The Role of Organizational Culture in Cross-border Acquisitions: A Look at the Process of Acculturation

By Robin Hurst.

Published by Organizational Cultures: An International Journal

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Cross-border mergers and acquisitions (M&A) have been part of the global business landscape for more than 30 years. While this trend remains common, as evidenced by the US$1.66 trillion estimated global direct foreign investment in 2012 (UNCTAD January 27, 2013), studies have shown that over 50% of M&A do not lead to expected outcomes (Bjorkman, Stahl, and Vaara 2007; Buono and Bowditch 1989; Cartwright 1998; Forstmann 1998; Gerds Strottman, and Pakshalika 2011; Goulet and Schweiger 2006; HayGroup 2008; Payne 2005). Some of the reasons cited for this poor performance include low employee commitment and employee turnover (Larsson and Finkelstein, 1999; Veiga et al, 2000), employee resistance to change (Bjorkman, Tienari, and Vaara 2000; Buono and Bowditch 1989), underdeveloped business strategy for integration (Cartwright and Schoenberg 2006; Finkelstein 1999; Gerds Strottman, and Pakshalika 2011; Larsson and Finkelstein 1999; Nahavandi and Malekzadeh 1988), readiness of employees for knowledge transfer (Bjorkman, Stahl, and Vaara 2007; Sarala and Vaara 2010; Tseng 2012), and overestimating the level of synergies that can be achieved (Cartwright and Schoenberg 2006; Christofferson, McNish, and Sias 2004; Larsson and Finkelstein 1999). While researchers and practitioners, alike, have focused much of their attention on the strategic and financial goals of M&A (Cartwright and Cooper 1996; Cartwright and Schoenberg 2006; Olie 1994; Stahl and Voigt 2003), they have underestimated the impact of organizational culture on the success of cross-border ventures (Forstmann 1998; Huang and Kleiner 2004; Stahl and Voigt 2003, 2008; Veiga et al. 2000). Many of the reasons cited for poor performance in M&A may be attributed to the organizational culture of each of the entities coming together.

Keywords: Organizational Culture, Cross-border M&A, Acculturation

Organizational Cultures: An International Journal, Volume 13, Issue 3, October 2014, pp.67-80. Article: Print (Spiral Bound). Article: Electronic (PDF File; 633.469KB).

Dr. Robin Hurst

Assistant Professor, School of Education, Virginia Commonwealth University, Richmond, VA, USA

Dr. Robin Hurst is an Assistant Professor of Adult Learning in the School of Education at Virginia Commonwealth University, and the Coordinator of the Adult Learning Masters Program. Her current research is centered around societal and organizational culture and change in cross-border mergers and acquisitions. She received both her doctorate and master of arts in Human Resource Development from The George Washington University.