Cultural Differences

DO

 CULTURAL

 DIFFERENCES

 MATTER

 IN

 M&As?

 A

 TENTATIVE

 MODEL

 AND

  EXAMINATION

One

 finding

 of

 the

 meta-­‐analysis:

  although the target firm’s shareholders gain significantly from M&A, there is little evidence that value is created for the shareholders of acquiring firms. Underlying assumption of this research: cultural differences represent a source of “acquisition cultural risk” and a potential obstacle to achieving integration benefits. This is consistent with the cultural distance hypothesis, which suggests that the difficulties, costs, and risks associated with cross-cultural contact increase with growing cultural differences between two individuals, groups, or organizations

Socio-­‐cultural

 Integration: • • The creation of positive attitudes toward the new organization and the emergence of a sense of shared identity and trust among organizational members. People tend to be attracted to those whose attitudes and values are similar to their own. Research on interpersonal trust development has shown that shared norms, ideologies, and values facilitate the emergence of trust, while limiting the potential for conflict Conversely, trust can erode and the potential for conflict increases when a person or group is perceived as not sharing key values. Social identity theory suggests that organizational members show a bias towards members of their own group and tend to hold a negative view about the members of the out-group in order to enhance the relative standing of their own group.

• •

Hypothesis 1. Differences in culture between merging firms are negatively associated with sociocultural integration outcomes.

Task Integration: • The opposite view that cultural differences can be a source of value creation and learning has also been advanced by M&A scholars. This view is largely based on the assumption that differences rather than similarities between merging organizations...