Impact of Business Ownership Change on Institutional Historical Knowledge Due to Employee Turnover: A Literature Review

Abstract

Increasing number of business ownership changes and its impact on human capital is a global concern over the years. Change of business ownership of organisations can be in the form of Business Acquisitions. Mergers and Acquisitions are the most common form of Business Acquisitions. Business Acquisitions have made a significant impact on Human Resources in both acquirer and acquired organisations. Human Resource is also an important component of business integration process. Desired results of post-acquisition hence can be hampered by the demotivated human resources. It is evident from literature that unless this sensitive area of human resources is not handled professionally, employees become reactive. The consequences can be damaging due to employee demotivation which can result in an increase in employee turnover after an ownership change. Retention of employees can be important to the acquirer companies since it can lose the Institutional Historical Knowledge with the parting of employees. The Institutional Historical Knowledge comprises of the knowhow an employee gained over the years of service in that particular institution and it includes ‘tacit’ knowledge which is competitively advantageous to the institution. This moves away with the employees leaving the organisation. The main objective/aim of this study is to identify whether there is an impact of Business Ownership Change, on Institutional Historical Knowledge due to Employee Turnover – ‘through literature. Hence, this paper reviews the theoretical findings in literature from business acquisitions, employee turnover and its impact on loosing Institutional Historical Knowledge-‘the wisdom withdrawal’. The significance of the study is to echo the risk of losing Institutional Historical Knowledge due to employee turnover. Therefore, this study is totally a desk research based on literature review. The study reveals that there is a negative impact of business ownership changes on institutional historical knowledge due to employee turnover.