Effects of national culture differences on post-cross-border acquisition performance in Italy

Piero F Morosini, University of Pennsylvania

Abstract

Although cross-border acquisition activity has continued to increase during the past decade, the empirical evidence does not appear to support the argument that it has been consistently successful. This mixed performance record seems to be related to the fact that, prior to an acquisition, strategic and financial areas take clear priority over cultural and organizational issues. However, the empirical evidence shows that after the acquisition, integration difficulties are particularly detrimental to post-acquisition performance (PAP), and that differences between the merging companies' top management teams and management styles are often significant predictors of post-acquisition outcome.^ Against this background, we explore--to our knowledge, for the first time--the empirical relationship between national culture differences and post-cross-border acquisition performance.^ A detailed questionnaire was designed and appropriately responded by 65 companies which had engaged in cross-border acquisition deals in Italy between 1987 and 1992. Based on this empirical data, we developed a bivariate linear regression model to test our hypotheses linking national culture and PAP, utilizing Hofstede's (1980) national culture indices.^ Our empirical results show that specific national culture traits significantly affect cross-border acquisition performance, either alone or through their interaction with the post-acquisition strategy (PAS) chosen and implemented by the acquirer. These results highlight interesting insights for managers and practitioners alike.^ Firstly, national culture has a significant influence on PAP, particularly in the short term. Specifically, foreign managers planning an acquisition in a highly 'materialistic' or 'uncertainty-avoidant' country should reflect the quantitative and qualitative implications of these characteristics in their post-acquisition integration plans.^ Secondly, acquisitions seem to work in nations with cultural traits which are significantly diverse from the acquirer's national culture. In other words, national culture distance is not necessarily detrimental to PAP.^ Finally, managers can improve PAP by choosing and implementing a PAS which is 'national culture compatible'; in other words approaches which positively reflect the significant interaction between a PAS and the seller's national culture traits. ^

Subject Area

Management|Commerce-Business|Ethnic studies

Recommended Citation

Morosini, Piero F, "Effects of national culture differences on post-cross-border acquisition performance in Italy" (1994). Dissertations available from ProQuest. AAI9521089.
http://repository.upenn.edu/dissertations/AAI9521089

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