Research has demonstrated that
turnover rates among employees and executives in the acquired firm are much
higher during an M&A event. Recent empirical and review articles on M&A
have also shown that employee retention/turnover can best be understood by
looking at psychological attributes and perceptions of M&As, thus drawing
significant attention to the psychological and ‘human’ side voids to
theoretically exploit and enhance understanding of people-related problems in
M&A endeavors. In this article, we develop a moderated mediation model and
propose that acquired firm employees’ psychological ownership is positively
related to acquired firm employees’ retention through the direct and mediating
effects of employees’ commitment and involvement in M&A. We also propose
that the effect of acquired firm employees’ psychological ownership on
employees’ commitment and involvement and, ultimately, acquired firm employees’
retention is moderated by loss of acquired firm autonomy. We also discuss
implications for theory and practice, as well as future research directions of
such an employees’ psychological ownership perspective on retention effects.