Managers as the bridge: How cultural friction influences the integration of cross-border mergers and acquisitions |
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| Institution: | 1. School of International Business, Southwestern University of Finance and Economics, 555 Liutai Avenue, Chengdu, Sichuan 611130, China;2. Department of Management, Birkbeck, University of London, Malet Street, Bloomsbury, London, United Kingdom;1. University of Southern Denmark, Campusvej 55, 5230 Odense, Denmark;2. Otto von Guericke University Magdeburg, Universitätsplatz 2, 39106 Magdeburg, Germany;3. University of North Carolina at Greensboro, 516 Stirling Street, Greensboro, NC 27402, USA;4. University of Ariel, Ramat Hagolan St. 65, Ariel 40700, Israel;5. University of Agder, Gimlemoen 19, 9i 241, 4604 Kristiansand, Norway;6. Goa Institute of Management Poriem, Sattari, Goa 403505, India;1. School of Economics, Ocean University of China, Shandong, China;2. Institute of Marine Development of Ocean University of China, Shandong, China;3. China Business Working Capital Management Research Center, China;4. University of Groningen, Groningen, the Netherlands;5. CESifo, Munich, Germany;1. Department of Management Sciences, COMSATS University Islamabad, Lahore Campus, Pakistan;2. Department of Organization, Work and Technology, Lancaster University Management School, Lancaster University, United Kingdom;1. University of Illinois at Urbana-Champaign, 330 Wohlers Hall, 1206 S. 6th St, MC-706, Champaign, IL, 61820, USA;2. Deutsches Institut für Wirtschaftsforschung (DIW Berlin) and Technical University of Berlin, Mohrenstraße 58, 10117, Berlin, Germany;1. Huazhong University of Science and Technology, School of Management, 1037 Luoyu Road, Wuhan 430074, PR China;2. Shanghai University, SILC Business School, 99 ShangDa Road, BaoShan Dirstrt, Shanghai 200444, PR China;3. University of Technology Sydney, UTS Business School, 15 Broadway Ultimo, 2007, NSW, Australia |
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| Abstract: | Going beyond cultural distance, the present study adopts a more contextualized view of cultural friction to account for the “actual cultural contacts” in cross-border mergers and acquisitions (CBMAs), and meanwhile builds a case-based measure of cultural friction to quantitatively capture the country- and deal-level cultural differences between the acquirer and the target in each CBMA. Differing from the existing research that takes the influence of cultural differences on CBMA performance for granted, we highlight the importance of managers from the acquiring firm by theorizing that cultural friction between the acquirer and the target can shape acquiring managers' choice of managerial practices to complete the managerial tasks during integration, leading to different performance. In particular, we postulate a curvilinear relationship between the cultural friction and CBMA performance. By incorporating regulatory focus theory into our analytical framework, we further hypothesize how this curve is shaped by managers’ regulatory focus, a key motivational trait at the firm management level. Using a sample of 304 completed CBMAs conducted by Chinese listed firms, our empirical results verify the U-shaped relationship between cultural friction and the CBMA integration performance, and suggest that this relationship is flattened by acquiring managers’ prevention focus. |
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| Keywords: | Cultural friction Acquiring managers Regulatory focus Integration performance Cross-border mergers and acquisitions |
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