The Disintegrating Effects of Equality: A Study of a Failed International Merger Christine B. Meyer and Ellen Altenborg* Norwegian School of Economics and Business Administration, Department of Strategy and Management, Breiviken 2, 5045 Bergen, and *Telenor Norway, 1331 Fornebu, Norway E-mail: Christine.Meyer@nhh.no [Meyer]; ellen.altenborg@telenor.com [Altenborg] In the literature on M&A and social justice, equality is regarded as an important principle to facilitate social integration. This article debates what happens when the equality principle is operationalized; from intentions in the pre-merger process to the distribution of resources and decision-making rules in the post-merger process. In a merger between two state-owned telecoms corporations in the Scandinavian countries, we found that the principle of equality had the reverse effects on social integration to that predicted in the literature. Instead of facilitating the social integration process, the equality principle led to perceptual and structural fallacies negatively influencing social integration. We suggest that these disintegrating effects were particularly strong because this was an international merger between two state-owned firms of unequal size. Introduction The dominating party’s attitude and beliefs about superiority and inferiority towards the other party is one of the most important causes of merger or acquisition failures (Deiser, 1994; Hambrick and Canella, 2003). Often the incor- poration is not carried out in the spirit of partnership, but is more comparable to a colonial conquest. To overcome these problems and facilitate the social integration process, the M&A literature has suggested that mergers should be carried out in the spirit of equality or balance (Cartwright and Cooper, 1990; Schwei- ger, Csiszar and Napier, 1994; Vaara and Tienari, 2003). We suggest that in order to understand how equality affects the social integration pro- cess, there is a need to focus at how the principle is operationalized and interpreted. For this purpose the literature on organizational justice is particularly useful. Organizational justice theory and M&A litera- ture suggest that adopting a principle of equality has positive effects on social integration. Evi- dence from the failed international merger between two Nordic telecom corporations, Telia of Sweden and Telenor of Norway, challenges this view by proposing that the operationaliza- tion of the equality principle can have a disin- tegrating effect on social integration. Contrasting this case with evidence from the literature on a dialectic approach (Van de Ven and Poole, 1995), we seek to come up with reasons why the principle of equality had a disintegrative effect in this particular merger. We argue that the principle of equality was particularly challenging in this merger because of unequal size, the international setting and state-ownership. The article starts by identifying a gap in the M&A literature on equality. Then we show how the organizational justice literature can contri- bute to a more precise definition of equality that takes into account how the principle is operatio- nalized and interpreted. Next we discuss the positive effects of equality on social integration. After reporting the methodology, we explore the disintegrating effects of equality in a dialectic manner contrasting the evidence from the litera- ture and the case. In the conclusion and discus- sion we provide a synthesis of the contrasting British Journal of Management, Vol. 18, 257–271 (2007) DOI: 10.1111/j.1467-8551.2006.00502.x r 2006 British Academy of Management