Organizational change in multinational corporations: a case study of ecolab-nalco mergerin Kenya

Abstract

Mergers and acquisitions are complex events in organizational life for which we have incomplete understanding, in part because researchers have tended to consider only partial explanations of them. The research establishes how sustainability of different cultures and functional processes is a function of the similarity and complementarity of the two merging businesses (combination potential), the extent of interaction and coordination during the organizational change process, and the lack of employee resistance to the combined entity. The approach differs from traditional methods of studying mergers and acquisitions in two ways: (1) the success of a merger or acquisition is gauged by the degree of collaboration realization rather than more removed and potentially ambiguous criteria such as accounting or market returns; (2) the key attribute of combination potential is conceptualized not only in terms of the similarities present across businesses, as in most studies of mergers and acquisitions, but also in terms of the production and marketing complementarities between the two businesses. The basis of this research will be to establish the influence of organizational change on multinational corporations in Kenya with a focus on the factors they take into consideration before the change process and their positions after the change, in this case the merger between Ecolab and Nalco. The purpose of this research therefore will be to conduct a case study of Ecolab- Nalco merger in Kenya in particular to try and understand the process of changing from a single MNC (only Ecolab) to combined MNC (Ecolab and Nalco or other MNCs), understand the factors that drive MNCs to merge and factors to be considered in order to achieve positive or successful results. In addition, the study will seek to understand how change management in MNCs influences the pace and direction of the globalization process, and how the key personnel is affected during the merger process. The research shows that the main reasons for MNCs merging are profit, expansion, market opportunity and to achieve growth. A review of the main theories covered in the literature review, resource dependency theory and the theory of change shows that a mixture of both of these theories (strong relationship between the two) is important when organizations decide on what factors to consider in an M&A process. This is mainly because most of the opportunities that are sought by both merging organizations will take advantage of the available resources to achieve their intended strategic goals. The theory of change will also help such organizations in outlining the necessary actions to take before, during and after the merger to achieve positive results by clearly establishing the steps to undertake. The data will be collected by conducting one- on- one interviews and qualitative method of data analysis used to analyze it. From this research, we will realize that MNCs have a lot in common. Findings also suggest that MNCs consider merging to utilize resources that an existing MNC may not have before the merger, for example, Ecolab did not have an experienced work force in the Oil, Mine, Energy, and Water sectors in Kenya before the merger, until the expatriates were brought. Other main reasons for merging in MNCs are revenue growth, expansion/growth, market opportunity, and shareholder motivation- what the shareholders believe will bring them the highest rates of returns. In overall therefore, the findings provide strong support for an integrative/ resource dependency theory of mergers and acquisitions.