Managing cultural variables during cross-border acquisitions: the post-acquisition process and effects on performance

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School of Business | Master's thesis

Date

2023

Major/Subject

Mcode

Degree programme

Global Management

Language

en

Pages

104 + 3

Series

Abstract

Mergers and acquisitions continue to be one of the most popular means for companies to acquire growth. However, M&A transactions bear a multitude of different factors, that in most cases worldwide lead to the companies not reaching previously set goals. In most failed mergers and/or acquisitions, the term ‘cultural fit’ is used to describe the main reason for missing the expected outcomes. This thesis is conducted to further analyse this ‘culture’ and its difficulties, as well as the management of these cultural variables in international acquisitions. This thesis contributes to the body of academic research discussing cross-border M&A, and how effective management of the human side, especially different national and organizational cultures, during the post-acquisition integration phase can boost the performance of the new entity. By reviewing a variety of existing research regarding cross-border M&A and comparing the theoretical findings to more practical data gathered from two case studies as well as two interviews, the following conclusions for cultural management during international acquisitions were made: National/organizational cultures influence M&A in many different ways, mainly during the integrational phase, such as the level of integration, sociocultural as well as task integration, governance structure, and company strategy. In order to effectively manage culture during cross-border acquisitions and thus increase the probability of M&A success, the executives need to: emphasize the importance of cultural integration and place it on the same level as financial or strategic integration, allocate a transformational leader (team) responsible for cultural management during the acquisition, conduct sufficient cultural due diligence, agree on a desired cultural endstate for the new organization’s culture, implement a transition plan, communicate effectively with all stakeholders involved (both internal and external), and make change ownership collective. Once these steps have been implemented successfully, new entities with a culturally diverse workforce can benefit from the following advantages: incorporating valuable national cultural aspects such as honesty for example, allocating tasks according to peoples’ different strengths, profiting from increased inimitability for competitors, as well as gaining advantages through increased innovativeness and effectiveness in decision-making practices.

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Thesis advisor

Seristö, Hannu

Keywords

cross-border M&A, cultural management, post-acquisition Integration, organizational culture, national culture, cross-border acquisitions

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