The role of culture in mergers & acquisitions: An investigation from a selectionist perspective

Author(s)

Publication date

2017

Series/Report no

MALKS;2017

Publisher

Høgskolen i Oslo og Akershus. Institutt for atferdsvitenskap

Document type

Description

Master i læring i komplekse systemer

Abstract

Mergers and acquisitions concerns the activity of buying, selling or combining organizations as a tool to improve financial performance, establish a global existence and withstand or dominate the competitive market. In the current climate, globalisation has driven organizations to merge or acquire in order to survive the highly competitive environment. However, research has shown a high failure rate for M&As. Although culture has been identified as a main cause of M&A failure, many organizations have still yet to address this aspect in a functional manner. While considering the role of culture in M&A activity, it may be useful to visit the principles of selection in relation to this matter. By understanding the underlying mechanisms that drive the evolution of cultural practices, it may be possible to shape them in a favourable direction. This thesis is divided into two articles, the first one addressing the general aspects of M&As, culture and selection, and the intersection between these factors. This article presents a comprehensive and theoretical account of these topics. The second article in this study presents an empirical paper concentrated on the affect of national vs organizational culture on M&A performance, also discussed in relation to selection. There were two case studies conducted which examining culture in a national unsuccessful merger, namely AOL-Time Warner, and an international successful merger, Vodafone-Mannesmann. Four M&A practicioners have also completed written full-answer interviews regarding the role of national and organizational culture in M&A activity. The cases showed that a merger conducted in the same national culture failed, due mainly to organizational cultural differences. An international merger succeeded in some degree, as culture was an aspect to be considered. The interviews yielded data that indicated culture to be a dominant factor that should be emphasized as far more relevant than previously, and should be considered in the pre-integration phase of a merger. National culture may play a critical role in a combination, however organizational culture may be an equally influencial factor. The study is concluded with recommendations for further investigation within this field, and a recommendation to organizations to acquire knowledge on the principles of selection and utilizing these during combinations in order to constrain the natural occurences in the enviroment, and manipulate them so as to successfully realize synergies.

Keywords

Version

publishedVersion

Permanent URL (for citation purposes)

  • https://hdl.handle.net/10642/5509