Union merger benefits: An empirical analysis

The incidence of union mergers is on the rise, yet the determinants of the benefits of merging have never been systematically addressed. This article reports the results of research which identifies and validates five dimensions of union merger benefits. The author thanks Gary Chaison, Bob Hinings, Royston Greenwood, Phil Kienast, John Butler, and an anonymous referee for their advice and assistance with the study.     

How union mergers affect membership participation

Using data from a survey of union members, we explore how an amalgamation of two Swedish unions affects membership participation. The research literature on the topic is mostly anecdotal and speculative, suggesting that mergers might have detrimental effects on membership participation because they create large unions with centralized governance and administration. But in this study, we do not find a broad-based decline in membership participation measured before and after merger as well as in relation to a comparison union that did not merge. These results are discussed in terms of the national context of union mergers in Sweden and the ways that mergers are negotiated, presented, and implemented to preserve membership participation. An earlier version of this paper was presented at the Third International Conference on Emerging Union Structures: Reshaping Labour Market Institutions, Canberra, Australia in December 1997. The data collection for this project was supported by funds from the National Institute for Working Life in Stockholm.     

Union merger incentives and pecuniary externalities

The collective bargaining process is influenced by the market structure that exists on both sides of the bargaining table. That structure, in turn, is affected by the merger activity of both firms and unions. Until recently, however, union merger incentives have remained unexplored. This paper surveys the principal theories that explain these incentives and develops a new theory of union mergers based on pecuniary externalities between unions. We are grateful to Ethel Jones, Jim Long, and an anonymous referee for useful comments on a prior draft of this paper. The usual caveat applies.     

Health care consolidation and the changing health care marketplace. A review of the literature and issues

This Issue Brief examines the academic literature and issues in consolidation of the hospital sector in the context of responses to changes in the competitive environment. It analyzes the motivations for consolidation as well as its effects. Hospital merger activity has increased dramatically in recent years. The current wave of mergers is primarily a reaction to a competitive environment that is placing a greater emphasis on controlling costs and forcing high-cost providers out of the market. The growth of managed care has placed considerable pressure on providers of health care and, in particular, on hospitals. The evolution of insurance companies' behavior helps explain the recent hospital consolidation movement. As managed care has become the dominant type of coverage in the last decade, insurance companies have become more active in trying to control costs--a reversion to their previous practices before the advent of managed care. Insurance companies have placed cost constraints on providers, both in the early years of health insurance and currently, when there are strong competitive forces. Hospitals claim that their primary merger motives are improving efficiency and the quality of care. The empirical evidence on this claim is mixed. Vertical integration (between suppliers and buyers of health care services, such as between hospitals and physicians) has appealed to hospitals because of their need to obtain more patients. More research is needed to explore the effects of vertical integration in the health care sector. In one of the more significant recent legal rulings, the U.S. Justice Department lost a 1997 case challenging the merger of two hospitals in the New York City metropolitan area. This, along with other recent losses by the antitrust authorities, does not bode well for the government's ability to prevent hospital mergers in metropolitan areas. It is difficult to generalize on an appropriate antitrust policy for hospital mergers. Hospital consolidation is likely to continue at a rapid pace. Since some developments may reduce the cost of employee benefits while others may increase the cost of these benefits, the final effect on the provision of health care benefits by employers is uncertain. Employers must pay close attention to the hospital consolidation movement because it will lead to important changes in the provision of health care benefits.     

Critical success factors for merger in the UK voluntary sector

This paper reports on research into mergers in the voluntary sector in the UK from 1988 to 1993. It compares empirically derived critical success factors with success factors derived from previous work on mergers in both the voluntary and private sectors. The study concludes that merger can be an extremely effective strategy for voluntary organisations. For it to be so, it has to be undertaken willingly, with a shared vision between the partners of what the merger will achieve. Cultural differences need to be recognised and handled within a trusting context in which mutual respect is backed by an equitable process. Finally; sensitive handling of individuals caught up in the merger process is essential—but something which the voluntary sector ought to be well capable of doing.     

ALTERNATIVES FOR RESTRUCTURING THE RAILROADS: END-TO-END OR PARALLEL MERGERS?

The U.S. railroad industry has seen considerable merger activity over the past two decades and more mergers are expected in the near future, but little is presently known about the relative social benefits of alternative merger configurations. Using traffic data for origin-destination pairs affected by recent mergers, this paper examines the impact of end-to-end and parallel mergers on increases in the market share of merged firms. To the extent that increases in market share reflect social benefits in the form of improved service and lower costs, end-to-end mergers are found to outperform parallel mergers.     

Merger activity and wage levels in U.S. manufacturing

This study uses micro data from the 1981 March Current Population Survey and incorporates industry merger information from the 1979 FTC Large Mergers and Acquisitions Series to examine the relationship between merger activity and wage levels in U.S. manufacturing. These data sources provide the opportunity to control the wage effect of workers’ differing personal qualities and to allow the investigation of wage levels in five merger categories. The findings suggest that in 1980, employees that work in industries composed of firms formed by horizontal, vertical, and product extension mergers received significantly higher wages than other workers. These results indicate that workers should benefit financially from the recent increase in the number of mergers, other than pure conglomerates. The author thanks William Jones, Peter Loeb, and Leo Troy for their valuable suggestions. The author is also grateful to the Rutgers University Research Council for support of this project.     

ANTITRUST POLICY AND MERGERS: THE WEALTH EFFECT OF SUPREME COURT DECISIONS

Many believe that antitrust policy has had a dramatic impact on merger strategies in the United States. For this to be true, enforcement of antitrust laws must affect a wide range of firms, not just those firms whose mergers are contested. This study tests whether or not firms engaged in uncontested mergers are affected by antitrust enforcement, as signalled by Supreme Court decisions. Using event study methodology, we find that antitrust policy against mergers was binding during the 1960s and 1970s as it ulowered the value of targets in ucontested ongoing mergers.     

The Urge to Merge: A Multiple‐Case Study

The authors undertook a comparative study of three recent mergers of nonprofit organizations in a Midwestern urban center, within the context of political‐economy theory. The research explored the impact of the same environmental factor, managed care, on the initial decisions by organizational leaders and the effects of these early decisions on subsequent actions taken to implement the merger. The study tested the authors' model of the motivations for merging, which proposes that the relationship between the decision‐making style of the leadership and the internal and external resources of the prospective partners determines whether the merger is driven primarily by mission, practicality, stability, or fear. Although the findings provide initial support for the hypotheses derived from the model, a demonstration of the differences in the approach to the merger by each organization indicated that other factors emerged as important driving forces during the various phases of the process.     

EMPIRICAL EVIDENCE ON FTC ENFORCEMENT OF THE MERGER GUIDELINES

The Justice Department's 1982/1984: merger guidelines identify various factors – concentration, entry barriers, ease of collusion, efficiency –that would thereafter determine whether the government will challenge a merger. Analysts have criticized enforcement agencies, however, for not following the guidelines, and criticize the guidelines themselves for not identifying the weights attached to the factors. Using a 1982-86 sample of seventy horizontal mergers, we examine which factors influenced Federal Trade Commission decisions to challenge mergers. The relative importance of the guidelines and other factors in merger challenges is measured, and related empirical issues are also explored.     

Organizational metamorphosis: A study of eighteen nonprofit mergers,acquisitions, and consolidations

This article reviews the literature on nonprofit mergers and presents a study of eighteen nonprofit merger, acquisition, or consolidation transactions. The findings underscore financial reasons as the chief motivation for mergers and cite the inability of small agencies to compete as an important contributing factor. Morale and productivity declined when staff had serious concerns about their future. Good leadership and honest and open communication were considered vital to ensuring a smooth merger process.     

Union mergers and the integration of union governing structures

Union mergers may require varying degrees of integration of union governing structures. Union amalgamations can range from complete fusions of the unions at all levels, to moderate integration, to the establishment of federated structures. Union absorptions, the alternative merger type, can entail complete and immediate absorptions, the formation of semi-autonomous divisions, and absorption through affiliation. The paper presents an examination of post-merger governing structures and a review of the factors associated with different degrees of integration.     

BIRTHS, DEATHS, AND MARRIAGES IN THE U.S. COMMERCIAL BANKING INDUSTRY

Regulatory change not seen since the Great Depression swept the U.S. banking industry beginning in the early 1980s and culminated with the Interstate Banking and Branching Efficiency Act of 1994. This article examines whether deregulation affected new charter (birth), failure (death), and merger (marriage) rates of U.S. commercial banks from 1978 to 2004 after controlling for bank performance and state economic activity. We find strong evidence that intrastate and interstate deregulation stimulated marriages, but not births or deaths. Finally, temporal causality tests show that mergers temporally lead to new charters and that failures lead to mergers (a demonstration effect) . ( JEL G21, L51)     

Local union mergers: Frequency,forms, and national union policy

This paper presents the results of a survey on the characteristics of almost 1,900 union mergers. It was found that a large proportion of national unions had some local mergers, but a majority of cases occurred in a few very active unions. Most mergers were absorptions of smaller locals into larger ones. Formal requirements for local mergers, either through general policies or constitutional clauses, were infrequent, but national level governing bodies appear to have substantial control over the approval of mergers. Suggestions are made for the further study of local mergers in relation to bargaining structure, local autonomy, membership participation, and local effectiveness.     

Self-interests and group-interests in employee involvement programs: A case study

What happens in a unionized setting when a participatory management system is adopted? This question is examined based on a field study of a union manufacturing facility that has been operating under a gainsharing system for four years. As suggested by the political science literature on transforming political systems from authoritarian rule to democracies, the events resemble a complicated chess game among management, union officers, and union members pursuing their self-interests or group-interests during and after the transitional process. Although gainsharing bonuses have been minimal, the democratization of organizational structures and relationships has generated multiple beneficial organizational and individual outcomes for management and union members.     

Small organization mergers in arts and humanities

This chapter discusses a case study of the merger between two relatively small organizations: a local nonprofit arts council and a public county‐level humanities commission. As this case deviates from other merger analyses that tend to focus on larger health and social service agencies, the chapter examines how well key findings of the nonprofit merger literature apply to mergers of organizations of smaller size and in other fields. Generally, we find that the merger literature so far provides sufficient guidance for nonprofit managers in fields such as the arts, where merger pressures have only now begun to mount.     

Member support for union mergers: An analysis of an affiliation referendum

A changing labor relations climate has caused many national unions to merge with smaller independent unions in recent years. One aspect of the merger process concerns the willingness of independent union members to support affiliation with a national union (Chaison, 1986). This article examines the determinants of indivudual-level voting behavior using data gathered from members of an independent union who rejected a proposed affiliation with a national union in a membership referendum. Logistic regression results indicate that affiliation supporters perceived the affiliation as improving union effectiveness, were influenced by social support among co-workers in favor of the merger, and perceived the saliency of the independent union’s support for the affiliation proposal. Conversely, affiliation opposition was influenced by the employer’s “vote no” campaign and by perceptions that affiliation would lead to an increased probability of strikes and to future increases in dues.     

Organisationsentwicklung in M&A Prozessen

Technical issues like legal matters or different types of due diligence predominate during the execution of mergers and acquisitions. Personnel issues only get considered during the post-merger integration phase. However, the success of mergers and acquisitions depends considerably on the early and correct involvement of the human resource and organization development (OD) department in every phase of the merger.     

PRODUCT BUNDLING AND INCENTIVES FOR MERGERS AND STRATEGIC ALLIANCES

This paper analyzes firms' choice of a merger or a strategic alliance in bundling their products with other complementary products. Tying two products of unequal value makes them equally valuable as they become inseparable for purchase. Consequently, firms can charge a higher price for the bundled products than before. If foreclosure is not the main purpose of bundling, firms would prefer strategic alliances to mergers because mergers only intensify competition by internalizing the complementarities of two products. In equilibrium, bundling occurs only through strategic alliances. (JEL L4, L11, L13, L23)     

Hospital Mergers

Abstract

When secular and sectarian (often Catholic) hospitals merge, women's reproductive healthcare services are often put in jeopardy. Some merger efforts are successful and others fail. Several issues arise as a result of this situation. First, what role do women's reproductive rights activists and their supporters play in effecting hospital merger decisions? This question does not assume that all women support women's rights organizations or that all women support a full range of reproductive rights. Secondly, what other factors seem to effect the outcome of merger discussions? In order to answer these questions, it is first necessary to understand the extent of Catholic hospital expansion and the nature of the hospital merger movement itself. These considerations will provide perspective for the two case studies of the American hospital merger movement that provide venues for examining the issues relating to participation and other factors that effect the outcome of merger talks. Cumberland and Baltimore are the two communities examined in this study. Though it would be a mistake to generalize to all merger situations based on these two cases, there are lessons that women's reproductive healthcare advocates can learn from the experiences of these two communities.

The issue of hospital mergers and the availability of reproductive healthcare services for women does raise an additional issue. Private sector decisions are being made that have a direct impact on public services, that is, the availability of a set of healthcare services in communities. This is not the direction that most public policy analysts consider.

The more frequently asked policy questions begin with public policy decisions and ask how they influence non-governmental decisions.