Management practices and performance of mergers and acquisitions in Pakistan: mediating role of psychological contract

The objective of this study is to examine the direct and indirect effect of management practices (procedural justice, coordination approach, communication system, integration strategy, and coping programs) on merger and acquisition (M&A) performance in the Pakistan banking industry. Psychological contract (PC) acts as a mediator between Management practices and M&A performance. The Present study distributes a structured questionnaire to 700 bank employees of different management cadres. The useful response rate is 76 % (536 employees). It uses PLS-SEM technique for data analysis.

Findings: (1) procedural justice is a key strategy which has highly significant direct and indirect effect on M&A performance; however integration strategy and the communication system have an only direct effect. (2) PC performs partial mediation at different levels between management practices and M&A financial and non-financial performance. This study provides an effective solution to solve the soft issues during and post-M&A process. This is one of the few studies which effectively integrate the five constructs into a single framework to study their effects on M&A performance. Limitations and future research directions are presented in the last section of the study.