Internal Human Capital Reconfiguration Following Mergers and Acquisitions: An Exploratory Study

Despite the wealth of research on post-merger integration, we know little about the antecedents and consequences of internal reconfiguration of human capital following M&A. In this study, we explore how M&A impacts internal reconfiguration of human capital between the target and the acquirer, how this reconfiguration affects employee departures and hiring, and the reconfiguration’s impact on the acquirer’s financial and innovation performance. Our study is set in the context of 299 M&A in Finland using matched employer-employee micro data. We find that M&A have a material impact on the internal reconfiguration of employees, which in turn makes the acquirers more likely to experience employee departures. We also find that internal reconfiguration impacts acquirers' innovation performance but not their financial performance.