Since the publication of the book The Structure of Scientific Revolutions by Thomas Kuhn in 1962, the idea of a paradigm as a worldview or a framework that organizes the research approach and even governs the types of questions that are allowed has become mainstream. However, Aliyu et al. (2014) stress that a formal understanding and discussion of any paradigm requires a concrete definition of its ontology, epistemology, methodology, and axiology. The positivist research paradigm is one such example of a paradigm whose ontology holds that reality and truth are independent of the viewer or observer (Kivunja & Kuvini, 2017). Therefore, any information gained is objective. However, the positivist research paradigm in academic research on social processes in international alliances and M&As is limited by its ontology. In other words, the assumptions that the positivist research paradigm holds limit its applicability in academic research on social processes in international alliances and M&As. This paper is a brief discussion of these assumptions with demonstrations from existing literature conducted in the last two decades.
Background: Why Do Mergers and Acquisitions Exist?
Mergers and Acquisitions are the most common internationalization and growth strategies employed by organizations at all scales. Yet, research by Vrontis et al. (2012) state that only half of the M&As succeed. Therefore, it is essential to understand the motives for M&As that drive managers and executives to pursue the strategies. Daft et al. (2010) outlines four main motives: strategic, market, economic, and personal. For instance, an organization might pursue the M&A strategy to increase its market power and competitivity in its operating environment. Furthermore, a strategic motive that could drive an organization to consider M&A as a growth strategy is to complement its weaknesses, such as lack of resources or capabilities (Daft et al., 2010). A firm might also pursue a merger and acquisition strategy as a pre-emptive move against its competition by keeping it from acquiring a strategic resource.
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On the other hand, an acquisition can be driven by the need to easily access and enter into a new market. By acquiring an existing company, the firm does not have to dedicate time and resources to plan and implement a market entry strategy while lowering the entry barriers. On the other hand, if the firm’s market position is under threat, acquiring a competitor is a good strategy to defend its position. Besides, an organization will be motivated to pursue a merger or acquisition to take advantage of the associated economies of scale and scope (Daft, 2010). However, this paper focuses on the limits of the positivist research paradigm from an ontological perspective. Therefore, the next section will discuss the ontology of the positivist research paradigm followed by a presentation of the results of an exhaustive literature search to critique and analyze the limits of the positivist research paradigm.
The Ontology of the Positivist Research Paradigm
In philosophy, ontology is the study of the assumptions people and researchers make to believe that the object under questioning is real or sensical. From a different perspective, ontology seeks to understand the nature of existence and reality by examining the researcher’s underlying belief system (informed by the applicable paradigm). Therefore, assumptions are important in the positivist research paradigm, especially since they orient the researcher’s thinking about the research problem. Furthermore, the assumptions influence their choice about the best methodology to answer the research question and how to understand and interpret the data gathered (Kivunja & Kuvini, 2017). The positivist research paradigm has four main assumptions.
First, it assumes that the world is deterministic. The assumption about determinism means that all observable events have causative factors that can be studied. Therefore, by creating causal and correlational relationships between factors and the outcomes, researchers can predict potential outcomes and also explain underlying reasons that shaped the specific event. Secondly, the positivist research paradigm assumes empiricism. Any study into a research problem requires an exhaustive collection of verifiable empirical data, supported by a theoretical framework, and the data should be used to accept or reject the hypothesis under question. The implication is that for the positivist researcher to increase the reliability and validity of their findings, they have to consider using the quantitative approach as it will enable the precise and accurate collection of parameters and coefficients to be used in data analysis and interpretation. However, qualitative methods can also be used.
Thirdly, the positivist research paradigm assumes parsimony, which means that the researcher will attempt to explain the phenomenon of interest in the most economic means possible. The last assumption is generalizability. According to Kivunja & Kivuni (2017), assuming generalizability implies that the outcomes and information gained from a research study using the positivist paradigm can be extended to other contexts through by the use of inductive references. Of all the assumptions made when using the positivist research paradigm, assuming generalizability is the most tenuous and will be the basis of the critique (limits) of the paradigm in the next section.
Limits of the Positivist Research Paradigm: A Case Study of Why Most Mergers and Acquisitions Fail
As mentioned in the previous section, half of the mergers and acquisitions fail. Despite the low effectiveness of the strategy as a means for internationalization and growth, managers and executives continue to pursue it. Scholars and researchers, therefore, have studied the phenomenon with a special focus on the causative factors for the failure. In a systematic literature review conducted on the subject matter, Vrontis et al. (2012) established that researchers in the last two decades have mainly focused on level of integration and organizational factors as culprits behind the low success of M&As as a viable growth and internationalization strategy for organizations. However, their findings have been inconsistent.
Integration in Mergers and Acquisitions
The level of integration is a significant determinant in predicting the success or failure of an M&A. Thirty three percent of the research studies analyzed by Vrontis et al. (2012) mentioned that the level of integration played a vital role in higher synergy, thus increasing the performance of the new organization. For instance, Zollo & Singh (2004) and Meyer (2008) argue that a higher degree of integration is a definite predictor of higher performance due to increased knowledge codification. Therefore, when tech companies undergo mergers and acquisitions (such as to complement existing weaknesses), the employees and management will have greater access to know-how, which will increase their performance. From a positivist perspective, these study findings can be generalized to create the recommendation that when pursuing an M&A, companies should target a higher level of integration.
However, the generalization is challenged by other research studies that produce inconsistent results. For instance, studies by Vestring et al. (2004) and SLangen & Hennart (2008) discovered that a higher level of integration during a M&A is the causative factor behind the documented failure of the strategy. The post-M&A strategy employed will also influence the success of the strategy. A study conducted by Paruchuri et al. (2006) revealed that after an acquisition, inventors who were deeply integrated in the acquiring organization produced fewer innovations than their counterparts. Therefore, if the two organizations have large differences, a higher level of integration will not improve the final performance. Therefore, the generalizability assumption of the positivist research paradigm is no longer valid. On the other hand, a generalization can be made where organizations are recommended to pursue higher levels of integration when implementing a M&A, except in cases where the differences between the organizations is large. Such a generalization is valid considering existing data. However, the level of integration is not the only factor that influences the success or failure of a M&A.
Culture in Mergers and Acquisitions
Culture is also an influencing factor, where differences have been studied by researchers as predictors of the success of mergers and acquisition. Similar to the studies on the influence of integration (discussed in the previous section), the research results on the influence of cultural differences in the success of mergers and acquisitions is inconsistent and contradictory. For instance, studies by Bjorkman et al. (2007) and Stahl & Voigt (2008) established that cultural differences between organizations have a negative outcome on the success of the merger and acquisition. In other words, the more culturally different the employees of the joining organizations are, the higher the barriers of human integration, thus increasing the chances of failure of the merger. Examples of barriers include language, interpersonal conflict due to differences in management styles, and radical change processes (Harzing & Feely, 2008; Das & Kumar, 2010). In contrast, Chakrabarti et al. (2009) established that cultural differences could improve the performance of mergers and acquisitions and, in some cases, become a main source of synergy. Therefore, it is difficult for a positivist researcher to make a generalization about the role culture plays in mergers and acquisitions.
Researchers who view culture as a positive influence in mergers and acquisitions claim that the cultural differences are not the causes of the failed mergers and acquisitions. Instead, it is the failure in managing the cultural differences that is to blame (Vrontis et al., 2012). For instance, employee attitude and behavior can have an impact on the outcome of a merger and acquisition. Syrjala & Takala (2008) established that if the change process is poorly managed, the employees might change their positive attitude about the M&A, thus resulting in reduced performance. Duncan & Mtar (2006) also published contradicting results where they showed that synergy realization is possible without any integration. Therefore, the generalizability assumption does not hold and, as a result, limits the applicability of the findings of the positivist research paradigm.
It is, therefore, important to understand the causes of the inconsistencies between the research studies. In a meta-analysis study, Stahl & Voigt (2008) established that external moderators played significant roles in determining the success or failure of a merger and acquisition. For instance, cultural differences were established to influence integration and organizational performance, but in specific conditions (Stahl & Voigt, 2008). Therefore, if the results of a research study cannot be generalized, they lose their value and applicability as a source of knowledge and information. The implication is that every situation will require explicit research design and data analysis without using any existing knowledge base. If the generalizability assumption of the positivist research paradigm is not valid, the paradigm ceases to be useful and alternative paradigms have to be developed.
Alternative Research Paradigms
The positivist research paradigm is one such example of whose ontology holds that reality and truth are independent of the viewer or observer. However, if it is no longer ontologically valid, alternatives exist. For instance, constructivist and social constructivist research paradigms are alternatives whose ontology is based on relativism. Instead of an objective reality and truth that are independent of the viewer or observer, the constructivist and social constructivist paradigms assume subjectivity, where realities and local and specific. Therefore, reality and the truth are dependent of the observer or researcher. With the two approaches, the contradictions and inconsistencies described in the case study above are no longer a concern as everything is acceptable as long as it adheres to a set of logic and reasons, such as be based on existing and verifiable data. In other words, generalizability is not a challenge for the constructivist research paradigm, unlike the positivist research paradigm. In contrast, the lack of specificity with the constructivist approach makes the paradigm less valuable as there is not inherent ranking about which arguments are more valid than the other.
Conclusion
The positivist research paradigm holds that reality and truth are independent of the viewer or observer. However, when used in academic research on social processes in international alliances and M&As, the positivist research paradigm is mainly limited by its ontology. In other words, the assumptions that the positivist research paradigm holds limit its applicability in academic research on social processes in international alliances and M&As. Of all the assumptions made when using the positivist research paradigm, generalizability is the most tenuous. Generalizability implies that the outcomes and information gained from a research study using the positivist paradigm can be extended to other contexts through by the use of inductive references. Alternatives to the positivist research paradigm are the constructivist and social constructivist research paradigms. Their ontology is based on relativism. However, the lack of specificity with the constructivist approach makes the paradigm less valuable as there is not inherent ranking about which arguments are more valid than the other.
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