The Role of Culture in Cross-border Mergers and Acquisitions: A Synthesis of Research

Abstract

Despite increases in M&A activity over the years, a significant portion of these deals fail to enhance firm value, with cultural differences investigated as a key factor in their poor performance. This master's thesis explores this intricate relationship, first by building a theoretical framework to understand the strategic drivers and mechanisms of M&A activity, borrowing from Gupta & Govindarajan's (2000) five forces for global expansion and Piesse et al.'s (2022) eight perspectives on takeovers. Second, the study employs a qualitative meta-synthesis approach, drawing upon a systematic review of literature from the fields of strategy, management, international business, anthropology, and sociology to provide a comprehensive analysis of the role of culture in cross-border M&As. The thesis further highlights the issue of performance metrics heterogeneity, underscoring the need for greater consistency and comparability across M&A research. It examines the distinction between national and organizational cultures, as well as objective and subjective measures of cultural distance. Real-life examples, such as the failed mergers of Daimler-Chrysler and Alcatel-Lucent, illustrate the consequences of cultural misalignment.

The thesis emphasizes the importance of proactive integration strategies tailored to different stakeholder groups, including top management, middle management, and employees. Clear communication, effective onboarding, and coordinated cultural integration emerge as crucial factors for successful post-acquisition integration. However, limitations in existing M&A literature, such as conflicting findings and lack of consistency in the use of performance measurements, hamper the development of comprehensive insights. The thesis concludes by recommending future research directions, including developing context-specific frameworks, using variables that have consistently proved to be significant, and fostering greater coordination among researchers and practitioners to advance the field and improve M&A success rates in the face of complex cultural challenges.