A Study Of Chinese Corporations’ Culture Construction After Cross-Border Merger&Acquisition

As the main mode of foreign direct investment, cross-border Merger&Acquisitionhas witnessed rapid development since the1990s. Although the number and scale ofcross-border M&A is climbing recently, the performance is not quite good. Accordingto Mckinsey studies, about70%of the cross-border practices failed, and culture is oneof the most important causes.With the high-speed economic development and deepening reform and opening-up,Chinese companies have become increasingly active in cross-border M&A. However,most of cross-border M&A that Chinese companies engaged in did not realizeexpected goals, and some of them failed in the end. In Dec.2004, Lenovo announcedits merger with IBM PC business, which becomes the milestone in Chinesecorporations’ cross-border M&A process. Over the eight years after the alliance, newLenovo has gone through difficult times and made a success eventually. Liu Chuanzhi,Lenovo’s founder, once said that, cultural factors play a decisive role in the finaloutcome of the alliance. Realizing this, new Lenovo has taken a series of actions so asto build a powerful corporate culture.This thesis begins with a study of theories of culture construction theories andcross-culture management theories under a M&A situation, and analyzes the influenceof culture differences between Sino-American cultures on the corporate cultureelements. Taking Deal&Kennedy’s corporate culture theory and Hofstede’scross-cultural theory as the foundation, this thesis tries to explore new Lenovo’saction in constructing a powerful culture after its merger with IBM PC business; and,to provide valuable suggestions for more and more Chinese companies in theirpost-M&A performance.