The impact of cultural differences on the performance of cross-border Mergers & Acquisitions

Abstract

Despite the increasing importance of cross-border mergers and acquisitions (CBM&As) in a globalizing world, research into the relationship between cultural differences and CBM&A performance is both incomplete and inconclusive. This study examines potential impacts of cultural differences, both from national and corporate perspectives, on the performance of CBM&As. The first part provides an understanding of cultural dynamics and unveils problem areas within CBM&A processes. It further discusses cultural theoretical frameworks with their implications for CBM&As. Secondly, a qualitative analysis investigates the relevance of culture during CBM&As, its effect dependent on different transaction types as well as the degree of impact on different business areas. This approach further aims to determine, what can be done to minimize culture related challenges. Main results show, that cultural differences have a multifaceted impact on CBM&A processes, especially on integration and long-term CBM&A outcomes. The qualitative part showed, that this effect can be controlled by early an assessment of cultural fit and a sufficient analysis of cultural dynamics prior to the transaction. The results also emphasized the need to examine cultural differences from a broader perspective, by considering industry-specific cultural characteristics or companies' ownership structures during the target selection.