A Recursive Perspective on Discursive Legitimation and Organizational Action in Mergers and Acquisitions

• Published in: Organization science (Providence, R.I.) R.I.), 2010-01, Vol.21 (1), p.3-22
• Main Authors: Vaara, Eero, Monin, Philippe
• Format: Article
• Language: English
• Subjects: acquisition; Acquisitions & mergers; Acquisitions and mergers; Analysis; Business administration; Business enterprises; Business structures; Comparative analysis; Corporate mergers; Corporate synergy; Decision making; discourse; Discourse analysis; Economics and Finance; Enterprises; Failure; Humanities and Social Sciences; Integration; Journalism; Laws, regulations and rules; Legitimacy; Legitimation; merger; Mergers; Mergers, acquisitions and divestments; Organization theory; Organizational effectiveness; Pathology; Pharmaceutical industry; Pharmaceutical preparations; Political discourse; Political discourse analysis; Political integration; Sense making; Studies
• ISSN: 1047-7039; 1526-5455
• DOI: 10.1287/orsc.1080.0394

This paper challenges the predominant view that legitimation is merely a specific phase in merger or acquisition processes. We argue that a better understanding of postmerger organizational dynamics calls for conceptualization of discursive legitimation as an inherent part of unfolding merger processes. In particular, we focus on the recursive relationship between legitimation and organizational action. We have two objectives: to outline a theoretical model that helps one to understand the dynamics of discursive legitimation and organizational action in postmerger organizations, and to examine a revealing case to distinguish the inherent risks and problems in discursive legitimation. Our case analysis focuses on the merger between the French pharmaceutical companies BioMérieux and Pierre Fabre. We adopt a critical multimethod approach and distinguish specific discursive dynamics and pathological tendencies in this case. The analysis highlights the unintended consequences of discursive legitimation, the central role of sensegiving and sensehiding in discursive legitimation, the inherently political nature of legitimation and the risks associated with politicization, the special problems associated with fashionable discourses and the role of the media, the use of specific discursive strategies for legitimation and delegitimation, and the crucial role of actual integration results. This analysis adds to the existing research on mergers and acquisitions by treating discursive legitimation as part of the merger dynamics. In particular, our case analysis provides a new explanation for merger failure. We also believe that the recursive model connecting discursive legitimation and delegitimation strategies to concrete organizational action makes a more general contribution to our understanding of organizational legitimation.