Organisational culture affecting post-merger integration

2019 ◽  
Vol 29 (2) ◽  
pp. 139-154 ◽  
Author(s):  
Yanan Yang ◽  
Christoph Lütge ◽  
Hongwei Yang
Keyword(s):  
Quantitative Research ◽  
Multinational Enterprises ◽  
Cultural Dimensions ◽  
Data Set ◽  
German Market ◽  
Content Type ◽  
Post Merger Integration ◽  
Merger Integration ◽  
Integration Levels ◽  
Levels Of Integration

Purpose The purpose of this paper is to determine the principal organisational cultural dimensions that affect levels of post-merger integration (PMI) in Chinese acquisitions in Germany and to explore the relationship of these specific organisational cultural dimensions and levels of integration. Design/methodology/approach Data set were collected using a structured questionnaire given to Chinese and German managers and employees, who implemented/were responsible for the PMI in 12 Chinese acquisitions in Germany. A total of 120 questionnaires were distributed and there were 67 respondents, corresponding to a response rate of about 56 per cent. Principal components analysis, one-way ANOVA and bi-variate Spearman’s correlation were applied to analyse the data. Findings Findings revealed that five organisational cultural dimensions (i.e. adaptability, consistency, involvement, balance and flexibility) were extracted to be the primary indicators affecting levels of integration in Chinese reverse mergers and acquisitions (M&As) in the German market. Further, adaptability emerged as the only predictor with a significant negative implication on predicting the degree of PMI that Chinese investors would initiate to integrate their acquired German subsidiaries. Originality/value This study is one of the few studies to consider the specific organisational cultural dimensions affecting the integration levels of reverse M&As and is the first study, to the best of our knowledge, to explore the correlations of specific corporate cultural dimensions and integration levels in emerging multinational enterprises’ reverse M&As through quantitative research.

Dynamic integration paths of emerging multinational enterprises in advanced markets

2019 ◽  
Vol 30 (1) ◽  
pp. 1-23 ◽  
Author(s):  
Yanan Yang ◽  
Christoph Lütge
Keyword(s):  
Multinational Enterprises ◽  
Dynamic Capabilities ◽  
Data Set ◽  
German Market ◽  
Content Type ◽  
Multi Stage ◽  
Linear Integration ◽  
Dynamic Perspective ◽  
Post Merger Integration ◽  
Integration Strategies

Purpose This paper aims to examine dynamic multi-stage post-merger integration (PMI) evolutions by Chinese multinational enterprises (CMNEs) in the German market and their potential influencing factors. Design/methodology/approach A data set was collected from 25 interviews with 21 respondents from six Chinese acquisition cases in Germany, and a comparative multi-case study and content analysis were applied. Findings The results reveal that Chinese acquirers take segmented linear integration path in Germany from nearly no integration to organisational integration and then to production integration. It contains three sub-paths: the P-O-O path (partnering–organisational optimisation–production optimisation), the P-P-P path (preservation–organisational preservation–production preservation) and the P-C-C path (preservation–organisational centralisation–production confusion). The initial nearly no integration condition is mainly impacted by asymmetric information and the targets’ strategic positions, whereas different organisational and production integration degrees in mid- and long-term stages are primarily influenced by Chinese acquirers' different dynamic capabilities. Moreover, Chinese acquirers' corporate ownership is not found to be a significant factor that influences CMNEs to take different integration strategies in different PMI stages. Research limitations/implications This paper contributes to broaden emerging multinational enterprises’ (EMNEs) PMI theory by adding dynamic perspective and provides suggestions for mergers and acquisitions (M&As) practitioners to identify integration options and avoid integration pitfalls in different integration stages. Originality/value Existing works identified that EMNEs prefer to partner with the targets in advanced markets, but lacked a dynamic perspective to disclose whether the partnering strategy would be adjusted or not over time. This study is the first to explore multi-stage integration changes and is one of the few studies that recognise the interaction of the integration strategy with the dynamic capability of the acquiring enterprises.

Segmentally aware: know when to merge and when to purge

2019 ◽  
Vol 33 (1) ◽  
pp. 196-214
Author(s):  
Yao Ma ◽  
Jiahua Xu
Keyword(s):  
Mergers And Acquisitions ◽  
Financial Performance ◽  
Design Methodology ◽  
Content Type ◽  
Structural Integration ◽  
Target Company ◽  
Overall Performance ◽  
Post Merger Integration ◽  
Merger Integration ◽  
Integration Levels

Purpose The purpose of this paper is to hone in on the degree of segment-level integration relative to corporate post-merger performance. Design/methodology/approach The sample consists of 89 segments in 29 combined companies resulting from large mergers and acquisitions (M&A) transactions between 2001 and 2014 in the pharmaceutical and chemical industries worldwide. The authors track the change through M&A in performance of segments with different integration forms as well as performance of entire companies with different integration levels. Findings The authors find that integrating the segments from the target significantly improves the acquirer’s overall performance, as well as the concerned segments’ performance, following an M&A transaction. Whereas the segments from the target company, when left unintegrated, not only exhibit subpar performance among all the segments, but also appear responsible for the worsening corporate performance. Various possible reasons for this contrast are discussed. Originality/value This paper raises awareness of the significance of segment-level analyses, and contributes to the post-merger integration (PMI) research by examining the influence of structural integration on operating segments. To the best of our knowledge, this paper is the first to investigate integration forms and the post-merger financial performance of various segments within companies.

Reaching organizational ambidexterity in the merger process: a temporal switching

2019 ◽  
Vol 58 (5) ◽  
pp. 879-896
Author(s):  
Anne-Sophie Thelisson ◽  
Audrey Missonier ◽  
Gilles Guieu
Keyword(s):  
Participant Observation ◽  
Organizational Ambidexterity ◽  
Longitudinal Case Study ◽  
Exploration And Exploitation ◽  
Content Type ◽  
Merger Process ◽  
Post Merger Integration ◽  
And Control ◽  
Merger Integration ◽  
Parent Companies

Purpose The purpose of this paper is to explore how a company reaches organizational ambidexterity during a merger process. Organizational ambidexterity refers to the proactive adaptations of an organization to simultaneously explore and exploit. Design/methodology/approach The paper presents a longitudinal case study of a public-private merger of two listed French companies. The data were collected from participant observation, interviews and archival documentation over two years. Findings The balance between autonomy and control by the parent companies evolves during the post-merger integration. The findings reveal that there was no concordance between the oscillations between autonomy and control on the part of the parent companies and the new organization’s exploration/exploitation strategies. However, the progressive evolution of control and autonomy from the parent companies engendered organizational ambidexterity during the third phase integration. Practical implications The study adds insight into how organizations can develop ways to manage organizational ambidexterity dynamics by employing temporal mechanisms, referring to an organization’s shifting sequentially between exploration and exploitation. The case highlights how temporal switching between exploration and exploitation occurs to ultimately enable ambidexterity. Originality/value Although organizational ambidexterity is recognized as a key element for post-merger integration, how it is achieved over the course of the merger process has received little attention. The study highlights that in the case of public-private mergers, the parent companies influence exploration and/or exploitation strategies. The paper adds insights on whether exploration and exploitation can be differentiated over time and whether exploration and exploitation can be reconciled at the same time.

A paradoxical approach symbiotic to postmerger integration: a French longitudinal case study

2019 ◽  
Vol 31 (2) ◽  
pp. 232-259
Author(s):  
Anne-Sophie Thelisson ◽  
Audrey Missonier ◽  
Gilles Guieu ◽  
Lotte S. Luscher
Keyword(s):  
Process Model ◽  
Dynamic Decision Making ◽  
Longitudinal Case Study ◽  
Target Firm ◽  
Content Type ◽  
Organizational Autonomy ◽  
Merger Process ◽  
Inclusive Approach ◽  
Post Merger Integration ◽  
Merger Integration

Purpose This paper aims to examine post-merger integration (PMI) through the lens of paradox to determine how paradoxes contribute to successful integration. Although PMI has been identified as crucial to understand merger success or failure, the literature on PMI drivers remains inconclusive. Design/methodology/approach Drawing on the theory of paradox and two key elements of PMI, strategic interdependency (SI) and organizational autonomy (OA), the authors describe the merger of two listed French companies using longitudinal data. Findings The authors identify how the paradox between OA and SI was triggered and fostered PMI success by leading to symbiotic integration. They also show that two capabilities were central in helping the paradox to evolve: preserving the specificities of the organizations and pooling their respective capabilities. These capabilities result from basic decisions and actions during the integration implementation, such as highlighting the expertise of the target firm, refocusing the core activity while valorizing each company’s expertise, clarifying the identity of the new organization on the market and enhancing joint piloting and transferring both general management capacity and functional abilities during the reorganization period. Practical implications The authors offer several useful insights for managers trying to manage paradoxical tension throughout the merger process. This study encourages managers to embrace inconsistencies as they make decisions and to shift to dynamic decision-making as a way to adapt to complex contexts. Originality/value This study adopts a global and inclusive approach to focus on OA and SI and flesh out a picture of the integration process. It proposes a dynamic process model to conceptualize the stage-wise nature of the PMI process by highlighting the interrelations between OA and SI dynamics.

Bridging the gap between corporate social responsibility performance and tax aggressiveness

2020 ◽  
Vol 33 (4) ◽  
pp. 825-855 ◽  
Author(s):  
Eduardo Ortas ◽  
Isabel Gallego-Álvarez
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Cultural Dimensions ◽  
Economic Sectors ◽  
Data Set ◽  
Content Type ◽  
Tax Aggressiveness ◽  
Corporate Social

PurposeThis paper addresses the role of corporate social responsibility (CSR) performance as a potential mechanism for reducing firms' likelihood of engaging in tax aggressiveness (TAG). The paper also contributes to the existing literature by addressing the moderating effect of national cultures on the link between CSR performance and corporate TAG.Design/methodology/approachThe focus is placed on an unbalanced panel of 2,696 companies distributed in 30 countries and seven economic sectors over the period of 2002–2014.FindingsThe results provide support for those companies achieving high corporate social performance (CSP), corporate environmental performance (CEP) and corporate governance performance (CGP) being less likely to engage in aggressive tax practices. Finally, the results identify some national cultural dimensions moderating the link between disaggregated measures of CSR performance and firms' TAG.Research limitations/implicationsThe difficulty of accessing CSR and TAG data for non-listed companies could bias the data set towards a compliant company profile because of the higher visibility. In addition, the use of effective tax rates to examine firms' TAG should be interpreted with some caution.Practical implicationsThe paper's findings provide unique and useful information for company stakeholders and managers aiming to address the factors that enhance firms' incentives to engage in aggressive tax practices.Originality/valueThis paper addresses the multidimensional nature of CSR performance by analysing the links between CSP, CEP and CGP and corporations' TAG. Furthermore, the research addresses the way in which national culture moderates the links between disaggregated measures of CSR performance and corporate TAG.

Integration duration of post-merger and leverage dynamics of mergers: theory and evidence

2019 ◽  
Vol 31 (2) ◽  
pp. 208-231
Author(s):  
Yao Cheng
Keyword(s):  
Capital Structure ◽  
Dynamic Model ◽  
Content Type ◽  
Acquiring Firms ◽  
Integration Period ◽  
Target Firms ◽  
Method Of Payment ◽  
Post Merger Integration ◽  
Merger Integration ◽  
Leverage Dynamics

Purpose The purpose of this paper is to examine the effects of the post-merger integration duration on acquiring firms’ leverage behavior before and after a merger, using a dynamic model in which full merger benefits cannot be consumed at the instant of a merger, but rather after a pre-specified post-merger integration period. Design/methodology/approach This paper presents a dynamic model and empirical tests that describe the impact of the post-merger integration period on the capital structure dynamics of the acquiring and target firms before a merger and during the post-merger integration period. By incorporating costs associated with the post-merger integration period, the model can provide new implications for the leverage behavior around the merger. Findings The model generates new implications related to acquiring firms’ leverage dynamics along with method of payment choice. Specifically, the model indicates that the post-merger integration duration is negatively associated with the market leverage of newly-merged firms at the time of merger completion and during the integration period. Further, acquirer managers are more likely to use equity to finance a merger when the integration duration is likely to be lengthy. Originality/value This is the first model in the literature that assumes that both the acquiring and the target firms can change their capital structure overtime, which allows us to analyze both the financing structure and the merger timing. Previous empirical studies also ignore the integration period in the analysis of the method of payment choice and leverage behavior around mergers. In the tests reported in this paper, the authors control for the factors mentioned above and demonstrate that the expected integration duration is not subsumed by those variables implying that it has its own power in explaining the choice of leverage and merger financing method.

Does national culture influence management's accounting behaviour and strategy? – an empirical analysis of European IFRS adopters

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lucas Reisch
Keyword(s):  
Organizational Behavior ◽  
National Culture ◽  
Cultural Influences ◽  
Cultural Dimensions ◽  
Institutional Setting ◽  
Data Set ◽  
Content Type ◽  
Legal Enforcement ◽  
Specific Factors ◽  
Strategy Variables

PurposeThis study examines, in a European context, whether a management-induced International Financial Reporting Standards (IFRS) accounting strategy is affected by national culture. It analyses the association between management's accounting strategy and Hofstede's cultural dimensions of individualism and uncertainty avoidance, as well as institutional and firm-specific factors.Design/methodology/approachUsing hand-collected accounting decisions from 301 annual reports of firms from 14 European countries in 2017, a model is developed to identify two ordinally scaled accounting strategy variables, each representing the aggregated effect of the decisions on earnings and equity ratio. Afterwards, the effect of the cultural dimensions on these accounting-strategy variables is analysed by an ordered logistic regression.FindingsThe results do not support an association between management's accounting strategy and national culture, complementing the previous critical literature on values-based theories of culture. However, there is evidence that national legal enforcement, disclosure requirements and firm size explain differences in management's accounting strategy across countries.Research limitations/implicationsUsing the cultural value dimensions of the Global Leadership and Organizational Behavior Effectiveness (GLOBE) project, the findings are robust and stable. However, the study is limited to a European data set and the sample year.Practical implicationsThis study contributes to the discussion on the transparency and comparability of IFRS accounting. The results imply that these issues are not affected by cultural differences but rather by differences in institutional and firm-specific factors. In order to bring about improvements, regulators should establish a uniform institutional setting, while the standard setter should reduce the number of implicit and explicit accounting choices embodied in the IFRS.Originality/valueThe paper advances the understanding of cultural influences on management's IFRS accounting behaviour by providing an alternative to the existing accruals approach.

Managing failure in the merger process: evidence from a case study

2020 ◽  
Vol 42 (1) ◽  
pp. 33-39
Author(s):  
Anne-Sophie Thelisson
Keyword(s):  
Single Case ◽  
Content Type ◽  
Theoretical Concepts ◽  
Organizational Issues ◽  
Integrative View ◽  
Merger Process ◽  
Consistent Picture ◽  
Post Merger Integration ◽  
Merger Integration

Purpose Despite their high number, most mergers end in failure. Academic studies of how these failures occur have remained rare, first, because of the difficulty of accessing the cases, and second, because of the difficulty of obtaining – for the purposes of qualitative analysis – objective and freely shared perceptions from the stakeholders, who tend to avoid speaking about failure. This is unfortunate, however, as failure can serve as a stimulus for organizational learning and readaptation for the future. Design/methodology/approach The author investigated how an organization managed failure during the post-merger integration stage. The author described the merger of two listed French companies using longitudinal data. Findings This in-depth case study provides new insights into failure during post-merger integration. The paper highlights the complexity of post-merger integration processes and the failures that the integration stakeholders had to address. The author underlined how they recognized failures and put into place solutions. They particularly highlighted two failures and how they were managed by the managers who acted as knowledge brokers within the new organization and by stakeholders who deconstructed the organization to ensure its future. Research limitations/implications The limitations are those concerning a single case study. Practical implications The paper identified trigger events in the merger process that prompted stakeholders to step in and manage and resolve failures during the integration period. Such triggers can be considered as steps for managers and stakeholders to solve organizational issues in the merger process. The paper highlighted the complexity of post-merger integration processes and the failures faced by integration stakeholders. The analysis thus contributes to an inclusive and integrative view of the challenges in this process. Social implications Despite their high number, merger and acquisition failures remain surprisingly high. This paper explored how stakeholders deal with failures by identifying which solutions are best adapted to their organization. Originality/value The case provides a vivid illustration of failure management during a merger process. Theoretical concepts and empirical findings from the literature are combined to present a single consistent picture.

An analysis of Japan’s connectivity to the global innovation system

2016 ◽  
Vol 24 (4) ◽  
pp. 399-423 ◽  
Author(s):  
Ahreum Lee ◽  
Ram Mudambi ◽  
Marcelo Cano-Kollmann
Keyword(s):  
Tacit Knowledge ◽  
Multinational Enterprises ◽  
Innovation System ◽  
Innovation Systems ◽  
Data Set ◽  
Content Type ◽  
Innovation Activities ◽  
Global Innovation ◽  
Knowledge Intensive ◽  
Short Product

Purpose In the modern knowledge-intensive economy, a nation’s competitiveness depends on the ability of its constituent firms to innovate. Extant research in national systems of innovation highlights institutions and public policies toward innovation as key determinants that affect firms’ innovation activities. This paper aims to widen the investigation by arguing that co-inventor connectivity allows firms to access the most tacit knowledge within global innovation systems. Therefore, it is one of the key factors that underpin a nation’s ability to develop and sustain its competitiveness. Design/methodology/approach Using a data set of 406,168 patents from US Patent and Trademark Office during the period of 1975-2004, this study analyzed the Japanese system of innovation through co-inventor networks. Findings Surprisingly, the authors found that compared to other advanced countries such as Germany and Denmark, the Japanese innovation system is quite closed. Originality/value The dimension of tacit knowledge is crucial in the current environment of rapid cycle time, short product lifespans and increasing emphasis on exploratory innovation. Hence the authors speculate that closedness to global innovation systems could be one of the reasons why many of Japan’s traditionally powerful multinational enterprises exhibit weak performance in recent years.

scholarly journals From play to pay: a multifunctional approach to the role of culture in post-merger integration

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Augusto Sales ◽  
Steffen Roth ◽  
Michael Grothe-Hammer ◽  
Ricardo Azambuja
Keyword(s):  
Cultural Differences ◽  
Social Systems ◽  
Macro Level ◽  
Niklas Luhmann ◽  
Management Tools ◽  
Content Type ◽  
Societal Context ◽  
Values And Beliefs ◽  
Post Merger Integration ◽  
Merger Integration

PurposeThe literature on Mergers and Acquisitions (M&A), cultural differences between organizations have frequently been identified as one of the main challenges in the process of post-merger integration (PMI). Existing research has explored a broad variety of cultural differences in perceptions, such as those relating to expectations, norms, values and beliefs within the respective organizations, and how these affect the process and success of PMI. However, less attention has been paid to the relevance of the macro-societal context to PMI. The ambition of this article is, therefore, to advance our understanding of how macro-level societal factors define organizational cultures and affect the success of PMI.Design/methodology/approachWe draw on social systems theory as devised by Niklas Luhmann, assuming that organizations are always embedded in the macro-level societal context of distinctive realms of social reality—such as the economy, politics, religion and the arts—that make up the so-called “function systems”. Looking at the case of the integration of a Brazilian technology start-up into a market-leading corporation, we analyze the dominant orientations towards these function systems, and the changes in these orientations over time.FindingsThe results suggest that differences in organizational culture in PMI can be partly explained by differences in orientations to the function systems. Moreover, forcing dramatic changes of orientations towards the function systems within a merged entity can severely damage its raison d'etre in the first place, potentially leading to, in some sense, an account of “culture murder”.Originality/valueThis article is unique in demonstrating that organizations are multifunctional systems whose culture is defined by the highly specific and potentially varying degrees of importance they place on individual function systems and that knowledge or neglect of these functional profiles may seriously affect the success of post-merger integration. Against this backdrop, the article presents a multifunctional profiling method that may easily translate into PMI management tools.

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