Mergers and Acquisitions in Practice by Tarba Shlomo Y.; Cooper Sir Cary L.; Sarala Riikka M

Author:Tarba, Shlomo Y.; Cooper, Sir Cary L.; Sarala, Riikka M.
Language: eng
Format: epub
Publisher: Routledge

Acculturation—managing post-acquisition organizational culture

Organizational culture refers to a symbolic set of values, beliefs, and assumptions that are held by organizational members and guide the way in which they, and in aggregate the organization, operates (Denison 1996). While efforts to manage the organizational culture during the M&A process may concern the softer, human side of M&A integration, organizational culture can also be a strategic resource for deriving value and competitive advantage from the post-acquisition organization (Barney 1986). Indeed, research indicates that efforts that are aimed at managing post-acquisition organizational culture are critical to achieving desired M&A outcomes (Schweiger and Goulet 2005; Nahavandi and Malekzadeh 1988). Efforts aimed at hindering culture clashes between the combining entities are particularly important, as clashes are shown to negatively impact the realization of strategic M&A objectives (Cartwright and Price 2003; Very et al. 1996), effectiveness of system integration (Weber and Pliskin 1996), and post-acquisition stock price performance (Chatterjee et al. 1992). Despite its importance, however, companies do not often set a high priority on post-acquisition organizational culture management (Marks and Mirvis 2011).

Managing a post-acquisition organizational culture is not necessarily about creating a new, cohesive organizational culture (Seo and Hill 2005). In fact, four approaches to acculturation, referring to the cultural changes induced by one group or both, resulting in interactions between the two combining organizational cultures, have been identified (Marks and Mirvis 2011). ‘Cultural transformation’ involves the abandonment of previously held cultures and the adoption of new values and norms (Marks and Mirvis 2011). On the other hand, ‘cultural pluralism’ is concerned with the coexistence of cultures in the combining organizations and requires no or minimal culture changes (Marks and Mirvis 2011), ‘cultural integration’ involves blending together the current organizational cultures (Berry 1983), and ‘cultural assimilation’ refers to a unilateral process by which one culture absorbs the other (Nahavandi and Malekzadeh 1988).

There are two perspectives in the current literature concerning M&A culture management. On the one hand, scholars who value cultural differences believe that a variety of people and practices may facilitate innovative idea generation and implementation in organizations (Cox 1993). Further, the unique capabilities embedded in different organizational cultures create the positive conflicts needed for synergies and learning (Vermeulen and Barkema 2001), which, in turn, break down rigidities in the combining entities to enrich market and management knowledge (Schreyögg 2005; Olie and Verwaal 2004). Indeed, evidence from M&A research indicates that differences in style and practices can be positively related to post-M&A performance (Vermeulen 2005), sales growth (Morosini et al. 1998), reduced employee resistance (Larsson and Finkelstein 1999), creative problem solving, innovation (Mirvis and Marks 2003), and increased synergies (Weber et al. 1996). Another line of M&A research, however, looks at the ‘dark side’ of organizational culture differences. Scholars in this area suggest that the differences between two combining entities can lead to ethnocentrism, stereotyping, and domination of the higher-status group over the lower-status group (Sales and Mirvis 1984).

It is recognized that HRM has a role in facilitating the different approaches towards M&A acculturation (Lakshman 2011).

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