M&A started in the end of the 20th century and has become a popular issue in world wild business. Researches were conducted to discuss about the financial issue and the executive strategy in the organizations (Smith, 1973; Fowler & Schmidt, 1989; Anand &
Singh, 1997). However, few studies focus on discussing the employees‟ perspectives (Schweiger & DeNisi, 1991; Fried, Tiegs, Naughton, &Ashforth, 1996). McManus and Hergert (1988) stated that while many enterprises neglect the personnel side in the organization, it can be the key of success in M&A. Gap of management style and the lack of cultural awareness can cause the failure of M&A (Cartwright & Cooper, 1992).
On February 6th, 2002, Taiwan passed the law of mergers and acquisitions. Since then, Taiwan‟s M&A activities became popular and the transaction amounts raised. Up until September, 2013, the total cases of M&A in Taiwan come to 2,028 and the total amount of the transaction was over 9 billion NT dollars. Table 2.1 below shows the details.
Since M&A is active in the society, entrepreneurs have to prevent the organization from being affected by the bad consequences such as increasing turnover rate and low working performance (McManus & Hergert, 1988). However, M&A is somehow complicated and difficult for the organizations. When processing the M&A strategy, cases such as BenQ and TSMC, which cause the conflict between the employees in Acquiring Company and Target Company should be alerted in mind.
Table 2.1
Statistics of Mergers & Acquisitions cases in Taiwan
Year Type Mergers Acquisitions Stock
Note. Integrated the report from Commerce Industrial Services, Ministry of Economic Affairs, R. O. C., January 9th, 2014, Retrieved from http://gcis.nat.gov.tw/welcome.jsp.
Psychological Contract Breach
A common definition of psychological contract breach is a concept of employees‟
feelings of disappointment such as frustration and betrayal arising from their faith that their organization has broken its work-related promises. In other words, it is subjective for a person who „feels‟ breach, which we called „perceived breach‟. We can see that it is not necessary to be real. Some negative moods were from the unsatisfied expectation. People will react severely especially when they work hard but does not get the rewards they deserve (Morrison & Robinson, 1997). What‟s more, Morrison and Robinson also stated that the bigger gap of obligation and responsibility is between employees and employers, the bigger feelings of violation will be.
For psychological contract, the components are basically based on psychological and economical side of employees. For example, employees can be psychological satisfied with the organizational support, chance of training and developing, and guarantee of jobs while they can be economical satisfied by annual salary and benefit. Employees will not only assess the extent of violation but also evaluate the magnitude and importance of the violation (Morrison & Robinson, 1997).
Robinson, Kraatz, and Rousseau (1994) proposed that when individuals perceived that the promise made by employers will not be fulfilled, the psychological contracts were breached. It will cause negative impact such as intention to leave the organization or low performance to the organization. More studies for psychological contract breach are listed in Table 2.2.
Table 2.2
Summary of Research on Psychological Contract Breach Authors / Year Main findings
Guzzo, Noonan &
Elron (1994)
a) Research for expatriate.
b) Psychological contract violation reduced organizational commitment and increased turnover rate.
Robinson & Rousseau (1994)
a) Investigate the new employees graduated from MBA.
b) 54.8% of the participants have the feeling of psychological contract breach.
c) Psychological contract breach is negatively related to trust, organizational satisfaction, job satisfaction and intention to stay.
Psychological contract breach is positively related to turnover rate.
Robinson & Morrison (1995)
Robinson (1996)
Increasing turnover rate, reducing work performance, and reducing the devotion for organizational citizen behaviors are all relative to psychological contract breach.
Shalk & Freese (1997) When the incentive to the employees can not be fulfilled, employees will have
Keith & Newstrom (1997)
When the employees didn‟t reach their expectation, they will have lower job satisfaction and performance. The employees might also quit under the circumstances.
Turnley & Feldman (1998, 1999)
a) Psychological contract breach will cause the reduction of employee‟s job satisfaction, organization commitment, and both in-role and extra role behaviors on performance. On the other hand, it will cause the increase of turnover.
Kickul & Lester (2001) b) The relationship between psychological contract breach and employees‟ attitude (OCB, job satisfaction, and negative affect).
Equity sensitivity has the moderating effect on some relationship between psychological contract breach and Negative affect and job satisfaction and OCB.
Kickul, Neuman, Parker, & Finkl (2001)
Indicated that when the employees feel not only psychological contract but also procedural justice and interaction justice had been violated, they will show the anti-citizenship behavior.
Note. Author organized the above table
In the previous study, there are different ways to measure the psychological contract breach. Robinson and Morrison (2000) combine two scales to measure psychological contact
another way to evaluate the extent of the psychological contract breech which measures the different kind of psychological contract of employees first then to see how well the organization fulfilled it. Other studies are having similar methods as these two studies. Since this study only wants to know if the breaches happened to employees, we don‟t have to measure the exact items that employees want. Therefore, we will adopt scale that developed by Robinson and Morrison (2000).
Job Involvement
Gostick and Elton (2009) stated that the wrong management strategy cause some problems. „Presenteeism‟, means those who are presented but are not focus on the job. These employees did nothing good for the organization performance. Hemp (2004) reported that the presneteeism directly or indirectly costs over $150 billion to United States‟ business. Sirota (2005) also mentioned in „The enthusiastic employee‟ that those who don‟t concern about the organization are like bombs which bring disadvantages. Hence, job involvement is not merely about individual‟s psychology but the organizational performance issue (Kanungo, 1982).
For Managers, how to maximize employees‟ value and to enhance the employee‟s job involvement in organization is always a big issue. The importance of job involvement can never be over emphasized.
The earliest study for job involvement can be traced back to Lodahl and Kejner (1965).
They combined central life interests (Dubin, 1956) and ego-engagement (Allport, 1947) and proposed the concept of job involvement. As it was regarded as an important issue in the organization, some researchers started to do research on this new term (Lawler & Hall, 1970;
Saleh & Hosek, 1976; Kanungo, 1982). Some researches took job involvement as a variable to find the relationship with other variables in the workplace (Jones, James, & Bruni, 1975;
Weissenberg & Gruenfeld, 1968; Huselid & Day, 1991; Brown & Leigh, 1996).
Definition of Job Involvement
There were many researchers give different definition to job involvement. The origin of the Job involvement started from Allport (1947) defined as the situation in which the person
“engages the status seeking motive” in his work. Lodahl and Kejner (1965) Proposed that job involvement is a multidimensional attitude and give two statements while Lawler and Hall (1970) considered it is different between two statements proposed by Lodahl and Kejner. In 70‟s research tended to stated job involvement as how individual considered their job in their life (Saleh & Hosek, 1976; Robinowitz & Hall, 1977; Reitz & Jewell, 1979.) After 80‟s, job involvement become a more psychological issue for employees. Take Kanungo (1980) for example, it had been defined as an individual‟s psychological identification with a certain job which can satisfy their current need. Several definitions are listed in Table 2.3.
Table 2.3
Summary of Definitions: Job Involvement.
Scholars /year Definition
Allport (1947) Ego- involvement was defined as the situation in which the person
“engages the status seeking motive” in his work. (p.123) Lodahl & Kejner (1965) Proposed that job involvement is a multidimensional attitude.
a) An extent of how employees regard their job or how important is job to employees‟ self-image.
b) It is influenced by self-esteem and personal job performance.
Lawler & Hall (1970) They argued that the statements that proposed by Lodahl and Kejner (1965) are different type of attitude, which can not be represented in one term.
They think that the first statement can be regarded as job involvement while another can be explained by expectancy theory.
In this study they also consider the second statement to be intrinsic motivation since people realized that job performance can satisfy their self-esteem and can be reached when individual works hard for it.
Table 2.3 (continued)
Note. Author organized the above table.
Saleh & Hosek ( 1976) People will have job involvement under four conditions:
a) When individual considers their job as their center of life.
b) When individual take the initiative to participate their job.
c) When individual regards job performance as self-honor.
d) When individual think that their job performance is in the same concept as themselves.
Robinowitz & Hall (1977) Reviewed the literature of job involvement and give two definitions:
a) performance-self-esteem contingency
For those who think work is a very important part of their life and who is very much personally affected by his whole job condition: his coworkers, the work itself, the company, etc.
b) component of self-image
The extent to how individual identified psychologically with his work, or the importance of work in his total self-image.
Reitz & Jewell (1979) Job involvement is the extent to which one's work is an important part of his life. To which can influence job performance and other worker behaviors.
Kanungo (1982) Argued that involvement either in particular job or in general work can be viewed as a “cognitive or belief state of psychological identification.” (p. 342)
The study also stated that two factors will influence the job involvement:
a) The saliency of one‟s both extrinsic and intrinsic needs.
b) One‟s perceptions about the need-satisfying potentialities of the job (or work).
Robbins (1998) Stated that job involvement is the psychological identification to one‟s job, which means the importance of job satisfaction to one‟s self-worth. influence by the socialization. Thus, WC is stable (it will not change as well when the working environment had been changed.)
JI is how individual commit and concern to their present job.
According to the summary above, we can find that most of the researchers agreed that job involvement is how people value their job. That is, when individual perceived the job performance can satisfy one‟s self-esteem need, job involvement will formed. Thus, job involvement is always a main factor to influence one‟s satisfaction and self-growth in organization. In addition, it can also be an important component to motivate employees and fulfill the goal of companies (Hackman & Lawer, 1971). After the comparison of previous studies, this study will adopt the definition of Kanungo (1982) which is the cognitive or belief state of psychological identification.
Theoretical Perspectives on Job Involvement
Synthesized the previous study, Rabinowitz and Hall (1977) proposed the comprehensive model that most of the literature agreed with the following three influencing factors of job involvement:
a) Job Involvement as an Individual Difference Variable:
Under this perspective, job involvement can be regarded as an independent variable of personal characteristic which are personal gender, age, education level, tenure and marital condition. Dubin (1956) indicated that job involvement will have strong relationship with the moral character of work, one‟s work ethic, and a sense of personal responsibility. Lodahl &
Kejner (1965) put it as the internalization of values toward work or the importance of work in the worth of the person. Other researchers who advocated this perspective considered the job involvement depends on one‟s attitude toward job. They proposed that there won‟t be any difference for their attitude and behavior toward job even if there are other situational factors (Hall & Mansfield, 1971; Runyon, 1973).
For this perspective, researcher considered the cognitive and attitude of job will influence by working environment. McGregor (1960) stated that job involvement will influence by organizational condition. Researchers of this perception think that the degree of job involvement will be influenced by working environment such as leadership and organizational climate. They also argued that individual‟s personal characteristic will influence job involvement in the organization (Vroom, 1964; Bass, 1965).
c) Job Involvement as an Individual-Situation Interaction:
Farris (1971) argued that job involvement was functioned by the interaction of individual with his environment. It can not be considered solely in an individual characteristic.
This perspective emphasized on the interaction of Individual and situation since they considered job involvement will be influenced by both of them (lawler & Hall, 1970; Wanous, 1974).
Measure of Job Involvement
This study lists two major measurements for job involvement in Table 2.4.
Table 2.4
Brief of the Job Involvement Measurement Authors / Year Brief
Lodahl & Kejner (1965)
a) Widely used by research on job involvement.
b) 20 items through 5-point Likert scale.
c) Multidimensional. To test the identity toward job and the influence of performance to self-esteem.
d) Criticized by some researchers because of the vague descriptions. (Rabinowitz & Hall, 1977; Paullay, Alliger,&
Stone,1994)
(Continued)
Table 2.4 (continued)
Note. Author organized the above table.
Brown (1996) found out that Kanungo‟s measurement can lower the confusion of the items. Since it is more precise, clear and can indicate the core of the meaning, the researchers adopted the measurement developed by Kanungo (1982).
Psychological Contract Breach and Job Involvement
In a number of the previous studies, psychological contract breach was viewed as a factor to cause many unpleasant work- related consequences. For example, reduce the job satisfaction and intention to stay (Robinson & Rousseau, 1994; Davis & Newstrom, 1997).
Studies that show the impact of psychological contract breach to some job attitudes are easily to find. Zhao, Wayne, Glibkowski, and Bravo (2007) have previously observed how psychological contract breaches impact employee productivity. Griffin, Neal, and Parker (2007) indicated that beyond influencing productivity, psychological contract breaches may also impact how adaptable and proactive employees are at work. Ng, Feldman, and Lam (2010) made the research on the relationship of Psychological contract breach with Innovation-related behavior and affective commitment.
Job involvement, regarded as one of the job attitudes (Hollon & Chesser, 1976; Janasz, Forret, Haack, &Jonsen, 2013), can also be influenced by psychological contract breach.
Authors / Year Brief
Kanungo (1982) a) Stated that the previous measurement is not appropriate because of the unclear description and having too many dimensions.
b) Separate the concept of Job involvement and work involvement
c) 10 items for job involvement questionnaire (JIQ) d) Also widely used by research on job involvement.
mistrust that caused by failing to complete the promise to employees (Rousseau, 1989). Thus, low job satisfaction and commitment and the intension to leave the organization cause the employees low involvement toward their job.
In organizational behavior or psychological field, few studies explain the direct relationship between psychological contract breach and job involvement in the organization.
According to some empirical studies, perceived psychological contract breach and feeling of violation can have negative relationship with job attitudes (Schmit, Amel & Ryan, 1993;
Robinson, 1996). From some other studies, researchers can see the relationship of job involvement and the mentioned job attitudes (Loadhl & Kejne, 1965; Kanungo, 1982). Thus, based on the limited studies, the author came up the hypothesis:
Hypothesis 1: Psychological contract breach is negatively correlated with job involvement.
Perceived Organizational Justice
Organizational justice, which is an essential issue for managers, can be a main factor that influences employees‟ behaviors (Dittrich & Carrell, 1979; Niehoff & Moorman, 1993;
Masterson Lewis, Goldman, & Taylor, 2000).
The origin of the justice will be traced back to 1960s. Homans (1961) developed the equity rule from social exchange theory. He stated that people behave for rewards or escape from punishment. Adams (1965) developed the equity theory based on Homans point of view.
He proposed that people will compare the rate of output/ Input, to see whether they were treated equally. It is the idea for distributive justice (Yochi & Spector, 2001). However, this concept missed the distributing process which can not represent the reaction to the inequity that happened to employees (Crosby, 1976; Folger, 1984). Researchers started to pay attention to the procedural justice which focused on the process before distributing.
perceived equity in the communicating process. He argued for the justice when pursuing goals. Bies and Moag (1986) considered that in the previous study, the interaction of individual with others has been overlooked. They proposed the concept of interactional justice to measure whether the organization respect their employees when making the decision. They argued that although procedural justice and interactional justice have significant relationship, interactional justice can still make up the deficiency to the explanation of procedural justice. It emphasized on the interaction of employees and employers during the process.
Greenberg (1987) considered organizational justice to be individual‟s feeling of being treated fairly in the organization, which can also be described as the equity in the working environment. That is, whether the employers showed equity or not can influence employees‟
behaviors (Organ, 1988). When the employees interact with others, they will involve themselves to the organization by the degree of how they feel fair to the organization. In other words, equity theory can explain how employees were satisfied with the organization.
(Schermerhorn, 1996). The study categorized three dimension of the organizational justice in Table 2.5, which are distributive justice, procedural justice and interactional justice.
Table 2.5 Theory and Equity Theory (Homans, 1961; Adams, 1965).
It is to measure if the employees perceive fairness in distributing resources (Fogler & Greenberg, 1985).
It emphasized on the employees‟ feeling of the result-oriented (Adams, 1965; Leventhal, 1976).
The degree of how they think to the distribution of the payment (Robbins, 1998).
How employees perceive the equity of distributing (Niehoff
& Moorman, 1993) b) Procedural
justice
Traced back to the research on the equity of the law (Thibaut
&Walkers, 1975). Stated that the procedure is important in any law cases. They also indicated that if individual react positively related to the perceived equity in distributing process.
Emphasized on the feeling of the process- oriented (Fogler
& Greenberg 1985)
Kim and Mauborgne (2005) proposed that the procedural justice is more important than the distributive justice.
Konovsky and Pauh (1994) stated that procedural justice is the reliable predictor to employees‟ behaviors.
c) Interactional justice
Developed from the procedural justice and put more emphasis on the interaction side in decision making process (Bies & Moag, 1986. p.44)
Fogler and Skarlicki (1997) stated that both procedural justice and distributive justice did not mention the importance of the interaction of people.
Bies and Moag (1986) proposed that the relationship of
procedure→Interaction→outcome Note. Author organized the above table.
Since organizational justice is been regarded as multidimensional (Scholl, Cooper, &
Mckenny, 1987), the study synthesizes the previous study. The result is listed in Table 2.6.
Table 2.6
Organizational Justice: Dimension Used in the Previous Studies.
Scholar/year dimension Note
Adams (1965) Distributive Perceive equity of individual‟s payment and the job involvement.
Thibaut & Walker (1975) Distributive procedural
Earliest research on procedural justice.
Stated that people want to have the right to have the power during decision making process.
Bies & Moag (1986) Procedure Interact Outcome
Proposed the relationship of three dimensions.
Greenberg (1987) Reactive-proactive Process-content
Use these two dimensions to develop the distributive and procedural justice.
Procedural justice influences how employees evaluate the organizations.
Interactional justice influences the perception of how individual been salary inequity, procedural justice and organizational citizenship behaviors..
Find the highly relationship between procedural and interactional justice.
Proposed that we can combine them together.
Note. Author organized the above table.
Greenberg‟s (1990) concept to the justice is adopted in this study. The author measures the three dimension of the organizational justice. The author adopted Moorman‟s (1991) measurement in the questionnaire.
Greenberg‟s (1990) concept to the justice is adopted in this study. The author measures the three dimension of the organizational justice. The author adopted Moorman‟s (1991) measurement in the questionnaire.