The Impact Of Culture On Cross-Border Merger And Acquisition

With the ever-deepening globalization, more and more enterprises seek to enhance their competitiveness by engaging in mergers and acquisitions. However, most cross-border M&A end up in failure. Researches show that the failure is more or less attributed to cultural differences and cultural clashes between the two sides. In the face of cultural differences at both national and organizational level, suitable cultural integration is needed to minimize the negative impact of culture on M&A.This thesis studies the impact of culture on the failure of DaimlerChrysler merger—the largest-ever one in industrial history from internal perspectives. The author hopes to trigger further research on culture-merger issues for managers and academicians, and provide some implication for Chinese enterprises which are increasingly engaging in cross-border M&As.This thesis mainly focuses on the impact of culture on M&A from three aspects of culture: national culture, corporate culture and cultural integration. In the thesis, the author first reviewed past research literatures by Hofstede, Schein,Haspeslagh & Jemison, and Nahavandi & Malekzadeh which will serve as the theoretical framework to guide the research. According to the need for strategic interdependence and organizational autonomy, cultural integration approach falls into four categories: absorption, preservation, symbiosis, and holding, with the corresponding acculturative modes of assimilation, separation, blending and deculturation. Based on the past research findings, the author assumed culture is a multi-level phenomenon where national and organizational are interrelated. Thus culture differences do not necessarily lead to merger failure; the formulation and implementation of cultural integration strategy does. Next the author conducted questionnaire survey and qualitative analysis on the national cultural difference between German and American employees, as well as the prevalent culture at DaimlerChrysler. The following two sub-hypotheses are tested: 1. German employees at DaimlerChrysler have lowerpower distance, lower individualism and higher uncertainty avoidance than American employees; and 2. the corporate culture at DaimlerChrysler is dominated by German culture rather than a combination of German and American cultures. Then the author makes analysis on the consequence of cultural integration approach, acculturative modes, and managerial efforts during the integration phase. Finally, it was concluded that taking absorption as its cultural integration approach and assimilation as its acculturative modes to address cultural differences negatively impact on DaimlerChrysler merger. In the last chapter, the author summaries the main idea of this thesis, points out limitation of the research and the possible direction for future studies in this field.