IMPACT OF CULTURAL DIFFERENCES ON MERGER AND ACQUISITION PERFORMANCE: A CRITICAL RESEARCH REVIEW AND AN INTEGRATIVE MODEL

Abstract

This paper provides a review of theoretical perspectives and empirical research on the role of culture in mergers and acquisitions [M&A], with a particular focus on the performance implications of cultural differences in M&A. Despite theoretical and anecdotal evidence that cultural differences can create major obstacles to achieving integration benefits, empirical research on the performance impact of cultural differences in M&A yielded mixed results: while some studies found national or organizational cultural differences to be negatively related to measures of M&A performance, others observed a positive relationship or found cultural differences to be unrelated to M&A performance. We offer several explanations for the inconsistent findings of previous research on the performance impact of cultural differences in M&A and develop a model that synthesizes our current understanding of the role of culture in M&A. We conclude that the relationship between cultural differences and M&A performance is more complex than previously thought and propose that, rather than asking if cultural differences have a performance impact, future research endeavors should focus on how cultural differences affect M&A performance.

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