The impact of cultural differences on the performance of mergers and acquisitions

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2016-08-22
Language
en
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Abstract
Despite the increasing importance of cross-border mergers and acquisitions (M&A), there is no economic consensus regarding the effect of cultural differences on the performance of M&A. The purpose of this paper is twofold; firstly, empirically determine the impact of cultural differences on the performance of M&A by a quantitative analysis. Secondly, through qualitative analysis explore the potential impact of cultural differences on the integration process as a possible explanation for the previous contradictory findings. In the first part, multilevel regressions were performed for 5 096 mergers in 81 different countries. In the second part three in-depth interviews were conducted with executives of three cross border merged companies. Main results showed that, M&A performances were lower when countries were more culturally distant. These findings were robust to different years. The qualitative part showed that the outcomes of M&A were dependent upon the development of the integration process. When taking into account the cultural differences within the integration process, M&A performances not necessarily suffered from cultural differences. The way cultural differences were handled within the integration process could be the reason for the contradictory outcomes of previous researches.
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Faculteit der Managementwetenschappen