Francesco Zirpoli (Università di Venezia)
"Post merger "network" integration: the case of Fiat and Chrysler"
I will present a forthcoming book on the merger between Fiat and Chrysler, co-authored with Markus Becker and Josh Whitford. This is a book about mergers of large firms which have extensive supply networks who carry out a substantial part of their productive and innovative activity. Mergers are already very difficult judging by their failure rate which are often cited in the range of 70%. In a world where the firms merging are not self-contained but rather, are very heavily embedded in their supply networks, the challenges involved in a merger seem even more daunting: How do you merge two production networks? Our arguments challenge the tendency of so many to highlight the vision and agency of organizational leadership on the one side, and suggests that too short shrift is given to questions of a number of organizational process and factors on the other. Indeed, the power of corporate leaders is triply (at least!) complicated and constrained. There is, first, the extension of the so-called agency problem down the hierarchy, wherein those to whom higher ups give orders have ideas and interests of their own and sometimes do not do as they are told. Then there are limits to the knowledge, competence, and abilities of leaders and subordinates alike; even if they are making every effort to complete (or invent) some task or other, they may prove unable. Finally, as Pfeffer and Salancik pointed out long ago, things are complicated still further when resources that matter sit external to the corporation.
The book draws on evidence gathered through a longitudinal analysis of the merger between Fiat and Chrysler. In the automotive industry, i.e. the context in which the merger takes place, many technologies are owned and produced by automotive suppliers with interests of their own as well as limitations in their knowledge, competence, and abilities, that is often where they sit. This latter aspect is what distinguishes our perspective from other analyses of mergers. In cases such as the one we treat, mergers of firms are effectively mergers of supply networks. The theoretical language and concepts we use to analyze this grand organizational experiment involving Fiat and Chrysler rely on a contextually updated variant of the Carnegie’s school’s “behaviorally plausible” approach to the study of organization according to which: firms are “socio-political entities” subject to cognitive and economic constraints; people and groups of people in complex modern organizations are guided by “rules of thumb” and “standard operating procedures”; organizations are rife with conflict over resources between highly interdependent people and groups of people. Those conflicts are not just or even mainly over resources in a zero-sum game, but are in fact more often about organizational strategy. We then propose a model for understanding the merger of production networks that hinges on three refinements to existing theory: (1) the institutionalization of most routines requires some more or less implicit agreement between members of an organization to economize on conflict (truce); (2) the managers and engineers who concretely tasked with turning two production networks into one are, in contemporary sociological parlance, multiply embedded; (3) political contestation in organizations runs beyond bargaining and negotiation. It is marked by discursive and cognitive processes, looks a lot like what social movement theorists call mobilization, and can therefore be studied with concepts—like the frame—more typically used to study social movements.