Impact of Culture On Mergers and Acquisitions: A Theoretical Framework

Mergers and acquisitions M&As are the front line strategic option for organizations attempting to have competitive advantage over its competitors. Organizations word-wide spend billions of dollars in pursuit of this strategy. However, the success rate is less then estimable. This is mainly due to the clashes of corporate cultures. The objectives of this theoretical paper are to find out the reasons why most of the mergers and acquisitions fail. Four main issues related to the culture clashes are highlighted in this paper, ambiguity and communication problems within the merged entity, properly management of cultural integration, the acquisitions and organizational culture, and Improper acculturation process among the merged organizations. The factors in this paper are based on previous literature. On the basis of different views of authors, a conceptual framework that uses the afore-mentioned issues through out the acquisition process to produce and negotiate some workable approaches. It is suggested that this conceptual framework can give a new insight into explaining the causes of unfulfilled expectations in international mergers and acquisitions