Pre-merger performance and merger success: An experimental approach

Jung S. You, Minsoo Jeong, Joon-Hee Oh and Wesley J. Johnston

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2025, vol. 118, issue C

Abstract: We investigate how firms’ characteristics and cultural integration – defined as the internal cohesion that emerges within a firm’s organization – affect merger success using laboratory experiments. In our design, subjects develop a shared culture while completing tasks, allowing us to capture both pre- and post-merger performance data. Using a panel model that tracks the dynamics of culture formation, we estimate the stable performance level of each firm once its culture is fully developed. We then examine how pre-merger characteristics and organizational culture influence post-merger outcomes. Our results show that the more efficient a firm’s pre-merger organizational culture, the more successful its post-merger culture, as stronger cultural integration emerges among the merging parties.

Keywords: Corporate culture; Merger; Experiment; Dynamic panel data; Synergy (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:118:y:2025:i:c:s2214804325000813

DOI: 10.1016/j.socec.2025.102417

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