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Strategic Alliances,
Mergers and
Acquisitions
The Influence of Culture on Successful
Cooperation
Edited by
Jan Ulijn
Professor of International Entrepreneurship, Innovation and
Culture, Open University and Emeritus Jean Monnet Chair,
Eindhoven University of Technology, the Netherlands
Geert Duysters
Professor of Innovation Management, Eindhoven University
of Technology, Tilburg University and UNU-MERIT,
the Netherlands
Elise Meijer
Eindhoven University of Technology, the Netherlands
Edward Elgar
Cheltenham, UK • Northampton, MA, USA
© Jan Ulijn, Geert Duysters and Elise Meijer 2010
Published by
Edward Elgar Publishing Limited
The Lypiatts
15 Lansdown Road
Cheltenham
Glos GL50 2JA
UK
v
vi Contents
Index 279
Contributors
Cary L. Cooper, CBE, Distinguished Professor of Organizational
Psychology and Health at Lancaster University Management School, UK.
T.K. Das, Professor of Strategic Management at the City University of
New York, USA.
Vlado Dimovski, Professor of Management and Organization at
University of Ljubljana, Slovenia.
Geert Duysters, Professor of Innovation Management at the Eindhoven
University of Technology, Tilburg University and UNU-MERIT, the
Netherlands.
Jan Eppink, Professor of Strategy and Environment at VU University
Amsterdam, the Netherlands. He is also a member of a number of super-
visory and advisory boards of companies and foundations.
Jean-Marie Fèvre, Senior Lecturer for Management Sciences at the
University of Metz, France. Active in the field of cross-cultural manage-
ment in different countries and positions for decades, he was awarded the
Cross of Merit of the German Federal Order of Merit in 2000 and was
made a Knight of the French National Order of Merit in 2008.
Gerhard Fink, Jean Monnet Professor for applied microeconomics
in European integration and director of the doctoral programmes at
Wirtschaftsuniversität Wien, Austria.
Victor A. Gilsing, Associate Professor at the Department for Organization
Studies at Tilburg University, the Netherlands. He is also a Core Fellow of
the Centre for Innovation Research (CIR) at Tilburg University.
Frits Grotenhuis, independent consultant in the field of strategic col-
laboration and innovation. He obtained a PhD degree at the University of
Groningen, the Netherlands, in collaboration with Eindhoven University
of Technology and Waseda University in Japan.
Beatrice van der Heijden, Professor of Strategic HRM at the Open University
of the Netherlands. She is the Head of the Department of Organizational
Behavior/HRM, and Director of Research and Doctoral Programs at the
vii
viii Contributors
xi
xii Preface
REFERENCES
xiii
Culture, strategic alliances, mergers and
acquisitions: an introduction
Elise Meijer, Geert Duysters and Jan Ulijn
Over the past decades, we have witnessed a sharp upheaval in the number
of external organizational modes such as strategic alliances and mergers
and acquisitions (M&A).1 A large strand of literature has already reported
on the benefits of these modes, for example the sharing of costs and risks,
the learning of new skills and technologies and their role in international
efforts of companies. In spite of the noted benefits, however, the track
record of these external organizational modes paints a black picture. Most
studies show that more than half of the strategic alliances and M&A do
not prove to be successful.
Traditionally, scholars focused on ‘hard’ factors like financial and stra-
tegic factors for explaining the success or failure of these external modes.
More recently, however, research into more ‘soft’ factors such as organiza-
tional and human resources-linked subjects have increased in importance
(Larsson and Finkelstein, 1999; Stahl and Voigt, 2008). This has led to
a growing and emergent body of literature on the importance of culture
for the success of strategic alliances and M&A.2 According to Hofstede
(2001), culture can be treated as ‘the collective programming of the mind
that distinguishes the members of one group or category of people from
another’ (p. 9). As argued by among others Stahl and Voigt (2008),
scholars have sought to explain the (under)performance of these exter-
nal modes by variables such as cultural distance (Morosini et al., 1998;
Simonin, 1999; Shenkar, 2001), cultural diversity (Parkhe, 1991), cultural
compatibility (Cartwright and Cooper, 1996; Sarkar et al., 2001), cultural
fit (Datta and Puia, 1995; Child and Faulkner, 1998; Weber et al., 1996),
management style similarity (Larsson and Finkelstein, 1999), organization
(cultural) congruence (Brown et al., 1988; Barkema et al., 1996; Park and
Ungson, 1997), cultural change (Kavanagh and Ashkanasy, 2006), cul-
tural convergence (Birkinshaw et al., 2000), or acculturation (Nahavandi
and Malekzadeh, 1988; Larsson and Lubatkin, 2001).3
Much of this research has investigated the impact of national culture on
the performance or longevity of strategic alliances and M&A. Different
1
2 Strategic alliances, mergers and acquisitions
national cultures lead to extensive differences between the people who are
part of the strategic alliance or merger and acquisition because they are
subject to fundamentally different sets of social institutions, including edu-
cation systems, labour markets and geographical mobility (Calori et al.,
1997; Whitley, 1992; Hambrick et al., 2001). These differences in national
culture can create a source of conflict and misunderstanding that prevents
the partners from successful cooperation (for example Parkhe, 1991; Datta
and Puia, 1995; Lyles and Salk, 1996). This is in line with Hofstede’s (1980)
hypothesis of cultural distance in which he argues that the difficulties, costs
and risks associated with cross-cultural contact increase with growing cul-
tural differences between individuals, groups or organizations (Stahl and
Voigt, 2008). Barkema and Vermeulen (1997), for example, found that dif-
ferences in uncertainty avoidance and long-term orientation between home
and host country (rather than differences in power distance, individualism
and masculinity) have a negative impact on international joint venture
survival because these make organizations perceive the opportunities and
threats differently, which may result in different actions by the organiza-
tions (Schneider and De Meyer, 1991). However, the opposite view, that
differences in national culture between the partnering organizations can be
beneficial, leading to a source of value creation and learning, has also been
advanced and empirically supported (Shenkar and Zeira, 1992; Park and
Ungson, 1997; Stahl and Voigt, 2008). Morosini et al. (1998), for example,
found that national cultural distance enhances cross-border acquisition per-
formance ‘by providing access to the target’s and/or the acquirer’s diverse
set of routines and repertoires embedded in national culture’ (p. 137).
These inconclusive results of the effect of cultural differences on perfor-
mance may imply that the role of national culture has been overstated:
most studies have not taken into account the impact of organizational cul-
tural differences as well (Pothukuchi et al., 2002; Sirmon and Lane, 2004).
Pothukuchi et al. (2002) even found that the apparent negative effects of
partner dissimilarity on international joint venture performance ‘origi-
nates more from differences in organizational culture than from differences
in national culture because organizational culture distance captures the on-
going operational differences in the norms of organizational practices and
behaviors’ (p. 259) negatively influencing the implementation of the joint
venture. Whereas national culture is first and foremost related to inher-
ent values, organizational culture primarily relates to common beliefs in
organizational practices and processes (Hofstede et al., 1990). According
to Hambrick et al. (2001) each parent firm will have its own internal
culture, including management selection and staffing practices, giving way
to a distinctly skewed set of managers who are responsible for the strategic
alliance or M&A. Research in strategic alliances and M&A has consistently
An introduction 3
the three largest companies in the Helios Group: the mother company
Helios (Slovenian), and the acquired companies Zvezda Helios (Serbian)
and Color (Slovenian as well) using the above-mentioned Trompenaars
method. Cultural fit between the companies involved in an acquisition has
been known to be one of the important factors determining the success
of the acquisition. With the growing number of acquisitions, the Helios
Group top management has also recognized this issue to be important for
further development as a modern international corporation. They argue
that companies should focus on the optimal cultural fit rather than absolute
cultural fit. Some differences in organizational culture could be beneficial
because they better suit either national (especially at lower firm levels) or
professional cultures and could actually contribute positively to company
performance. However, when it comes to lower firm levels, where the effect
of national culture seems to be stronger, a careful consideration as to which
organizational culture changes are really needed is crucial, because it would
not be effective to go against national culture contexts or to break away too
abruptly from traditions and thus risk a higher resistance to change.
Chapter 7, ‘Cross-border marriages: Dutch–Japanese and Dutch–
American combinations’ by Grotenhuis, deals with cultural differences
within cross-border mergers. Several reasons for failure have been brought
up in the literature; however real-life cases of the ‘how’ and ‘why’ are
limited or fragmented, especially for processes of cultural integration. The
cases described in this chapter concern combinations of Dutch–Japanese
and Dutch–American organizations. Grotenhuis uses three in-depth case
studies to illustrate cultural integration patterns. Based on these in-depth
cases between Dutch–Japanese and Dutch–American mergers, and a lit-
erature review, he concludes that cultural differences can play a major role
in the success of a merger, but not necessarily. This is related to several
factors – amongst others, the degree of integration – but also to the way in
which management deals with the differences. Based on the case studies,
four different patterns of acculturation could be discerned: ‘marriage after
engagement’, ‘shotgun wedding’, ‘living apart together’ and ‘divorce’.
In Chapter 8, ‘Managing potential conflicts in a European banking
alliance in ICT: study of intro- and mutual perception combined for a
cultural fit’, Eppink, Ulijn and Van der Heijden go into some other factors
that may impact upon the success of the strategic cooperation beside cul-
tural (mis)fit. In this respect they draw attention to the appropriateness of
the chosen aims for the alliance, the appropriateness of the chosen form
relative to the aims, and the stages in the evolution of an alliance that may
require adaptation of the alliance competences to the new situation. In
the empirical part of the chapter, they investigate the role of culture in the
strategic alliance within the Information and Communication Technology
An introduction 7
(ICT) area between seven European banks. Hall’s (1995) cultural dimen-
sions are used. They find that assertiveness and responsiveness play a
major role, but uncertainty avoidance and power distance far less. Such
factors have an impact on expectations for the cooperation, and also on
the ways conflicts are resolved.
Chapter 9, ‘Portrait of an odd-eyed cat: cultural crossing as a trademark
for a Dutch–Thai strategic alliance’ by Kwanjai and den Hertog, presents
the case of a Dutch–Thai joint venture that thrived, by weaving together
the many intricate cultural webs, to achieve a unique pattern of partner-
ship which, metaphorically speaking, became its indispensible trademark.
The case illustrates how the three levels of culture expounded in this book
– national, organizational and professional cultures – could all interlace in
a real-world setting and serve as an instrumental force of success amidst
tension in one particular cross-border strategic alliance.
In Chapter 10, ‘Resistance to the transfer of management knowledge
in international ventures: steps towards a pathologic interpretation’, Fink
and Holden consider a longitudinal stylized case of Austrian firms taken
over by a well-established and successful US firm with a clear and explicit
corporate culture. After three to four years almost all original members
had left the firm and were replaced by new ones who better fitted the cor-
porate culture of the US firm. Why did a pattern like that emerge? Fink
and Holden propose that it is not so much about differences in national
culture, but a factor that is not necessarily visible and is almost certainly
discounted until it is too late: psychological reactions to the disorienting
impact of the change processes, which often are misinterpreted as staff
resistance, but which are symptomatic of the very pathology of cross-
cultural business encounters. To support this proposition, they develop
concepts of collective culture shock and cultural stretch. Their starting
point is a consideration of four cases involving prominent organizations
in their quest to find ‘common cognitive ground’ (Nonaka and Takeuchi,
1995) with protagonists in a variety of cross-cultural interactions, all of
which have evolved over several years.
What are the outcomes of these chapters with regard to the relative
impact of respectively national, corporate and professional culture on the
performance of strategic alliances and M&A? What progress could this
book make, in following on from that by Cartwright and Cooper (1996)
on the human factor in strategic alliances and M&A? What research out-
comes are to be expected, based upon some recommendations for future
studies in this respect?
Increasingly it has been suggested in the literature that professional
culture might easily overrule the effect of corporate culture or even national
culture (Ulijn and Weggeman, 2001). For example, Sirmon and Lane (2004)
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