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JOCM
30,6 Impact of psychological capital on
the resistance to change during
post-merger integration
936 A theoretical model
Jennifer Linda Dorling
People Advisory Services (PAS), Ernst & Young, Munich, Germany

Abstract
Purpose – Mergers and acquisitions (M&As) are major corporate changes and are among the most stressful
for employees. Employee resistance is a well-recognised reason for high failure rates of post-merger
integration (PMI). The contemporary concept of psychological capital (PsyCap) is a promising approach for
dealing with the issue. To date, relatively little research has been conducted on the relationship between
PsyCap and resistance. The purpose of this paper is to examine the possible positive impacts of PsyCap on
employee resistance during PMI, based on a review of the existing literature and selected interviewers with a
panel of experts, and offer a theoretical model for decreasing the resistance.
Design/methodology/approach – This paper builds on the literature on M&A, PMI, and employee
resistance by focusing on the contribution of PsyCap. Apart from formulating propositions and answering
pre-determined research questions, the findings are the basis for a theoretical model that was validated
by a panel of experts.
Findings – This research documents the negative emotions that are triggers for resistance during PMI under
the influence of PsyCap. By measuring and assessing the PsyCap needs of employees, resistant employees
were revealed, and their PsyCap was developed using tailored interventions. The research findings indicate
this to be a feasible approach for reducing resistance during PMI.
Research limitations/implications – All of the findings rely on empirical testing and operationalisation.
Cultural differences may influence the PsyCap dimensions.
Practical implications – M&A deals often fail due to unsuccessful PMI implementation because
leaders fail to consider the psychological impacts when trying to overcome resistance. The model proposes a
possible solution.
Originality/value – The offered theoretical approach is original and provides new insights for researchers
and practitioners who evaluate M&A strategies.
Keywords M&A, Change management, Resistance to change, PsyCap, PMI, Post-merger integration
Paper type Conceptual paper

Introduction
Currently, organisational change is a predominant topic, and it has become an unavoidable
issue that organisations must survive. Virtually all major global companies and industries
contemplating growth or positive value apply important corporate strategies such as
mergers, acquisitions, strategic alliances, partnerships, or joint ventures (collectively called
mergers and acquisitions (M&As)). As major changes, M&As incorporate wide-scale
organisational changes, require more sophisticated levels of management, and
extensive employee collaboration. M&As are one of the most stressful forms of organisational
change (Stahl and Voigt, 2008).
Relevant M&As and post-merger integration (PMI) are ever-present in the business field,
and business analysts conclude that global M&As are increasing in frequency despite
the recession (Schmid et al., 2012). However, a vast body of research identifies the
Journal of Organizational Change
Management ineffectiveness of M&As and reveals overwhelming M&A failure rates of 60-90 per cent
Vol. 30 No. 6, 2017
pp. 936-956
(Christensen et al., 2011; Apaydi, 2014). The majority of researchers attribute the poor
© Emerald Publishing Limited
0953-4814
handling of the “people factor” during PMI as the primary reason for failure (Sidle, 2006;
DOI 10.1108/JOCM-11-2015-0199 Bauer and Matzler, 2014; Kansal and Chandanib, 2014).
 The awareness of the human side of M&A has increased given the interrelated Impact of
organisational turbulences that prompt many negative impacts on employees due to psychological
integration factors (Seo and Hill, 2006; Ager, 2011). Many scholars have stressed that the capital
failure rates of change efforts are due to employee resistance, and they focus extensively on
resistance management. They have proposed strategies and implementation processes to
reduce the resistance. We will show that there is sufficient evidence in the literature to give
weight to this finding and add some further support from our interviews with an expert 937
panel of consultants, who bring insights from their involvement in this area.
The resistance to the efforts of organisational change is a psychological phenomenon
that grew into a psychological concept. In 1952, Lewin introduced one of the cornerstone
models for comprehending organisational change and extensively documented that the
resistance was the primary obstacle for successful organisational changes. However,
positive thoughts towards organisational changes seem to have the potential to decrease
resistance (Luthans, Youssef and Avolio, 2007). Therefore, a much deeper understanding of
the psyche of an individual is required.
In this context, little research has been conducted on the effect of psychological capital
(PsyCap) on employee resistance regarding change efforts and the impact PsyCap may have
particularly during PMI. Based on the notion of positive psychology (Seligman and
Csikszentmihalyi, 2000), which has been established in positive organisational behaviour
(Luthans, 2002b), Luthans et al. (2004) developed the definitive issue, which is the core
construct of PsyCap that produces positive work-related outcomes. Luthans, Avolio and
Avey (2007) and Luthans, Avolio, Avey and Norman (2007) suggested that PsyCap is
essential in the workplace and affects performance improvement on individual and
organisational levels.
Surprisingly, the body of PsyCap research and the role it has on organisational change is
relatively small. Previous studies have investigated the effect of PsyCap and positive
organisational variables, such as the organisational behaviour of employees during change
processes (Beal et al., 2013) and their trust in organisational change (Norman et al., 2010) or
positive employees during change (Avey et al., 2008). However, no studies have explored the
relationship between PsyCap and the resistance to change (RTC) during PMI. Additionally,
it is not clear whether PsyCap has only a one-time effect on reducing employee resistance
during PMI with respect to M&As.
Luthans et al. (2006) suggested that the current scientific knowledge on PsyCap as it
relates to the workplace is “just emerging” because it is primarily limited to positive and
clinical psychology, particularly in the organisational behaviour literature, and it currently
receives little attention. PsyCap research has existed for approximately the past ten years.
Thus, PsyCap is a novel concept but is a theoretically sound notion. Therefore, there is
significant potential for organisational change research to have a plausible positive
contribution on PMI employee resistance.
This paper contributes to M&As by proposing that the Luthans et al. PsyCap concept,
which is a potential human resource development asset for organisations, may be effective
in decreasing the RTC during PMI.
Within that difficult, complex business process which is monetary highly assessed,
PsyCap within the suggested/proposed theoretical model could potentially be a concept not
yet applied or tested as an alternative method to decrease employee resistance. Few studies
(if any) or demonstrable performances have been conducted of such psychological notion
and none with proven scientific effectiveness. This again underlines the rationale to
perform this research.
The aim is to provide a comprehensive analysis and summary of the literature on the
impact of PsyCap coupled with PMI and the associated employee resistance to analyse
the interface between positive psychological resources (PsyCap) and organisational
JOCM change (i.e. employee resistance during PMI and its possible positive impact on reducing
30,6 resistance during this phase). This approach is promising because of the unique insights
that employee resistance provides during PMI and PsyCap. Based on these concepts,
a strategic nexus can be assembled.
This paper is organised into the following sections. Following the introduction and
background information, the key concepts are presented in the context of the current M&A
938 activity and PMI failure rates with a special focus on the RTC. Thus, the concept of PsyCap
is introduced and defined.
Furthermore, the methodology and research questions (RQs) are outlined, followed
by a literature analysis of the key concepts and issues, and propositions are provided
accordingly.
Based on the theoretical contributions from literature and the conclusions regarding the
RQs, a theoretical model is derived. Upon presentation of the model and its limitations,
suggestions for future research and implications for corporate practice are presented.

Background and problem analysis

M&A activities and PMI failures
In a strategic sense, M&As are instruments that allow two or more entities to integrate their
operations on an equal basis with one firm controlling 100 per cent of the shares of the other
with the objective of achieving strategic long-term sustainable growth and economic benefit
(Schriber, 2012).
The trend of M&A ventures has increased over the last several years in recurring
upsurges (M&A waves) that average approximately 34 mergers per wave (Auster and
Sirower, 2002; Duchin and Schmidt, 2013). Currently, we are facing the sixth wave since
2003 (KPMG Management Consulting, 2011), and the total number of deals continually
increases every year; the invested sums of money have increased to new heights. According
to the WilmerHale report in 2014, which releases annual comprehensive statistics and
analysis on M&A activity, 26,409 global deals were completed in 2013.
They first appear to be due to the high success rate of M&As. Experts agree, however,
that quite the contrary is true. Most research and management literature has indicated that
since 1990, M&A activities have increased in their overall success rate but only with
marginal improvements. The empirical research indicates that failure rates typically range
between 50 and 80 per cent ( Jacobs et al., 2013; Apaydi, 2014). Research further shows that
M&A transactions possess immense power to rapidly change a corporation. Hence, PMI is
extremely critical for the success or failure of M&As. Because most M&A failures occur
during this stage, this is the most complex and significant phase (Faulkner et al., 2012).
Increased staff turnover rates after mergers have been highlighted in various studies.
Morrell et al. (2004), for example, examined the “shock” of change and found a positive
correlation with increased fluctuation. Following this, organisations lose important
competencies, consequently leading to negative M&A performance and PMI. Accordingly,
McGrath (2011) suggested that mergers are one of the most costly activities in business and
these deals fail most often. Banal-Estañol and Seldeslachts (2011) stressed the high costs
that particular occur during post-merger efforts. These facts alone should draw great
attention to PMI.
Regarding the success or failure of M&A activity, scholars and researchers involved in
organisational research define the PMI process as a key issue because it is characterised by
employee resistance (Søderberg and Vaara, 2003; Kusstatscher and Cooper, 2005;
Galpin and Herndon, 2007; Batterink, 2009).
“People risks” are identified as the most crucial element, implying immense power and
determining antecedent success (Temple and Peck, 2002; De Meuse and Marks, 2003;
Stahl and Mendenhall, 2005; Davis, 2012; Weber et al., 2014). The people issue that affect
M&A activities will be even more important in the future (Mercer, 2014; Weber et al., 2014). Impact of
In a quantitative analysis, Gerds et al. (2010) explored the risks that directly influence psychological
merger effectiveness. They identified four major menaces, and people risks are the largest capital
PMI barriers that are at the nucleus of many PMI failures. Contrary to the belief that
resistance has a propensity for being low at top management and high at the worker level,
they discovered resistance in PMI projects at all levels. Counterintuitively, the resistance is
predominantly high at the top management level. According to KPMG Management 939
Consulting (2011), the majority of companies attribute M&A failure to “people and
organisation issues”. They found that mismanagement of post-merger people integration
require comprehensive and tailored approaches to PMI.
With change, there develops a disturbance in the organisational culture potential.
In addition to problems regarding corporate identity, career advancements, and teams, there
is a probability that PMI is met with resistance (Temple and Peck, 2002). In total, people
issues are the most significant factors in M&As, and they are vital to the success of
organisational change, causing high failure rates during PMI.

PsyCap
The focus of this research on employee resistance during PMI is on positive PsyCap,
as developed by Luthans et al. Based in the field of positive psychology (Seligman and
Csikszentmihalyi, 2000), it is a powerful personal resource and key contributor to
organisational competitive advantage when developed and managed among employees
(Luthans et al., 2004; Luthans, Avolio and Avey, 2007; Luthans, Avolio, Avey and Norman,
2007). PsyCap is a definitive issue that draws on an individual’s positive psychological
capacity, self-efficacy, optimism, hope, and resilience. These can be measured, developed,
and effectively harnessed in performance improvement for both the individual and
organisation (Luthans, 2002a, b).
The concept presents itself as:
(1) having confidence (self-efficacy) to take on and put in the necessary effort to succeed at
challenging tasks; (2) making a positive attribution (optimism) about succeeding now and in the
future; (3) persevering toward goals and, when necessary, redirecting paths to goals (hope) in order
to succeed; and (4) when beset by problems and adversity, sustaining and bouncing back and even
beyond (resilience) to attain success (Luthans, Avolio and Avey, 2007; Luthans, Avolio, Avey and
Norman, 2007, p. 3).
PsyCap concentrates on these concepts’ interdependence on each other, their respective
commonalities, and their association with a wide range of desirable work-related outcomes.
Because these facets are malleable, they are open to development and training and
are indiscriminate with regard to personality traits (stable and change-resistant), and the
underlying construct of PsyCap is of immense importance to this paper.
In an exploratory study, Luthans et al. (2005) examined the relationship of a sample
(n ¼ 422) of Chinese workers and their performance with four components. They determined
that PsyCap components are “state-like” that have “synergistic effects” (Luthans and
Youssef, 2007); the outcome of all four components combined was greater than their
individual performance. The components of PsyCap have the “conceptual common thread of
implicitly” to characterise “one’s positive appraisal of circumstances and probability for
success based on motivated effort and perseverance” (Luthans, Avolio and Avey, 2007,
p. 550). Specifically, it was found that an ideal PsyCap can foresee work-related outcomes
(i.e. job performance and absenteeism) compared to its constituent psychological resources.
Furthermore, organisational research shows that the development and management of
PsyCap affect performance, organisational commitment and change, efficiency, etc.
(Luthans et al., 2004; Bardoel et al., 2014).
JOCM RQs
30,6 As mentioned, M&A activities often fail during the PMI phase, and PsyCap may influence
change efforts more positively regarding the RTC. Therefore, the objective of this paper is to
summarise the literature on the main themes and to extract propositions to develop a strong
theoretical model.
The following RQs can be asked:
940 RQ1. What triggers employee resistance during PMI?
RQ2. How strong is the association between individual PsyCap dimensions and
organisational change?
RQ3. What is the relationship between PsyCap and PMI resistance?
RQ4. What is the impact of PsyCap development within PMI and which methods can be
utilised?
RQ5. What are the organisational benefits of PsyCap within change processes?

Methodology
To address the RQs, the methodology included the analysis of previous work on key
concepts via a comprehensive literature search for representative sample of research/
studies, thereby synthesising these and deriving proposals for a theoretical model. Hence,
it was essential to identify literature that applies to this research area and is considered
influential and significant.
Therefore, consistent with best practice (i.e. Ridley, 2008), data were collected via relevant
electronic databases, specifically, EbscoHost, PsycINFO, ScienceDirect, and Web of Science.
Because the quantity of research, literature, and other publications on M&A, PMI, and employee
resistance is huge, only articles from scholarly (peer-reviewed) journals were considered.
Additionally, because Luthans’ seminal work on PsyCap began in 2002, the search for literature
was limited to publications since that year. Because PsyCap research is still evolving, the paper
focuses primarily on conducted research studies. The composed PsyCap corpus was published
in 2007; hence, this essential book was also considered. The language was restricted to English.
A detailed content analysis was conducted by reviewing key papers. The review was conducted
following a structured approach, starting with reading titles, abstracts, keywords, introductions,
and conclusions, and then were analysed and identified for their relevance. Thus, the most
pertinent articles that met the inclusion criteria were taken into account.
A panel of experts was consulted to evaluate the feasibility of including practice-based
expertise to validate the proposed model. The experts were London (UK)-based
professionals and from a large consultancy. The internationally operating consultancy
comprises in excess of 50,000 employees. Panel members have an average of 15 years’
experience in M&A consulting and include a manager, director and senior consultant
(n ¼ 3). All participants have direct project experience from PMI. They were appointed by
their service line’s partner and were carefully selected with special consideration to their
background, work experience specification, and expertise on this topic. Compared to other
companies (worldwide), they are one of the best and most qualified experts in this area.
They use best practice in their field and continue to set a high standard in solution offerings.
The experts were interviewed two to three times. Each interview lasted between
30 minutes and 1 hour. Interviews took place in their office and were conceptualised as open
discussions. Questions focused primarily on their experience of PMI and M&As and,
in particular, arising problems and triggers for failure with special regard to employees.
Moreover, e-mail contact was very close in terms of any alignments, information
exchange, any communication, etc.
Literature summary and propositions Impact of
Emotional impact of mergers and PMI resistance psychological
Although PMI is perceived as the final phase of M&A transactions, it is the most critical capital
aspect that defines success; however, it typically involves employee resistance, as described
above (Seo and Hill, 2006; Mirc, 2013). It is often reported that resistance during PMI is
provoked by a series of actions that typically occur when merging organisations
synchronise their operations and interconnect their individual corporate identities, i.e., task 941
consolidation, process assimilation, department or plan restructuring, and the deployment
of transition teams (Schroeder, 2012). The PMI phase is of great importance within a
transaction, resulting in entity reorganisation that is characterised by the rearrangement of
almost all of the involved processes. Huge mergers tend to change an organisation
fundamentally (Lauser, 2010). Consequently, these undertakings produce high levels of
threats perceived by employees, i.e., fear of job security, individual identity, etc. (Weber and
Drori, 2011; Schriber, 2012). Not only M&As but also similar reorganisations often cite RTC
as a major rationale for unsuccessful organisational change (Stanley et al., 2005).
At this stage of the argument, two remarks from the analysed literature are necessary.
First, studies on M&As often refer to the “merger syndrome”, a post-merger phenomenon
that describes employees’ reactions to the announcement of a merger as usually negative.
For example, Vince (2006) identified several emotional reactions of senior managers during
M&A deals: pain, anger, shame, no power, no sense of purpose, and fear. Naz and
Nasim (2014) added threats to social identity, a sense of loss, and helplessness. Particularly,
mergers seem to be increasingly problematic; they are regarded as highly emotional and
negative experiences because the level of change involved in merging companies is
enormous (Sinkovics et al., 2011). According to research, negative emotions during M&As
are intensified to a great extent, which can have devastating consequences on the
organisational change (Stanley et al., 2005). Agboola and Salawu (2011) agreed and
discovered that the typical reactions towards a change involve negative emotions,
i.e., uncertainty, anxiety, and stress, because it constitutes a threatening situation. Klarner
et al. (2011) argued that the resistance due to negative emotions/reactions can slow down the
entire change process. Under these circumstances, it is expected that employee response to
change is crucial during PMI.
Second, a vast amount of literature agrees that resistance is exhibited by misbehaviour
and dysfunctional attitudes, i.e., deviance. For example, Stanley et al. (2005) found a positive
and predictive relationship between resistance, cynicism, and disengagement, further
explaining that cynical employees refuse to trust their company. This assumption leads to
less commitment to the organisation’s objectives and may imply less commitment to change.
A similar view was expressed by Sinkovics et al. (2011), who argued that the emotional
aftermath may last way beyond the completion of the deal. They further highlighted that
employees who resist understand change negatively, leading to reduced commitment,
productivity, satisfaction, high staff turnover, absenteeism, and disloyalty. Hence, the
magnitude of an employee’s resistance is determined by the individual’s perception of the
severity of the threat and their inability to counteract the change.
Organisationally, the psychological manifestations can be interpreted as a collapse of
performance, organisational satisfaction, commitment, attendance, morale, and
productivity. The aforementioned studies clearly suggest that M&As imply the likelihood
of organisational change during PMI to be interpreted negatively with a propensity for
negative emotions and a display of deviance that results in employee resistance.
All of these factors lead to absolute negativity in employee equilibrium, causing less
overall change commitment. Thus, it is proposed that:
P1. Employees who interpret organisational change during PMI negatively (negative
attitudes) are more likely to experience negative emotions towards the change and
JOCM exhibit dysfunctional attitudes and deviant behaviours. They are more likely to
30,6 resist and be less committed.
P2. Positive PMI largely depends upon employee responses (i.e. their attitudes and
behaviours) to the implicated organisational change.

942 Positive PsyCap resources during change and PMI

The four PsyCap components have a theoretical/research background of positive outcomes.
Consequently, it is likely that they will contribute positively to PMI in this paper’s context.
For example, Luthans, Avolio, Avey and Norman (2007) illustrated that employees who
display resilience and the ability to bounce back are also hopeful and efficacious.
It is anticipated that employees are more confident to persist and endeavour while engaging
in alternate routes to return to their initial position or possibly above and beyond the
previous adverse position. It can be hypothesised that they can overcome significant
challenges and adverse events, such as PMI. Similarly, in a quantitative study of a business
transformation, Beal et al. (2013) examined the primary factors for positive organisational
change and analysed the elements. As a result, optimism initiates a positive orientation
towards change, self-efficacy inspires confidence with a reduction in fear of change, hope
contrives ways and the means to deal with change, and resilience intensifies one’s ability to
adjust to change and overcome it.
Self-efficacy refers to a person’s belief or confidence in their ability to successfully
execute and achieve challenging tasks, i.e., the confidence to succeed, demonstrating a
strong interaction between work performance and application (Luthans, Avolio, Avey and
Norman, 2007). The element was originated in the extensive work of Bandura’s (1997) social
cognitive theory, which discovered that highly confident individuals are more convinced of
their ability to achieve continuing success in the face of major challenges and are able to
more quickly rebound or “bounce back from adversity than those who are not” (Luthans
et al., 2006, p. 29). He further stated that self-efficacy can be influenced via emotional states
(e.g. success is associated with pleasant feelings), and people that have high self-efficacy are
able to manage well their emotions throughout an event. Hence, positive emotions that are
linked to success (e.g. joy) may recall a person’s feelings of competence, thus increasing their
belief in their achievement potential.
For example, Avey et al. (2008) devoted their PsyCap attention to combining Bandura’s
efficacy sources with positive organisational change: employees who accomplish tasks
successfully (“task mastery”) are more likely to believe that they have the capability of
repetition. Other efficacy sources imply vicarious learning, such as reproducing another
person’s behaviour when coping with change, social persuasion, which involves being assured
by higher-status individuals of successfulness during the change process, and arousal, which
involves possessing the emotional and physical motivation to deal with the change. Concisely,
self-efficacy appears crucial for effective organisational change during PMI.
Optimism is associated with internal, stable, and global attributes about positive events
and positive expectations for future events (Luthans, Avolio and Avey, 2007). Accordingly,
Seligman (1998) offered in his “exploratory style” framework that during an event optimists
make internal or external attributions for success or failures. Thus, optimists retain their
motivation despite negative events during changes or other obstacles (Avey et al., 2008).
Luthans and Youssef (2004) added that optimism protects individuals from hopelessness,
depression, guilt, and desperation. This stipulates its influential position during change
efforts; presumably, individuals that have high optimism have positive expectations
towards the change and their role within it. Correspondingly, the optimists experience PMI
with positive expectations. Thus, the change initiative is more likely to succeed when the
members of an organisation have positive expectations towards the change.
 Hope is defined as the belief or motivational state that individuals experience when Impact of
persevering towards goals (Luthans, Avolio and Avey, 2007; Luthans, Avolio, Avey and psychological
Norman, 2007). Avey et al. (2008) stated that hopeful employees maintain motivation for capital
goal accomplishment; hope and sustainability contribute to employee well-being.
They claimed that pathway thinking and its application are significant constituents of
hope because applying motivation to generate effective pathways is particularly
significant during a crisis or in unpredictable situations during change efforts. 943
This appears inevitable during PMI.
These findings are in accordance with Snyder’s (2002) model of hope, which is posited as
a cognitive process that elicits emotions that manifest the level of hope. Specifically, high
hope individuals approach the pursuit of goals with positive emotions, whereas low hope
individuals focus on the negative emotions that result from failed goal pursuits. According
to Avey et al. (2008), hopeful employees think that change implies positive outcomes for
themselves and they believe that they are able to affect these with their own resources.
Thus, hope influences the self-efficacy that one is capable of accomplishing the hoped-for
ambition (i.e. PMI).
Resilience is defined as “when beset by problems and adversity, sustaining and bouncing
back and even beyond (resilience) to attain success” (Luthans, Avolio and Avey, 2007, p. 3).
Stemming from the clinical psychology, recent research on PsyCap resilience has
demonstrated that it reflects an individual’s ability to cope and bounce back from adversity,
challenges, uncertainties, and adversity. Moreover, resilience enables adaptation to stressful
and changing life pressures (Tugade and Fredrickson, 2004). For example, Luthans et al.
(2006) proposed that a person with resilience underscores the assessment of risks and their
own resources proactively, potentially impinging upon their work outcomes, such as
macro-level threats, or in this case, organisational changes associated with M&As.
Individuals with high resilience levels tend to better adapt to their external environment
despite changes or negative incidents, and they rebound further back to homoeostasis and
even improve their performance. Additionally, Bardoel et al. (2014) suggested that resilience
constitutes a valuable resource even in the absence of organisational changes. They
examined employee resilience within organisations in “turbulent times” and claimed to
invest in the resource because it fosters the power of endurance towards adversity.
Such individuals are likely to recuperate from disillusions or disappointments that may be
experienced during change and are emotionally more stable. Their findings showed that
resilience entails the capability to reduce stress and strains throughout organisational
changes, and most significantly, it increases the commitment towards the change even
though the individual in question may not favour the change. Moreover, they stated that
resilient employees are more capable of coping with continuously changing workplaces or
times of crisis.
Thus, each of the key contenders are connected to a positive framework of change and to
constructive actions. Thus, the following proposition can be made:
P3. Employees that rate high for the individual PsyCap dimensions are more likely to
cope well with organisational change during PMI. They hold positive expectations
and are more committed to change than those that rate lower in the respective
dimensions.

The relevance of PsyCap for PMI resistance

Empirical evidence states that PsyCap and desirable/undesirable behaviours are
interrelated with the respective attitudes of organisational change. Thus, PsyCap is
expected to be directly related to employee resistance during PMI, which is one major form
of organisational change.
JOCM To further elaborate on the study by Beal et al. (2013), positive PsyCap affects that
30,6 moderate resistance and decrease employee efficiency result in daily tasks that are not
accomplished. Resistant employees uttered negativity, which likely promoted a disruptive
work atmosphere. Additionally, the likelihood of employees showing low levels of PsyCap
and high levels of resistance was confirmed, lowering morale amongst employees and
decreasing optimism and hope. However, using their developed force field diagram, the
944 researchers found that hope and optimism in particular give a “turbo-effect” to
organisational change. Given that leaders understand the important role of positive
employee behaviours during changing times, this turbo-effect provides further means for
enhancing employee effectiveness and efficiency, which should be recognised.
During PMI changes, it is believed that PsyCap states are challenged because employees
are required to adapt to change amid fewer resources in addition to taking on new roles,
skills, and responsibilities. Avey et al. (2008) argued that positive emotions are facilitated via
“high PsyCap” or more clearly, via the aid of good PsyCap characteristics aid as a guide
during change challenges. When there are positive beliefs regarding learning novel
behaviours and achieving goals in addition to effectively coping with the challenges of
change, positive emotions of confidence are experienced (optimism, successfulness).
Then, these emotions improve the ability to create various pathways to cope with the
challenge and produce positive attitudes for future perspectives, such as recovering from
setbacks and examining other routes to success (resiliency, hope).
Empirical and theoretical research show increasing evidence that PsyCap is positively
related to the employee’s mental approach in addition to their psychological behaviour,
and it is positively influenced by PsyCap at the emotional level that is pertinent during
effective change.
During PMI, PsyCap states are challenged because employees are required to adapt to
change amid less resources in addition to taking on new roles, skills, and responsibilities.
Not surprisingly, PMI reactions are primarily negative. However, with relevant coaching
in PsyCap at the appropriate level, employees then will have the skills to interpret the
process positively via the individual PsyCap qualities.
For example, Tugade and Fredrickson (2004) found that mental states and faculties
(i.e. resilience) are antecedents for experiencing positive emotions and contribute to
emotional regulation, which leads to finding positive attributes in negative events.
This supports the fact that psychological capacities (i.e. PsyCap) contribute to building
positive emotions and decreases resistance during PMI.
Figure 1 depicts the research and proposed model from Avey et al. (2008), which suggests
that employees that have a high PsyCap have more potential for experiencing positive
emotions, leading to engagement and organisational citizenship. This, therefore, facilitates

Employee
Attitudes:

• Engagement
•⊕ attitudes

Positive
PsyCap
Emotions
Employee
Figure 1. Behaviours:
Influence of PsyCap
and positive emotions • Organisational
Citizenship
on employee attitudes
and behaviours within •⊕ behaviours
change
Source: Adapted from Avey et al. (2008, p. 51)
positive organisational change. However, employees that have a low PsyCap Impact of
are diametrically opposite and are prone to exhibiting cynicism and deviant behaviours, psychological
which equates to resistance. capital
Because resistance in PMI is correlated with negative emotions, employees who
have a high PsyCap exhibit positive emotions and, therefore, may exhibit behaviours with
attitudes relevant to positive change during PMI and vice-versa. Based on this evidence,
it is proposed that: 945
P4. Employees who have a high PsyCap are better able to experience positive emotions
during PMI; thus, they will display positive behaviours and attitudes towards the
change. They are less resistant and facilitate positive changes during PMI after
improvements in the PMI success quotient.
P5. Employees who have a low PsyCap experience more negative emotions; therefore,
they are the critical group of employees that resist during PMI.
Additionally, Norman et al. (2010) examined the link between PsyCap and desirable
behaviours and found positive associations with organisational citizenship behaviour
(OCB), namely performance in extra roles. Similarly, Walumbwa et al. (2011) investigated
the benefit of a supportive organisational climate within teams and found positive
mediating effects due to high PsyCap on team OCB. Consequently, OCB via PsyCap appears
crucial during PMI and is recommended for careful consideration because, as described
above, resistant employees tend to disengage. Predictably, those who are highly engaged
and perform well will mobilise more personal resources, i.e., PsyCap.

PsyCap in the workplace – the outcome component

PsyCap and absenteeism/staff turnover during M&As. As mentioned, M&As increase
voluntary turnover rates. According to studies, during numerous completed M&As,
a considerable proportion of high-talented employees leave the companies within the first
12-24 months (Massoudi, 2006). Fugate et al. (2008) analysed the perceptions of employees
and their emotional reaction towards organisational change and described the influence of
early apprehension. The negative emotions towards the change were a predictor of turnover
intentions and sickness-related absenteeism.
Because research on PsyCap offers insights into the positive effects of organisational
change, it could also positively influence PMI. For example, Avey et al. (2006) identified
lower levels of absenteeism and reduced turnover intentions (external job search behaviour)
for employees that exhibit high PsyCap. Analogously, Luthans and Jensen (2005) found that
PsyCap is positively related to an employee’s intention to stay within the organisation
and their commitment towards the objectives of the organisations. Alternatively, as noted
by Avey et al. (2006), low PsyCap influences undesirable outcomes, such as motivation for
staff resignation.
PsyCap and well-being during PMI. High stress levels reveal the impact initiated by PMI,
which has been addressed by many scholars. For example, Van den Heuvel et al. (2012)
scrutinised the relevance of personal resources during organisational change. Their findings
showed that change processes can affect employees’ mental and physical health, resulting in
reduced well-being, burnout, psychological strain, decreased job satisfaction and
performance, low morale and commitment, and counterproductive behaviour in the
workplace (high resistance).
In addition, Schriber (2012) considered the well-being of managers during mergers, and
they stated that they suffered from immense workloads with some experiencing exhaustion
or burnouts. Due to the prevailing uncertainty, anxiety, low motivation, and productivity
induced by resistance, voluntarily resignations are the outcome. Preceding evidence
JOCM demonstrates that changes during PMI produce serious consequences for organisations and
30,6 may have a long-term negative impact on an employee’s mental health. Interestingly,
however, Peterson et al. (2011) observed that the overall PsyCap of a person can enhance the
well-being, and Avey et al. (2010) noted that it influences the long-term well-being in
the workplace. Similarly, Singh and Mansi (2009) found that PsyCap is an indicator of
well-being in the workplace.
946 PsyCap and work performance. For example, in two studies in educational settings
(business students and management students), PsyCap has been shown to increase academic
performance. The results revealed that PsyCap is the explanatory factor for high performing
students and groups, and it also has a predictive relationship (Luthans et al., 2012; Jafri, 2013).
A meta-analysis and empirical study from Avey et al. (2011) shows that employees with high
PsyCap levels can call on more resources to achieve goals; hence, they reach higher
performance levels than low PsyCap employees. Correspondingly, Luthans, Avolio, Avey and
Norman (2007) examined PsyCap and job performance on the individual level, and they found
a positive correlation that accounts for a more intensive performance, which exceeds
personality and pivotal self-assessment. Sweetman et al. (2011) discovered that the influence of
PsyCap at the individual-level affects employees’ creative performance. Likewise, Luthans
et al. (2011) found a positive correlation with problem-solving competence.
These indicators are a positive indication of PsyCap and the positive work outcomes that
are relevant to change and resistance during PMI, and they should be contrasted by
enhancing/developing overall PsyCap. The outcomes are expected to be negatively
correlated with PMI resistance. Thus, the following proposition is made based on the
PsyCap framework:
P6. PsyCap and related positive work outcomes are relevant to organisational change
during PMI and are negatively related to resistance.

Practical PsyCap approaches for PMI

PsyCap measurements. Previously, measurements were performed at the individual or team
level to assess an individual’s level of PsyCap via self-reporting measures via a four-
dimensional “PsyCap questionnaire” (PCQ) that includes 24 items and a five-point Likert-type
scale (1 ¼ strongly disagree; 5 ¼ strongly agree). This was the most frequently used
assessment. Luthans and fellow researchers consolidated and confirmed this assessment test
empirically (Luthans, Avolio and Avey, 2007; Luthans, Avolio, Avey and Norman, 2007).
For example, Beal et al. (2013) performed a quantitative study that used the PCQ and a
17-item RTC scale from Oreg (2003), and they identified employees that had low PsyCap who
were also exhibiting high levels of resistance. Correspondingly, high PsyCap levels were
positively related to low-employee resistance. In this longitudinal study, they studied the four
key PsyCap characteristics and how they could influence organisational change.
The discovered that PsyCap led to a greater efficiency for change and exhibited a predictive
dimension. Additionally, positive employees influenced positive change. The RTC scale, which
has been validated in various contexts, included a six-point rating system (1 ¼ strongly
disagree; 6 ¼ strongly agree) and measured the individual’s inclination for resistance.
By combining both instruments regularly during PMI, “critical groups” could be
revealed, which have been determined in this paper as one of the main issues that are
responsible for PMI failures:
P7. The regular usage of a PCQ combined with the RTC scale during PMI will separate
staff into groups by measuring their resistance tendencies in addition to their level of
PsyCap, which will assess the individual’s needs. This regular measurement will
reveal the resistant group that is critical during PMI.
As demonstrated, most researchers typically conceptualise PsyCap at the individual level Impact of
by exploring the interaction of employee attitudes, behaviours, and performance with psychological
PsyCap. However, experts have begun to scrutinise the concept’s influence in recent studies capital
on an organisational and team level (Newman et al., 2014). The most significant study was
performed by Walumbwa et al. (2011) in a financial institution. They applied the cumulative
group effect of PsyCap and generated a “collective PsyCap”.
In their study, the authors rated the collective PsyCap on an eight-point scale, which 947
evaluated the correlation between reliability and agreement. They measured the collective
PsyCap perception of the team and stated that it creates desirable behaviours and desirable
team-level outcomes. Given the effects of undesirable behaviours of individual employees
during PMI, it is likely that collective PsyCap also contributes to desirable organisational
outcomes. For example, McKenny et al. (2013) discovered similar results in their study in which
PsyCap on an organisational level was clearly connected with the organisation’s subsequent
financial output. This is a result that is significant for M&As. Likewise, the combined individual
PsyCap of the group exhibited a positive correlation with team performance (Clapp-Smith et al.,
2009). Therefore, the collective PsyCap can be expected to exhibit a much larger effect.
PsyCap development. The developmental nature of PsyCap implies the potential to link to
positive individual- and organisational-level outcomes. For example, in their experimental
research with working adults (n ¼ 364), Luthans, Avey and Patera (2008) and Luthans,
Norman, Avolio and Avey (2008) utilised a web-based training intervention that included
two, one-hour-long sessions to enhance PsyCap.
The individual components were introduced and their effects were applied generally and
for specific roles in the organisation. They were demonstrated via a video-like format,
including brief clips from popular movies to highlight examples of each feature. After each
session, the participants then evaluated their own experiences related to the individual
concepts. The intervention demonstrated how to effectively develop PsyCap and suggest a
competitive organisational advantage.
Confirming their findings, Luthans et al. (2010) expanded the pilot study and utilised
short-term micro-interventions, or PCI (PsyCap intervention), to develop PsyCap in an
organisational setting. They utilised a series of exercises and group discussions, such as
influencing goals, pathways, and activities in addition to obstacle planning, goal
accomplishment, and awareness building of personal assets to directly impact the
individual’s PsyCap states. Using the PCQ, the researchers analysed the PsyCap levels three
days before and three days after the intervention on an individual level. The overall PsyCap
of the participating employees enhanced and improved the performance. The PsyCap
development produced extraordinary (270 per cent) returns on the PsyCap investment (ROI)
and a high return on development, implying a potential competitive advantage.
PsyCap development can likely reduce PMI resistance. For example, in the study by Luthan
et al., they found that PsyCap generated a larger awareness of an employee’s sensitivity to their
own strengths and capacities (mindfulness), which was proposed to consequently lead to more
commitment and engagement towards organisational change during PMI.
Thus, it is proposed that:
P8. By using various PsyCap interventions, an employee’s PsyCap can be developed to
produce high PsyCap levels, and RTC during PMI will decrease.
P9. Employees whose PsyCap is increased by the aforementioned interventions will be
less resistant to change and will be better prepared for the emotional disturbance,
which will result in an improved condition.
P10. Because of PsyCap interventions, employees will increase their mindfulness, which
possibly can enhance commitment and engagement to change during PMI.
JOCM Results and theoretical model
30,6 Based on the review of the PsyCap framework, the results suggest that the concept is
strongly related to desirable employee attitudes and behaviours that are considered relevant
to PMI. Based on the literature, M&As are strongly associated with negative reactions,
i.e., exhibition of deviance, misbehaviour, and dysfunctional attitudes (merger syndrome).
Thus, the propensity to meet the PMI with resistance increases, resulting from negative
948 emotions that have been identified as triggers for PMI resistance, which applies to RQ1.
To address RQ2, regarding the association intensity between the four PsyCap dimensions
and organisational change, the empirical evidence indicates a strong positive correlation
that applies to PMI. Each element helps employees cope with challenges of the changes.
To address RQ3, regarding the relationship between PsyCap and PMI resistance, the
results suggest that employees that have a high overall PsyCap also experience positive
emotions during PMI, indicating possible facilitation of successful change efforts, which
may improve PMI success rates. Perhaps most importantly, employees that have a low
PsyCap were identified as the critical group that resists during PMI. They experience
negative emotions, which are the aforementioned resistance triggers. Additionally,
there was another important finding regarding the second question in RQ3 of how to detect
this resistance. First, the RTC scale reveals this critical group, and second, the PCQ assesses
an individual’s needs in terms of their PsyCap.
Regarding RQ4, which requested an examination of the developmental impact of PsyCap
during PMI, the results indicate that PsyCap possibly decreases PMI resistance and
counterbalances dysfunctional attitudes with positive emotions during M&As.
The development methods that are best were found to be PCI or web-based training
interventions. These methods were not only discovered to be positively related to resistance
reduction but also they enhance an employee’s mindfulness, creating an awareness of
the person’s sensitivity to their own strengths and capacities that possibly prevents
negative thoughts and increases the commitment to change and engagement.
In addition to the main impact of PsyCap on resistance during PMI, to address RQ5, one
must look at the organisational benefits of PsyCap within the change processes. There were
patterns across all of the analysed literature that showed that PsyCap is associated with
desired work-related outcomes, such as commitment, engagement, absenteeism/turnover,
performance, and well-being, that are identified as crucial for PMI and exhibit a significant
relationship on the facilitation of positive organisational change.
To organise these results and propositions, they are depicted in a simplified descriptive
model that is shown in Figure 2.
The validity of the proposed model was confirmed by the panel of experts. It is easily
applicable, requires a low cost, and limited effort. The basic idea is to regularly use the PCQ
and RTC scale during a PMI process to separate staff into two groups by measuring their
inclination for resistance and to determine their PsyCap states. Group 1 basically includes
people that have a high PsyCap and a low RTC, and group 2 is the critical group that
includes people that have a low PsyCap and have a high RTC. Based on this grouping,
systematic measures, i.e., the aforementioned PsyCap interventions, should aim particularly
at the second group to ideally improve their openness to change during PMI. Thus,
the negative emotions that are resistance triggers could be counteracted. During the process,
additional PMI-associated desirable outcomes are expected. It is anticipated that the
targeted measures for reducing the RTC among staff via improving their PsyCap should
influence the success rates during PMI.

Limitations
This research also has limitations, which should be evaluated. First, regarding the proposed
model, the usage of the RTC scale and PCQ could not be quantified in terms of the intervals
 Impact of
More
psychological
High PsyCap employees, low RTC
(high: self-efficacy, optimism, hope, resilience) successful capital
PMI
• Decreased employee resistance

• Desired work outcomes positive related

to PMI:
949
Change commitment, engagement,
Regular performance, absenteeism/turnover,
PCQ well-being
and RTC scale

Low PsyCap employees, high

RTC Developing PsyCap

Negative emotions
Targeted:
• Dysfunctional attitudes
• PsyCap interventions (PCI)
• Deviant behaviours
• Web-based trainings
• Reduced well-being Figure 2.
• Negative work-related Model to decrease
outcomes employee resistance
during PMI

at which they should be applied because this is dependent on empirical testing. Similarly,
these measurements may also be used before and during a M&A deal. Second, the PCQ
provokes questions as to whether social or cultural biases or preferences influence this
self-reporting measurement. As Hofstede (1980) discovered, cultures distinguish from each
other to a large extent due to the possible influence of the PsyCap dimensions because they
are developmental. For example, in addition to self-efficacy and hope, optimism and
resilience are also dependent on the external environment, which in turn may differ in their
development reinforcement within individual or collectivistic cultures (Luthans, Avolio and
Avey, 2007; Luthans, Avolio, Avey and Norman, 2007).
A further limitation regarding the PsyCap development was the inclusion of additional
interventions; however, thus far, no additional interventions have been found. Furthermore,
the shortcomings of PsyCap composite scores must be considered. For example, when
employees score highly on all four dimensions and when employees score highly on only
two dimensions, both obtain equal scores; however, they are differentiated by their PsyCap
profile (Dawkins et al., 2013). For these cases, work outcomes and resistance may show a
broad bandwidth, and resistant employees may fall into the non-critical group.
In general, PsyCap has only been investigated for approximately ten years. Literature on
studies in this field is difficult to find because the field is just emerging. Moreover, research
on the influence of PsyCap on RTC and organisational change is sparse. The majority of
studies have been limited primarily to US research rather than non-US-based studies
(exceptions are i.e. Luthans et al., 2005; Peng et al., 2013; Siu, 2013 etc.). Correspondingly, the
concept of PsyCap has never been investigated within the scope of M&A and PMI, which
has made it challenging to find adequately related evidence to support the propositions.
It is a fact that M&A resistance is hard to address, there have been various and
many approaches that have been tried before, but all show lack of (limited) success.
We believe that the suggested approach in this paper has strong potential and if applied,
a significant impact.
JOCM Conclusions and future research directions
30,6 This paper has hypothesised that PsyCap can support during PMI because it has
emerged as an important human resource that has significant effects on organisational
objectives.
The findings and the theorised model imply that high levels of PsyCap may possibly
decrease RTC during PMI and thus increase PMI success rates. As employees with bad
950 attitudes towards a merger/acquisition are revealed and therefore identified with the RTC
scale in the proposed model ( ¼ critical group) and their PsyCap as well as their needs are
assessed with the PCQ, interventions should most likely be targeted at this group.
This makes conclusive statements that, subsequently, this target group has more positive
attitudes towards the merger or is even completely committed and supportive. This in turn
leads once more to a greater likelihood to improve PMI/M&A success, which gives
additional rationale for the research.
Employees who are high in PsyCap possibly constitute a valuable resource to
organisations regarding the psychological repercussions. For example, according to Larson
et al. (2013), employees with lower PsyCap levels are expected to increase their PsyCap if in
close vicinity to those that have a high PsyCap during working relationships because it
“rubs off”. Thus, high-level individuals may be important during PMI as “change
champions/agents”. The proposed model could enable leaders or change managers to
decrease resistance so that they can intervene at the most opportune time and produce more
effective PMIs and sustainable organisational change.
Specific results have been achieved for both research and implementation. Looking
forward, PsyCap is a well-recognised theoretical framework that will have a positive effect
on research concerning the development of organisational change. Thus, this research may
offer an empirical link between most positive psychology micro-oriented research and the
principal determinants of business performance to help determine the competitive
advantage theory regarding PsyCap. An investment in PsyCap for the long-standing
problems of PMI is suggested, in addition to investigating the outcomes and suppressing
effects. Future research may also consider more interventions to develop PsyCap because
only two have been used thus far in this field. The same is true for the PsyCap-OCB effect,
which was determined to be crucial during PMI. This offers an interesting research topic
because mergers and downsizing procedures can lead to immense workloads for residual
employees. Although there is growing evidence concerning PsyCap at the group/team/
organisational level, researchers may also investigate the results more carefully
because collective outcomes are particularly important during PMI and should receive
more attention.
Future research can use these results for future empirical tests to possibly increase the
successfulness and to limit the effects of employees on organisational change during PMI.
Another avenue for further research would be to consider the influence that staff
competence has on PsyCap.
The implications for leaders of organisations facing M&As and the critical PMI phase
should be an investment of organisational resources for decreasing resistance via the
development and application of PsyCap to create more positive organisational change
during PMI. The notion of PsyCap as a theoretical resource-based methodology is a
promising approach for PMI. This theoretical model sheds new light on this practice-based
problem and is a credible attempt to address it.
Finally, M&As are ubiquitous and the issue of “employee resistance” has been identified
in Brehm’s (1966) psychological reactance theory as a counteractive behaviour that is a
product of threats to an individual’s freedom. PMIs are difficult examples of resistance
impacts, and resistance is one of the biggest obstacles for PMI success. From this
perspective, resistance can be attributed to psychological variables. Specifically, resistance
is a natural psychological response for individuals, and it must be viewed this way by Impact of
leaders, rather than merely attempting to overcome it. Therefore, to decrease the RTC, psychological
the issue must be addressed at the psychological level. capital
Glossary
M&A Mergers and acquisitions
PMI Post-merger integration 951
PsyCap Psychological capital
POB Positive organisational behaviour
OCB Organisational citizenship behaviour
RQs Research questions
P(n) Propositions
RTC Resistance to change scale
PCQ PsyCap questionnaire
PCI PsyCap interventions
ROI Return on investment
ROD Return on development

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Corresponding author
Jennifer Linda Dorling can be contacted at: [email protected]

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