. Casper, Tremmel, & Sonnentag, 2019). This
increases the importance of generating positive experiences at work.
Analytical framework
Although previous acquisition literature highlights the negative aspects of emotion, uncertainty need not
always be dominant. Employees can become guided by motivation, if the consequences of the acquisition
are perceived as positive. In contrast, when the consequences appear negative, uncertainty prevails
(Teerikangas, 2012). This suggests that the key to successful integration may be in creating positive
perceptions regarding the organizational outcomes of the deal. Whereas a negative climate leads to
increased negativity, a positive climate can generate positive emotions and organizational outcomes
(figure 1) (Bar-tal et al., 2007). This reflects the nature of emotions following acquisitions illustrated as
a continuum from antecedent events through emotional reactions to outcomes such as employee attitudes
and behavior (Sinkovics et al., 2011, p. 30). The reasoning builds on cognitive appraisal and affective
events theory.
PLACE FIGURE 1 HERE
According to cognitive appraisal theory, emotions are reactive in nature. They are born when individuals
interpret events as pleasant or unpleasant – in effect positive or negative (Lazarus, 1991). Emotions
include an antecedent stimulus (i.e. triggering event), an appraisal of the stimulus (i.e. cognitive
evaluation), and a reaction to the outcome of the appraisal (i.e. the labeled emotion). The emotional
reaction can include for example a subjective experience (the “feeling” of the emotion), facial
expressions (such as raising eyebrows when surprised), or other physiological signs (such as blushing)
(Fredrickson, 2001).
Emotional climate 9
Affective events theory explains the structure, triggers and consequences of emotions in organizations,
thus linking emotions to the workplace. It argues that events at the workplace cause emotional reactions
in the employees. Employee emotions in turn influence work-related attitudes and behavior (Weiss &
Cropanzano, 1996). Affective events refer to situations at the workplace that trigger an evaluation of a
work-related instance (Basch & Fisher, 1998). Such events can reflect both interpersonal relationships
and the execution of job assignments (Casper et al., 2019). The work environment influences these
affective events in making certain outcomes – and thereby certain emotional reactions – appear more or
less likely (Weiss & Cropanzano, 1996).
Figure 1 reflects cognitive appraisal theory and affective events theory during the integration process,
suggesting that a negative work climate is likely to lead to negative appraisals and behavioral outcomes,
while a positive climate increases the likelihood of positive appraisals and behaviors. However, it is also
possible for negative emotions to have positive consequences (for example anger prompting quick and
effective task completion) or positive emotions to turn into negative consequences (for example pride
over positive feedback causing lower productivity). Nevertheless, over time, both negativity and
positivity are more likely to trigger similarly valenced behaviors.
QUALITATIVE CASE STUDY DESIGN
As research on the relationship between emotional climates and post-acquisition integration is still
scarce, a qualitative approach is useful as it allows the discovery of interrelated patterns as well as the
formation of deeper understanding (cf. Edmondson & McManus, 2007). In this chapter, attention is
directed at understanding human experience (cf. Welch & Piekkari, 2017). This chapter adopts an
interpretive sensemaking lens to theorizing from case studies, seeking to find meaning and in-depth
understanding (cf. Welch, Piekkari, Plakoyiannaki, & Paavilainen-Mäntymäki, 2011). The case here is
instrumental, in that the study began with a research question and with a pre-understanding from theory,
Emotional climate 10
which a case could shed light on – not to understand the particulars of the organization, but to understand
the phenomenon (cf. Stake, 1995). Thus, a case that is particularly helpful rather than statistically typical
was chosen (cf. Eisenhardt & Graebner, 2007). The case here is not a company but an acquisition process,
and the unit of analysis the evolving emotional climate as seen by informants influenced by the
acquisition (cf. Fletcher & Plakoyiannaki, 2011).
This approach also allows for contextualized, rich description (cf. Dyer & Wilkins, 1991; Stake, 1995;
Welch et al., 2011), increasing the trustworthiness of the findings. The quality of a single case study lies
not in the generalizability of the findings to any population, but in the intimacy between the researcher
and informants during fieldwork. This occurred in practice through cooperation over one year.
Triangulation was used to capture different points of view within the company, and the researcher was
personally involved in the data collection in order to capture meaningful findings (cf. Welch & Piekkari,
2017).
The acquisition
German Gamma bought Finnish Delta in January 2017. Gamma was a large, international group, whose
operations were chiefly complementary to Delta’s. Delta was a small manufacturing company, at the
time of the deal employing 77 workers. It struggled with profitability and had suffered from occasional
lay-offs for years. Nevertheless, the quality standards were high and the product range competitive. Delta
also had wide sales across Europe, Middle East and India. Thus, the deal was an opportunity for Delta to
regain competitiveness and Gamma to expand its product portfolio. This chapter represents Delta’s point
of view.
Gamma was a large, powerful buyer and therefore drove the integration. Nevertheless, the chosen
integration approach was relatively slow, as few changes occurred in the first six months. The company
names and product brands remained intact, with no plans of amalgamation in the near future. Gamma
Emotional climate 11
reported a willingness to learn from the acquisition, as it was the largest deal they had yet made. Still,
immediate unification was necessary with regard to quality standards as well as reporting practices,
financial systems, and management structures.
Data collection and analysis
Primary data collection occurred over 11 months. First, 17 interviews were conducted in summer 2017,
complemented with 9 follow-up interviews in spring 2018. The interviewees (table 1) represented a total
cross-section of different functions at Delta, including the integration manager from Gamma. Most
interviews were conducted face-to-face, but two were conducted via skype due to the overseas location
of the informants. Most of the interviews were conducted in the Finnish language – the mother tongue
of both parties – but foreign employees were interviewed in English. The interviews lasted 30–60 minutes
and were later transcribed to ease analysis. NVivo software was used to categorize the data according to
both theory-based and data-driven themes. The core themes reflected the deal itself, changes,
communication, emotions, the emotional climate, and management.
PLACE TABLE 1 HERE
The second set of data – short, memo-like diaries – was gathered in autumn 2017 and spring 2018. Diaries
enable the collection of personal, context-specific data (Bolger et al., 2003), which are sensitive and time-
bound in nature (Kenten, 2010). They also enable researcher objectivity and detachment from data
creation (Hurmerinta & Paavilainen-Mäntymäki, 2013), thereby increasing trustworthiness. The diary
frame was available both in print and online, and asked the respondent to rate the emotional climate of
that day, share any emotions they may have felt or detected in their colleagues, as well as contemplate
how the company or they themselves could improve the working atmosphere at Delta. Diarists were
advised to make three to five consecutive daily entries. In autumn 2017, altogether ten respondents made
44 diary entries: 29 online and 15 manually. In spring 2018, altogether six respondents made 21 online
Emotional climate 12
entries. All diary entries were in Finnish, and analyzed iteratively based on a pre-understanding from
theory and from the interview data.
Third, four open-ended, research-specific questions were added to an employee satisfaction survey in
late October 2017. The survey had 56 respondents, representing some 59 % of Delta employees (at that
time totaling 95). The questions asked employees to consider emotions, communication, working
atmosphere, and management following the acquisition, reflecting the key issues found in the interviews.
Most respondents were Finnish-speaking, but a few replied in English. Again, the analysis was an
iterative process. The findings from each set of data are intertwined in the following discussion. Any
direct quotations have been translated by the author, unless originally in English. To protect anonymity,
direct quotations are completely masked.
EMOTIONAL CLIMATE IN THE GAMMA–DELTA ACQUISITION
Employee reactions to Gamma
The employees considered Gamma a good buyer, hoping it would increase investments at Delta, thereby
opening a brighter future. This perspective was strong in all collected data. As a management level
employee put it in 2017 “- - Now we have more resources backing us so that we can develop production.
I have been saying for years that we need certain things, more investments and improved efficiency, but
it has always been so that we have no money. Now I am hoping there will be some.”
Employees were interested in Gamma, perceiving it as proficient, progressive company that made long-
term investments. Gamma’s family ownership was a key aspect for Delta employees, because it was
linked with desirable organizational values. This perception made Delta employees’ more comfortable
with Gamma, encouraging them to think that Gamma cares for its employees. Delta employees also
appreciated Gamma’s keen sense of quality. Still, Delta employees felt that Gamma had not embraced
Emotional climate 13
them as part of the new organization. One key aspect causing this perception was the feeling of not being
heard: “We can [bring matters to the attention of Gamma], but so far it has had no influence. It is their
rules, and we must [follow].”
Still, relief over being bought by a company with a complementary rather than competing product range
was great. Because their recent history had been rather gloomy, the deal showed to Delta employees as
a way to increase the longevity of the company, as well as increase investments. The possibility of intra-
group trade was also welcomed, as were the increased international networks provided by Gamma.
Continuity of work was appreciated, even though Delta employees were expecting the nature of their
work to change somewhat. During Gamma’s previous acquisitions no major lay-offs had occurred,
increasing a sense of safety also at Delta. As one employee stated in 2017: “- - When the new owners
were here to introduce themselves it gave me a good feeling. And that they had production all over
Europe, they are not concentrated in just one country – I mean, if all their production was in China it
would feel like we will be gone too – but now I don’t feel like that, as they have production in Europe in
many countries, so in that way I feel peaceful.”
Nevertheless, becoming a part of Gamma’s wider networks also caused confusion, as the number of
suppliers, customers and colleagues increased, and responsibilities changed. Similarly, Delta’s
organizational structure changed, causing anxiety over some former positions. Although most employees
were confident that Delta’s existence as a part of Gamma would continue, some felt uncertain over what
Delta’s place in the more hierarchical Gamma would look like. The longevity of Delta triggered hope,
but the deal also caused fears that in the future, Delta would be completely amalgamated into Gamma.
In 2017, one employee reflected that “- - somehow you want to hold on to that we are not German but
Finnish.”
Emotional climate 14
Employee reactions to changes at Delta
Despite its positive aspects, growth brought also challenges to Delta. For example, financial reporting
underwent significant restructuring, which was extremely laborious and stressful. The renewal of the
enterprise resource planning system was feared to cause similar workloads – and cause a myriad of
problems before functional. Overall, integration caused stress and tiredness. “I think there is quite a lot
of tension.”
However, the visibility of changes varied between employee groups. Very few changes actualized for
example in manufacturing in the first six months. Many were even hoping for more tangible changes, as
that was perceived as proving the success of integration and the deal as a whole. Improvements in quality,
for example through new machinery, would have been especially welcome to the employees. Yet some
of the changes that did occur caused negative reactions; they seemed either too slow, so nothing
happened, or too fast, so employees did not have time to digest. When changes became more visible in
2018, employees felt the pressure of multiple ongoing processes: “We have no choice, things just have
to move forwards, so we just grit our teeth. And then you can’t even take a look around yourself or do
anything else, you just have to get the job done and that’s it.”
Although in the beginning the future of Delta had seemed brightened, the picture remained blurry.
Especially the strategic direction of Delta was causing wonderment: “One [challenge] is making out the
future. What we are going to continue, what is left here, and what might move somewhere else. And what
it is sensible to do here. There are still many questions; this integration is still in such an early stage.
And of course the same questions should be presented to Gamma, how they have perceived us. Have we
been what they thought, or have we been a disappointment or the fulfillment of hopes.” The uncertainty
also lowered motivation, as the future Delta employees were building was not clear. Some even feared
Emotional climate 15
that completing changes was a step towards shutting down the Finnish plant. Similarly de-motivating
was when significant changes in job descriptions occurred due to restructuring.
In 2018, the fears over Delta’s bottom line that had begun when foreign customers were moved to
Gamma’s local subsidiaries early on increased significantly. Internal sales had not picked up as hoped,
and employees considered it Gamma’s responsibility to boost them. Internal sales had been a key point
in the integration plan, as that would have compensated for the shift in foreign sales. Indeed, the biggest
challenge was considered to be “Raising internal sales now that external clients have been handed over.
Our company will not do very well if our margins fall and our sales fall and our costs rise – it is not a
long-term solution.”
More work was seen as a positive improvement, but in 2017 the expected investments were raising
questions regarding future workloads and possible recruitment: “- - in the latest info we were promised
many kinds of investments, so what does that mean – we only have a few people here, so when are we
going to hire more. You cannot find ready workers for these tasks and the training periods are rather
long.” These questions became more timely when in 2018 new machinery was ordered and new personnel
hired.
The new hierarchy in the organizational structure also caused frustration. As a small, agile company
Delta was used to informal power, yet Gamma as a much larger player had always been hierarchical.
Gamma often had several people doing the tasks that at Delta were previously handled by one, causing
difficulties in workloads and communication. As a management level employee mentioned in 2017:
“There is still some slowness, and they have a complex organization. It is problematic to know, who is
in charge of what. - - It is difficult to identify with whom one should discuss things.” In 2018, concern
over losing Delta’s best practices was added to this confusion: “Well, it doesn’t feel all that nice, when…
Emotional climate 16
When things happen that you don’t see as very sensible.” Employees felt like Gamma did not understand
Delta processes.
In some functions at Delta, workloads seemed unsustainably heavy throughout data collection.
Particularly employees involved in information gathering and planning for integration, as well as those
most involved in implementing changes, were very stressed. Similarly, those who were involved in
planning and knew of changes that were coming felt overwhelmed by the number of overlapping projects.
Employees were hoping that workloads could be evened out. Likewise, improvements in efficiency in
terms of machine repairs and improved communication were called for.
Nonetheless, Delta employees welcomed Gamma colleagues, and valued face-to-face meetings.
Although communication was perceived as insufficient in the beginning, Delta management felt
motivated to change this, and employee views on internal communication were improving by 2018.
However, the grapevine was still a key communication method, and particularly communication from
Gamma seemed too infrequent. Still, as one employee stated in 2017: “I don’t think it [change] is
necessarily a bad thing. It just makes me laugh that some people argue that this is how it has always
been, how it was always done, when you are trying to ask for change – to make suggestions how things
could be done, bring out your own ideas – some are like this is how it has always been, but not me. - - I
am always ready to try. - - I am always willing to learn new things.”
Evolving emotional climate at Delta
Employees had always experienced a positive climate at Delta, which helped it to remain so during
integration. Employees found positivity in enjoyment at work: being able to joke and laugh with
colleagues. They found it easy to discuss social issues along with work-related matters, and felt
comfortable reaching out to anyone at Delta. The employee turnover rate had always been very low, and
the company was perceived to treat the employees well. This also motivated employees to reciprocate.
Emotional climate 17
In the words of one diarist from 2017: “I think everyone has been in positive spirits. There has been
joyful chat around the coffee and lunch table.” Success was experienced as a key positivity trigger, for
example, when employees achieved or even surpassed objectives. The possibility for concentration
without rushing to new tasks was also valued.
The positive climate was seen to clearly improve work. It helped employees be proactive and complete
tasks outside the immediate scope of their job. It increased cooperation and caring about colleagues, and
allowed employees to feel free to ask questions, knowing they would always receive constructive advice.
The employees also perceived that the positive climate increased their working pace, and thereby
productivity. In 2017, one employee considered that “It [a positive emotional climate] is – in terms of
working atmosphere it is essential. That it is nice to come [to work] and work goes well. That there is
more than just completing tasks at your post, that you have breaks and what not. It is essential. If we
didn’t have that, this would be quite a gloomy toil.”
However, the climate at Delta was not solely positive. Many rumors regarding the acquisition were flying
about, raising anxiety and deteriorating the climate. Employees saw this a consequence of
communication lags.  The stress caused by extra work also shortened employees’ tempers and
deteriorated interaction with colleagues. Perceptions of unfair workloads caused friction between
individuals and functions. Similarly, it was noted in the satisfaction survey that “The work load doesn't
allow to carry out tasks properly. Many tasks cannot be handled at all.” Although employees were
assured their jobs were safe, many felt anxious regarding the future.
Communication lags also caused annoyance. Employees wished for more open and honest
communication that could discourage rumors and speculation. As was noted in the employee satisfaction
survey, “The only thing I look back on negatively is that communication emphasized that for customers
or employees nothing will change. In reality changes will occur and especially for customers the
Emotional climate 18
channels will change.” Employees also hoped that managers could increase the positivity of
communication, believing that would inspire unity and motivation. In 2017, management was also called
upon to “Listen to employees (at all levels) and make an effort in fixing problems. There are real
problems, but no-one cares, and some are overworked, which slows down others.” Having to rush and
falling behind objectives was seen as the main cause of “bad” work days. One diarist from 2017 even
mentioned feeling “Hopeless. Because there is too much work.” Employees were feeling expectant,
looking forward to more clarity in Delta’s future.
Compared to what it was pre-deal, Delta employees felt a deterioration in the emotional climate in 2018.
It had become more critical and achievement-centered. Even some resignations were attributed to
integration pressures. The “us” versus “them” attitudes often linked with acquisitions were clear. Rumors
were still strong and Delta’s future still seemed foggy. The worries over how Gamma interpreted Delta’s
bottom line were increasing, and at the same time causing feelings of unfairness. Employees were
becoming worried about how they could cope with the future, and tensions were rising: “People are
rather irritable and tired, and you can see that the positivity I always thought was our strength has
decreased considerably.”
Yet all was not gloomy. Some integration projects had been successfully closed, triggering positivity.
Likewise, the friendliness and helpfulness were not lost, and teams continued to enjoy good atmosphere.
Similar positivity was experienced with Gamma colleagues. Overall, that work would continue was a
key positivity trigger. The realization of investments increased employees’ sense of security in the future:
“In the end I feel better than last autumn, and we have now had many positive things like investments
and such, so of course they build faith in the future.”
In 2018, employees also saw improvement opportunities at Delta. Help in prioritizing tasks was asked
for, and questions if some of the old flexibility could be regained were raised. Delta employees
Emotional climate 19
considered it would be beneficial for Gamma to allow some differences in practices, where Delta’s old
ways had been better than Gamma’s. Employees wished immediate supervisors could take on a proactive
role in increasing positivity, as this would help boost morale. However, supervisors were “feeling
confused… and at the same time you should try not to show the negative emotions.” Nevertheless, in the
employee satisfaction survey in October 2017 employees evaluated their job satisfaction at 7.8 out of 10,
which is extremely good.
DISCUSSION
At Delta, it seems like Gamma was not aiming for a particularly high level of unification. Instead, they
seemed to focus on task integration, with very little human integration visibly taking place. This may
have influenced employees’ perceptions of deterioration emotional climate (cf. Birkinshaw et al., 2000),
highlighting the importance of considering the softer side of acquisitions (cf. Cartwright & Cooper,
1995). As amalgamation was not Gamma’s objectives, it is clear that very little acculturation took place.
However, employees at Delta welcomed social controls such as information sessions and social
gatherings, emphasizing the importance of socialization during integration (cf. Bauer et al., 1998;
Larsson & Lubatkin, 2001; van Maanen & Schein, 1979). This shows that even when human integration
is not a key objective, considering the human factor can be highly relevant for carrying out task-related
changes.
Similarly, as full amalgamation was not Gamma’s objective, very little cultural change was visible at
Delta. However, it was clear that the organizational climate was changing; employees moods regarding
their jobs, the company, and the management were fluctuating (cf. Ashkanasy, 2003). This highlights
that although much of acquisition literature especially on the human side focuses on cultural change,
employees react emotionally also to other types of change. Although it is important to consider cultural
compatibility following acquisitions, cultures change very slowly (cf. Cartwright & Cooper, 1993;
Emotional climate 20
Kusstatscher & Cooper, 2005). Thus, it is very likely that even when no cultural change is intended, or
when cultural change has not yet taken place, something within the organizational environment changes,
causing emotional reactions. This chapter suggests it is the emotional climate of the organization, as the
climate is more susceptible to change following new leadership (cf. DeRivera, 1992).
The Delta case shows that employees do experience and perceive the benefits of a positive emotional
climate during organizational change (cf. Ashkanasy & Daus, 2002; Birkinshaw et al., 2000; Sekerka &
Fredrickson, 2008). Employees expressly mentioned how a positive emotional climate supports
cooperation (cf. Fischer & Manstead, 2008), encourages positive relationships among colleagues (cf.
Geue, 2018), and improves performance (cf. Ozcelik et al., 2008). The positive climate employees
experienced at Delta reflects that managers and colleagues were ready and willing to listen to possible
concerns, and wished to encourage positivity among employees (cf. Ozcelik et al., 2008). Although this
did not rule out the existence of negative emotions , it maintained the overall atmosphere at Delta more
positive than negative (cf. Bar-tal et al., 2007).
Employees did, indeed, experience a myriad of emotions with regard to the acquisition (cf. Lawlor,
2013). In many interviews, employees also reported their colleagues experiencing similar emotions,
suggesting that some level of contagion had occurred (cf. Hatfield et al., 1994; Maimone & Sinclair,
2014; Tran, 1998). Group emotions seemed to be triggered both through membership (such as taking
pride in Delta’s old best practices, which were seen as superior to Gamma’s) and co-presence (such as
enjoying team meetings and socialization efforts) (cf. Menges & Kilduff, 2015).
At Delta, the positive climate seemed to facilitate change (cf. Vacharkulksemsuk et al., 2010) mainly
through boosting morale. Positivity did seem to create more positivity, whereas negative emotions grew
as they spread (cf. Bar-tal et al., 2007; Casper et al., 2019). The reactive nature of emotions (cf.
Fredrickson, 2001; Lazarus, 1991) was visible in employees’ explanations of why events and changes
Emotional climate 21
felt the way they did. This also proves that events in the workplace do trigger emotions (cf. Basch &
Fisher, 1998; Weiss & Cropanzano, 1996). The behavioral effects of emotional events were visible for
example in lowering morale and motivation following negative emotions (cf. Weiss & Cropanzano,
1996).
MANAGERIAL IMPLICATIONS
At Delta, employees reacted to all integration-related changes as predicted in the literature on human
integration. This suggests that although the acquirer may not intend to carry our socio-cultural changes,
employees can react very emotionally. Thus, employee emotions need to be taken into consideration
when planning post-acquisition changes. The employee experiences at Delta also show that the emotional
climate is indeed dynamic, and can change during the integration process. Employee emotions did seem
to feed similarly valenced experiences, meaning that a positive climate can encourage positive
experiences. However, it does not rule out negative ones. This highlights the importance of understanding
how the emotional climate can change following different experiences. Therefore, it is important for
acquirers to acknowledge that emotions vary throughout the integration process, and that even though
the emotional climate can seem positive, negative experiences may be brewing under the surface.
Employees at Delta seemed to react most negatively to a perceived loss of direction. When the future
strategy of the company became unclear to them, they experienced confusion, uncertainty, anxiety and
lack of motivation. The employees seemed to want for more communication, and especially more
concrete communication, from their immediate supervisors. Acquirers should therefore note that despite
their best laid plans, if the acquired employees’ immediate supervisors are not on board, the deal can turn
sour very quickly (cf. Teerikangas, 2012). The importance of communication following acquisitions has
been studied many times, but despite the amount of literature available on the subject, it seems that in
practice there can never be too much communication. However, of course top management must consider
Emotional climate 22
if and when to let employees in on strategic discussions. Nevertheless, showing compassion in terms of
open and frequent communication will likely not go amiss.
Considering Delta employees’ experiences, post-acquisition positivity centers on how the acquirer is
perceived and what the future of the pre-acquisition company looks like. Thus, if acquirers wish to
increase positivity, it may be beneficial to emphasize the aspects of the deal that employees are likely to
perceive as most interesting or positive. The features of the acquisition partners as well as the benefits of
the deal to the employees can be key concerns. For example, the continuity of employment, longevity of
the company, or possible future investments and improved resources can encourage employees to make
the deal a success. Even change itself can be considered a positive challenge, raising curiosity. Frequent,
open, honest communication can relieve anxiety. Honesty in particular is important, as misleading
information can quickly turn into negative emotions.
At Delta, negative emotions, in turn, seemed to focus on uncertainty. Thus, in order to alleviate
negativity, it is important to continuously crush rumors and cut speculation. This may be difficult, if such
information spreads through the grapevine. Major change always triggers fear and uncertainty, meaning
that increased communication and enough time to digest what changes will occur can help relieve
anxieties. Explicit justification of planned changes may similarly help get employees on board change.
At the same time, acknowledging that those “in the know” carry a heavy mental toll of managing the
integration both in practice and emotionally is important, as keeping secrets from colleagues and
subordinates can be difficult. Furthermore, making sure resourcing is done in a sustainable way can help
with feelings of exhaustion and stress when workloads spike during integration.
Besides the ways of supporting a positive emotional climate following acquisitions, managers also have
many tools for supporting positivity in general. For example, the pre-acquisition emotional climate can
greatly influence the first reactions triggered by the deal, meaning that paying attention to the
Emotional climate 23
organizational climate also prior to an acquisition may be advantageous. Similarly, a feeling of team
spirit can increase unity and improve employee performance, and can be boosted through organizational
socialization efforts such as group gatherings. Positive, encouraging communication in turn can be used
to boost motivation. Communication mismatches can be avoided through establishing clear
communication chains throughout the company. Finally, employee well-being in terms of improving the
physical workspace and creating psychological comfort at work can improve overall employee
performance.
CONCLUSION
This chapter set out to examine how the surrounding emotional climate influences the emotions emerging
during the integration period. More particularly, this chapter explored how organizations can influence
the emotional climate surrounding change, and thereby encourage the emergence of positive rather than
negative employee emotions. According to the findings, companies can support the emergence of
positive emotional climate through offering employees positive emotion triggers and making sure the
employees have an objective to work towards – that the strategy of the post-acquisition company is clear.
Through a single case study of a German–Finnish acquisition, this chapter revealed that the positive or
negative valence of the emotional climate surrounding change is likely to trigger similarly valenced
emotional experiences in the employees. The findings show that positivity following acquisitions centers
on images of the acquirer and the future of the company, whereas negativity stems from the myriad of
uncertainties related to acquisitions and integration. As expected, a positive emotional climate was found
to ease integration, as it predisposes employees to positive perceptions and behaviors.
The theoretical contribution of this chapter lies in the new perspective it brings to the discussion on
emotions following acquisitions. On the one hand, literature on emotions following acquisitions is still
Emotional climate 24
scarce. On the other hand, research on the influence of organizational cultures on post-acquisition
integration far surpasses that on organizational climates. Organizational cultures have been found to take
even years to change following acquisitions. However, as climates can change more quickly, it may be
that in fact the emotional climate influences integration first. The framework in figure 1 can help scholars
understand why post-acquisition integration is such a complex, volatile process both in the short and long
term, both in cases of small scale and extensive integration.
Interestingly, it was found that even if integration is minimal, employees are likely to experience
emotional reactions. Therefore, ensuring that the surrounding emotional climate is positive can help
acquirers achieve sought synergy objectives easier and quicker, despite the intended level of integration.
Revealing the dynamic nature of the emotional climate also deepens understanding of the role of
emotions following acquisitions, as previous research largely focuses on single emotions or emotions as
singular events.
Managerially, this chapter has offered many insights and helpful hints to ease integration processes. It is
important for managers to remember that employees are likely to react to changes emotionally, and that
the emotional dynamics at the organization can change even quickly. Thus, line managers have an
important role in keeping up a positive emotional climate even when faced with negative events.
Emphasizing positive events and alleviating the consequences of the negative is likely to increase
employees’ positive emotions regarding the deal, whereas making sure that working is comfortable both
physically and mentally is likely to improve performance.
The limitations of this chapter stem mainly from the context-specific nature of a single case study. Future
research in different case contexts is necessary to gain deeper understanding of how for example the
chosen integration mode, the pre-acquisition emotional climate, or the employees’ affective dispositions
influence the emotional climate following acquisitions. Similarly, data for this chapter were collected
Emotional climate 25
almost solely from the acquired organization. A more balanced data collection can offer future research
increased understanding of how the emotional climate shapes with regard to the acquiring, the acquired,
and the integrated company. Finally, as this chapter can only propose outcomes based on previous works,
future research is necessary to reveal the possible relationship between emotional climates and
acquisition performance.
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Emotional climate 28
ILLUSTRATIONS
Figure 1 Emotional climate during integration
Table 1 Interviewees
Job title Function Length ofinterview 1
Length of
interview 2
Type of
interview
Managing Director Top management 57:44 57:38 Face-to-face
Deputy Managing Director,
Integration Manager Top management 1:03:18 52:01 Face-to-face
Supply Chain Director Production 47:34 28:30 Face-to-face
Chief Financial Officer,
Personnel Director Finance 1:02:27 56:36 Face-to-face
Country Manager Sales 52:44 51:02 Face-to-face
Manager Sales 40:33 - Skype
Customer Service Coordinator Customer Service 50:10 57:08 Face-to-face
Senior Purchaser Purchasing 58:03 - Face-to-face
Purchaser Purchasing 44:03 - Skype
Logistics and Quality Manager Logistics 1:02:25 - Face-to-face
R&D and Training Manager Technology 1:02:07 49:00 Face-to-face
Manufacturing Supervisor Production 40:31 - Face-to-face
Assembly Supervisor Production 46:17 48:31 Face-to-face
Employee Production 38:27 - Face-to-face
Employee Production 54:45 - Face-to-face
Employee Production 1:02:07 54:15 Face-to-face
Employee Warehouse 58:33 - Face-to-face
Acquiring
organization
Target
organization
Integrated
organization
Negative
climate
Negative
emotions
Negative
outcomes
Positive
climate
Positive
emotions
Positive
outcomes
Post-acquisition integration