Impact of Culture on Mergers and Acquisitions
Impact of Culture on Mergers and Acquisitions: A Theoretical Framework
Mohibullah*
Mergers and acquisitions (M&As) are the front line strategic option for organizations attempting to have competitive advantage over its competitors. Organizations word-wide spend billions of dollars in pursuit of this strategy. However, the success rate is less then estimable. This is mainly due to the clashes of corporate cultures. The objectives of this theoretical paper are to find out the reasons why most of the mergers and acquisitions fail. Four main issues related to the culture clashes are highlighted in this paper, ambiguity and communication problems within the merged entity, properly management of cultural integration, the acquisitions and organizational culture, and Improper acculturation process among the merged organizations. The factors in this paper are based on previous literature. On the basis of different views of authors, a conceptual framework that uses the afore-mentioned issues through out the acquisition process to produce and negotiate some workable approaches. It is suggested that this conceptual framework can give a new insight into explaining the causes of unfulfilled expectations in international mergers and acquisitions.
Key words: Mergers and communication, acculturation. Paper type: Conceptual paper
acquisitions,
culture,
ambiguity,
Purpose: The purpose of this theoretical paper is to evaluate the role of culture in the failure of many international mergers and acquisitions and also to illustrate the methods to avoid the cultural problems between the merged organizations.
Introduction/ Rationale Of Choice
During the last twenty years, due to increasing competition, new financing possibilities and changes in regulation all over the world, mergers and acquisitions (M&A), international as well as domestic, have become popular strategic tools for increasing products portfolios, entering new markets and acquiring new technologies.
Mohibullah*
Mergers and acquisitions (M&As) are the front line strategic option for organizations attempting to have competitive advantage over its competitors. Organizations word-wide spend billions of dollars in pursuit of this strategy. However, the success rate is less then estimable. This is mainly due to the clashes of corporate cultures. The objectives of this theoretical paper are to find out the reasons why most of the mergers and acquisitions fail. Four main issues related to the culture clashes are highlighted in this paper, ambiguity and communication problems within the merged entity, properly management of cultural integration, the acquisitions and organizational culture, and Improper acculturation process among the merged organizations. The factors in this paper are based on previous literature. On the basis of different views of authors, a conceptual framework that uses the afore-mentioned issues through out the acquisition process to produce and negotiate some workable approaches. It is suggested that this conceptual framework can give a new insight into explaining the causes of unfulfilled expectations in international mergers and acquisitions.
Key words: Mergers and communication, acculturation. Paper type: Conceptual paper
acquisitions,
culture,
ambiguity,
Purpose: The purpose of this theoretical paper is to evaluate the role of culture in the failure of many international mergers and acquisitions and also to illustrate the methods to avoid the cultural problems between the merged organizations.
Introduction/ Rationale Of Choice
During the last twenty years, due to increasing competition, new financing possibilities and changes in regulation all over the world, mergers and acquisitions (M&A), international as well as domestic, have become popular strategic tools for increasing products portfolios, entering new markets and acquiring new technologies.
References: Young. M. and Post, J.E (1993) “Managing to communicate, communicating to manage: How leading companies communicate with employees” Organizational Dynamics, Vol. 22. No. 1, summer, pp. 33-43 12