Identity and integration: The roles of relationship and retention in nonprofit mergers

• Date: 01 December 2019
• DOI: http://doi.org/10.1002/nml.21382
• Published date: 01 December 2019

RESEARCH ARTICLE

Identity and integration: The roles of relationship

and retention in nonprofit mergers

Katherine R. Cooper

1

| Reyhaneh Maktoufi

2

1

College of Communication, DePaul

University, Chicago, Illinois

2

Communication Studies, Northwestern

University, Evanston, Illinois

Correspondence

Katherine R. Cooper, College of

Communication, DePaul University,

Chicago, IL.

Email: kcooperm@depaul.edu

Abstract

Prior research suggests that nonprofits are flexible and

possess multiple identities, although we know less about

how transformative changes, such as mergers, shape non-

profit identity. This qualitative study draws upon in-depth

interviews from 13 nonprofit merger cases to explore fac-

tors that influence postmerger identity and integration. In

particular, we focus on the roles of organizational similar-

ity and relationships, program and personnel retention,

and rebranding. Ultimately, we derive a typology of post-

merger integration in nonprofits and suggest that post-

merger identity may be classified in terms of absorption,

preservation, or creation. Implications for nonprofit

leaders are discussed.

KEYWORDS

identity, mergers, nonprofit < management, nonprofit organizations

1|INTRODUCTION

Nonprofits are “malleable and flexible,”adapting their organizational identity to changing circum-

stances and framing that identity in both structural and strategic terms (Young, 2001, p. 140). How-

ever, amidst increasing turbulence in organizational environments (Ashforth, Harrison, & Corley,

2008), nonprofits may encounter opportunities for what Clark, Gioia, Ketchen Jr, and Thomas

(2010) refer to as “major transformations that require third-order change,”such as mergers (p. 398).

Such transformations provide an opportunity to consider organizational identity in the postmerger

nonprofit.

Data for this study were collected as part of a larger project funded by the Polk Bros. Foundation, Chicago Foundation for

Women, Chicago Community Trust, Crossroads Fund, Grand Victoria Foundation, Lloyd A. Fry Foundation, Michael Reese

Health Trust, and Pierce Family Foundation.

Received: 15 August 2018 Revised: 13 June 2019 Accepted: 18 June 2019

DOI: 10.1002/nml.21382

Nonprofit Management and Leadership. 2019;30:299–319. wileyonlinelibrary.com/journal/nml © 2019 Wiley Periodicals, Inc. 299

Although nonprofit mergers have been the subject of numerous studies (Toepler, Seitchek, &

Cameron, 2004), such research tends to focus on financial catalysts that lead to mergers (Benton &

Austin, 2010; Golensky & DeRuiter, 2002; Sargeant & Jay, 2002; Wernet & Jones, 1992). On the

postmerger side, studies tend to focus more on financial outcomes as opposed to organizational inte-

gration (Chen & Krauskopf, 2013). Moreover, the field lacks theory about how organizations make

decisions pertaining to restructuring (Campbell, 2009), leading researchers to suggest that a theoreti-

cal framework for merger research is needed (Benton & Austin, 2010). Researchers further note a

need for theory building about organizational identity during major change events such as mergers

(Clark et al., 2010).

The purpose of this research is to explore the characteristics that inform organizational identity in

the postmerger nonprofit and whether these characteristics suggest a framework for integrating

acquired organizations following a merger. We begin by summarizing what is known about nonprofit

mergers, reviewing definitions and catalysts for nonprofit mergers, interorganizational relationships

between merging organizations, and research on organizational identity in a merger context. We then

use Weick's (1993) concept of retrospective sensemaking as a sensitizing construct for our grounded

theory approach, in which we rely on interview data collected from board members and executive

directors representing 13 mergers.

Contributions of this research include the following: First, we move beyond the literature's ten-

dency to focus on the financial aspects of nonprofit mergers and elaborate on other factors—such as

premerger similarity and partnerships and postmerger retention and branding—that are foundational

to the nonprofit's postmerger identity. Second, we draw upon these findings to suggest a new frame-

work for integrating acquired organizations into the postmerger nonprofit. Third, we highlight impli-

cations for nonprofit leaders exploring mergers.

2|LITERATURE REVIEW

Nonprofit mergers have generated a limited but robust body of research (Toepler et al., 2004). In par-

ticular, researchers have focused on defining nonprofit mergers and exploring merger catalysts. We

begin with a review of this literature before moving on to a review of organizational identity prior to

and following a merger.

2.1 |Nonprofit mergers: Definitions and catalysts

Nonprofit mergers are “the result of a decision by two or more organizations to combine their opera-

tions in a permanent relationship”(Golensky & DeRuiter, 2002, p. 170). Mergers are just one

approach to restructuring; Campbell (2009) describes interorganizational restructuring as “the com-

ing together of two or more independent organizations in which partners alter governance, integrate

service and administrative operating systems, and at least one gives up significant independent

decision-making authority”(p. 222). Besides mergers, other approaches to restructuring may include

acquisitions, parent–subsidiary relationships (Campbell, 2009), or consolidation,in which both enti-

ties resolve and become a new entity (Singer & Yankey, 1991). Consequently, mergers can be used

to refer to various restructuring arrangements (Owen, Kelly, Pittman, Wagner, & Reed, 2011; Top-

eler et al., 2004). In this paper and among our sample, we referred to Golensky and DeRuiter's

(2002) definition to stress that mergers included the integration of organizational operations and was

intended to be a permanent restructuring.

300 COOPER AND MAKTOUFI