The complex phenomenon that mergers and acquisitions (M&As) represent has attracted substantial interest from a variety of management disciplines over the past 30 years. Three primary streams of enquiry can be identified within the strategic and behavioural literature, which focus on the issues of strategic fit, organizational fit and the acquisition process itself. The recent achievements within each of these research streams are briefly reviewed. However, in parallel to these research advances, the failure rates of mergers and acquisitions have remained consistently high. Possible reasons for this dichotomy are discussed, which in turn highlight the significant opportunities that remain for future M&A research.

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Thirty Years of Mergers and Acquisitions Research: Recent Advances and Future Opportunities

Asubstantive body of theory and research on the role of culture in mergers and acquisitions (M&A) suggests that cultural differences can create major obstacles to achieving integration benefits. However, the opposite view---that differences in culture between merging firms can be a source of value creation and learning---has also been advanced and empirically supported. In an attempt to reconcile these conflicting perspectives and findings, we present a model that synthesizes our current understanding of the role of culture in M&A, and we develop a set of hypotheses regarding mechanisms through which cultural differences affect M&A performance. The results of a meta-analysis of 46 studies, with a combined sample size of 10,710 M&A, suggest that cultural differences affect sociocultural integration, synergy realization, and shareholder value in different, and sometimes opposing, ways. Moderator analyses reveal that the effects of cultural differences vary depending on the degree of relatedness and the dimensions of cultural differences separating the merging firms, as well as on research design and sample characteristics. The implications for M&A research and practice are discussed.

https://www.jstor.org/stable/info/25146169

Do Cultural Differences Matter in Mergers and Acquisitions? A Tentative Model and Examination

While overseas acquisitions by emerging-economy firms are gaining increased attention from the business press, our understanding of whether and why this inorganic mode of international expansion creates value to acquirer firms is limited. We argue that international acquisitions facilitate internalization of tangible and intangible resources that are both difficult to trade through market transactions and take time to develop internally, thus constituting an important strategic lever of value creation for emerging-economy firms. Furthermore, the magnitude of value created will be higher when the target firms are located in advanced economic and institutional environments: country markets that carry the promise of higher quality of resources, and therefore, stronger complementarity to the existing capabilities of emerging-economy firms. An event study of 425 cross-border acquisitions by Indian firms during 2000–2007 supports our predictions.

https://link.springer.com/content/pdf/10.1057%2Fjibs.2009.47.pdf

Do international acquisitions by emerging-economy firms create shareholder value? The case of Indian firms

This paper presents an integrative model of the impact of cultural differences on capability transfer in cross-border acquisitions. We propose that cultural differences affect the post-acquisition capability transfer through their impact on social integration, potential absorptive capacity, and capability complementarity. Two dynamic variables – the use of social integration mechanisms, and the degree of operational integration of the acquired unit – are proposed to moderate the effects of cultural differences on social integration and potential absorptive capacity. The implications for acquisition research and practice are discussed.

https://link.springer.com/content/pdf/10.1057%2Fpalgrave.jibs.8400287.pdf

Cultural differences and capability transfer in cross-border acquisitions: the mediating roles of capability complementarity, absorptive capacity, and social integration

Diversity in organizations: Where are we now and where are we going?

The choice of performance measure has long been a difficult issue facing researchers. This article investigates the comparability of four common measures of acquisition performance: cumulative abnormal returns, managers' assessments, divestment data and expert informants' assessments. Independently each of these measures indicated a mean acquisition success rate of between 44–56%, within a sample of British cross-border acquisitions. However, with the exception of a positive relationship between managers' and expert informants' subjective assessments, no significant correlation was found between the performance data generated by the alternative metrics. In particular, ex-ante capital market reactions to an acquisition announcement exhibited little relation to corporate managers' ex-post assessment. This is seen to reflect the information asymmetry that can exist between investors and company management, particularly regarding implementation aspects. Overall, the results suggest that future acquisitions studies should consider employing multiple performance measures in order to gain a holistic view of outcome, while in the longer term, opportunities remain to identify and refine improved metrics.

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Measuring the Performance of Corporate Acquisitions: An Empirical Comparison of Alternative Metrics*

This chapter synthesises theoretical and empirical perspectives on cultural compatibility within cross-border acquisitions, drawing on both the organisational and national culture streams of acquisitions literature. The impact of cultural compatibility on subsequent acquisition performance is seen to revolve around the form of post-acquisition integration and the relative attractiveness of the acquirer's culture. For the latter, there is some evidence that attitudes towards participation, formality and risk may have a particular importance, although the relative influence between organisational and national culture remains unclear. Avenues for future research are indicated.

The influence of cultural compatibility within cross-border acquisitions: A review

Purpose – Against a backdrop of continued weak economic conditions and with many firms experiencing declining financial performance, this paper presents a synthesis of the business turnaround literature. It aims to identify which turnaround and recovery strategies have been effective historically, based on the evidence provided by previous empirical research.Design/methodology/approach – The authors review literature that includes 22 empirical studies, which investigated business turnarounds in previous recessionary environments. This literature was reviewed in its entirety, rather than as individual contributions, to synthesise the lessons available for businesses operating in today's challenging economic environment.Findings – The literature review revealed convergence in the findings of the prior studies. In total, six effective turnaround strategies were consistently identified and four of these relate to the content of the turnaround, namely: cost efficiencies, asset retrenchment, a focus on the firm...

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Richard Schoenberg

Papers

Thirty Years of Mergers and Acquisitions Research: Recent Advances and Future Opportunities

Measuring the Performance of Corporate Acquisitions: An Empirical Comparison of Alternative Metrics*

The influence of cultural compatibility within cross-border acquisitions: A review

Strategies for Business Turnaround and Recovery: A Review and Synthesis

What determines acquisition activity within an industry