Cultural Clashes in a Merger of Equals

CULTURAL CLASHES IN A “MERGER OF EQUALS”: THE CASE OF HIGH-TECH START-UPS

ISRAEL DRORI, AMY WRZESNIEWSKI, AND SHMUEL ELLIS

Mergers of equals are often considered simply symbolic. Whereas existing literature on the topic views equality as underscoring the importance of distributive justice, power, or identity, the role of culture remains relatively obscure. In this study, the authors explore equality as a dynamic construct associated with two major processes in mergers of equals: cultural clash and cultural construction. The authors employ a qualitative case study with interviews and analysis of company materials from BroadBand, a wireless Internet access provider, to address the role of culture and equality in mergers and acquisitions (M&A). The results shed light on how and why social actors entering into mergers may enact a culture of equality. First, firms may develop new aspirations and patterns of appreciation and initiate practices and strategies that construct equality as an integral part of the merger. Second, when distributive equality becomes a liability, it incites change. In the context of equality, this change results in strategic action that transforms the meaning of “a merger of equals” to a more practical, pragmatic, and integrative equality, which takes into account the interests and the needs of the merged firm. Third, contrary to the common skeptical and cynical portrayal of mergers of equals, this study found equality to be a crucial factor during postmerger integration. © 2011 Wiley Periodicals, Inc.

Keywords: merger of equals, equality, cultural clash, cultural construction, practices of equality

Introduction

ere is a tip for deal making: When companies start talking about a ‘merger of equals,’ someone is usually getting the better deal” (http:// www.nytimes.com/2007/02/25/ business/yourmoney/25deal.html). This cynical quote from the New York Times’ A. Sorkin on the merger of XM Satellite Radio with “

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