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Mr. Piyush Gulati
Ph.D. Candidate in Strategy
INSEAD

Managing post-acquisition operating performance can be challenging because synergy extraction entails changes and must be balanced with disruption to the organizational units involved. While prior literature has focused on organization-level factors (such as knowledge similarity and team design), in this paper I shift the focus to individual-level factors–specifically the social skills of employees–that help in achieving this balance. I argue that increased hiring for social skills, such as communication, negotiation, and teamwork, after an acquisition helps manage disruptions by enabling improved inter-unit collaboration between the acquirer and target units. To test the argument, I use a stacked differences-in-differences design to analyze data from approximately 5.3k acquisitions (SDC), 26 million job listings to measure social skills hiring (Lightcast), 22k senior manager profiles (Boardex), and 2,739 US public firms (Compustat), tracked quarterly in the period 2010-2020. I find that a 25 percent increase in average social skills at the acquiring firm is correlated with a 3.1 percentage point mitigation of post-acquisition operating performance drop. For deals with a large increase in distinct organizational units or delayed target integration, both of which imply a higher need for inter-unit collaboration, increased social skills are correlated with higher mitigation of 5.1-11.5 points–providing support for the proposed mechanism. Through these findings, I contribute to research on post-acquisition integration, offering insights into the structure-human capital dynamics in enabling organizational collaboration.