Last Updated 03 Mar 2020

The Impact of Culture Differences on Strategy Realisation in the Post-Acquisition Process

Category Culture, Strategy
Essay type Research
Words 2234 (8 pages)
Views 558
Table of contents

This study sets out to develop an understanding of why and how in the post-acquisition integration process, culture differences impact strategy realization. Based on clinical research, the effect of culture differences was explored in multiple integration settings within a single multinational corporation. This pointed to various degrees of perceived organizational and perceived personal uncertainty associated with different integration approaches impacting on commitment to organizational goals. A controlled laboratory experiment validated perceived uncertainty causing an individual change on the socially constructed variable culture, which affects employees’ behavior, such that it negatively impacts the process to strategy realization. The theoretical and practical relevance of these findings is discussed, as are directions for further research.

Mergers and acquisitions (M&A) as a strategy for growth, by their sheer size and number, carry strategic importance for companies, industries, and the economy as a whole. M&A are a select opportunity to enhance a firm’s capabilities, and though a well-traveled, not proven road to value creation. Success depends on companies’ ability to achieve their specific synergy goals by integrating their specific organizations, sharing their specific resources, and reconfiguring their organization toward value-creation processes. The needed inter- and intra-company cooperation, turning potential into achievement, reinforces the need to regard strategy formulation and implementation as aspects of the same objective.

The study develops an understanding of why, and how, culture differences impact strategy realization in mergers and acquisitions (M&A). The following three premises set the framework of the research area:

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(1) M&A are a select opportunity to enhance a firm’s capabilities (Haspeslagh and Jemison 1991);

(2) The post-acquisition integration process is a crucial factor in M&A, whereby management of the post-acquisition integration process is generally considered important in achieving organizational objectives (Pablo 1994, Schweiger and Walsh 1990);

(3) Culture is found to be a plausible explanation for obstructions in the post-acquisition integration process (Nahavandi and Malekzadeh 1988)

It has been argues that culture and strategy are overlapping constructs. Culture in an organizational setting serves two critical functions. It solves both problems of external adaptation (defining objectives) and those of internal integration, namely how opportunities and threats in the environment are dealt with. Social scientists have defined culture in a myriad of ways. “Culture gives you a set of codes to deal with phenomena in a social environment”

Impact of Culture on the Post-Acquisition Integration Process

In value-creating M&A, post-acquisition integration is the vehicle to transfer competencies and to share knowledge and skills between organizations. Though cultural diversity offers the opportunity to use the competencies and knowledge contained in each organization to the benefit of the combined company, clashing cultures throughout the corporate structure are found to poison an integration process and subsequently prevent synergy from being achieved. Two phenomena have made culture harder to come to terms within present-day M&A. The first is the growing number of cross-border, cross business (e.g. retail and investment banking), and cross-industry (e.g. banking and insurance) M&A. Not only do employees have different norms, values, and attitudes, they filter the environment and acts of others through the lenses of their own experience. Cross-border M&A are even less likely to succeed than within country M&A: accommodating both national and organizational cultures results in “double layered acculturation”. The second phenomenon is the growing importance of human capital, the primary “raw material” of the service industry. In providing a service there is both a high “personal” factor and a high level of interaction. In such an environment, the acquired business’ resentment over loss of autonomy and its subsequent resistance to change are detrimental to achieving organizational objectives. Assimilating the staff of merging or acquired companies is a matter of strategic importance in the realization of synergies. Failure to integrate cultures makes for an organizational void soon filled with dilemmas and conflicts, thus making for a situation where culture clashes are unavoidable. Furthermore, caution that culture clashes between members of different sub- cultures will likely evolve from a dormant level to an overt one if business is no longer “as usual”.

Research framework

This study diverges from earlier research findings in that obstructions to cooperation are not assumed to stem entirely from formerly independent organizations coming into contact with one another. If culture differences between acquisition partners obstruct post-acquisition integration, then the degree of culture differences between the acquisition partners and the degree of contact between the acquisition partners are of a determining nature. In this study, empirical work was conducted to investigate specifically how organizational and personal uncertainty change individuals’ responses to cultural dimensions relating to goal-directed behaviors. In the specific M&A framework for investigation, it is hypothesized that dimensions of culture are affected by perceived uncertainty created by the integration approach implemented, ultimately impacting commitment to organizational goals and strategy realization. It is argued that above a certain level, perceived uncertainty causes a reaction outside the conscious control of individuals, affecting extra-role behavior, notwithstanding earlier collective programming of the mind. The specific framework for investigation allows for how and why the dimensions of culture moderate the behavioral outcomes of post-acquisition integration and, ultimately, strategy realization for the firm.

In order to understand why and how culture contributes to strategy realization, the following hypothesized relationships are tested in a controlled laboratory experiment.


The following hypotheses test the perspective that the dimensions of culture are a dynamic contextual dependent variable in the post-acquisition integration process.

Null hypothesis 1: Dimensions of culture will not differ between the integration approaches.

Null hypothesis 2: The median of the answers given on the same questions in the different integration approaches does not differ between the integration approaches.

The acceptance of the null hypotheses would signify that the study provides no evidence to suggest that there is a significant within-person difference on the dimensions of culture under conditions of change.

This field study showed that, contrary to expectations, respondents did not find the culture differences problematic and/or affecting the various post-acquisition integration processes. Thus, regardless of the degree to which different cultures came into contact with each other in the different integration approaches, respondents did not object to adapting to the culture of the partner as long as the post-acquisition process was perceived to be fair, honoring employees’ past commitment to organizational goals, and free from opportunistic behavior.

In the field study, perceived uncertainty, stemming from organizational change in the integration approaches, was a major issue. Respondents described it impacting the post-acquisition integration process to the extent that it affected commitment to organizational goals and subsequently strategy realization. They considered uncertainty as a processual phenomenon of post-acquisition integration, reflecting both perceived organizational and perceived personal uncertainty. Perceived organizational uncertainty comprises the future of the company, knowing and understanding of what the goals are, the availability of resources to accomplish the goals set, legitimate concern for the protection of value drivers, and the industrial and economic environment in which the organization operates. Perceived personal uncertainty includes among other things, job security, honoring psychological contracts, altered career expectations, job satisfaction, new colleagues, work practices and/or business systems, and opportunistic behavior of others.

Discussion and Implications

The primary theoretical contribution of this study is the establishment of why and how, in the post-acquisition integration process, culture differences impact the realization of strategy. In general, the dimensions of culture as described as influence employees’ participation in bridging the gap between synergy potential and synergy achieved. The dimensions of culture are found to be a moderating variable rather than an independent factor in the post-acquisition integration approach. A within-person change on the dimensions of culture, stemming from a change in the levels of autonomy granted and interdependence required, explains why culture impacts strategy realization. The effects of this within-person change on commitment to organizational goals resolve how culture impacts strategy realization. Culture is found to be a socially constructed variable, which in the post-acquisition integration process is impacted at an individual level, regardless of earlier programming of the mind. Uncertainty as it is perceived, stemming from organizational change in the post-acquisition integration processes, has an inverse relation to behavior conducive to realization of strategy.

The research results contribute to knowledge in the field of strategy, organizational behavior, and social psychology by validating that dependent on context the dimensions of culture become dynamic. Research findings also illustrate that in the post-acquisition integration process perceived uncertainty is a dual construct and a context-dependent process variable. Particular to the field of strategy is that the absence of resistance to neither change nor employees continuing to perform their daily routines is enough of a condition to bridge the gap between synergy potential and synergy achieved. Extra-role behavior is the critical factor in the post-acquisition integration process toward strategy realization. The scale applied in the controlled laboratory experiment, measuring the dimensions of culture, shows the discretionary nature of extra-role behavior.

There is practical relevance for business leaders is that it is not necessarily the degree of culture differences between acquisition partners, nor the degree cultures come into contact with each other, nor these culture differences originating cross-business, cross-industry or cross-border that explain the impact of culture on strategy realization. The effect of perceived uncertainty on the post-acquisition integration processes is such that the importance of management action cannot be overstated. The inverse relation between the level of perceived uncertainty and employees’ extra role behavior seriously impacts strategy realization. Any integration approach can show a pattern of high perceived organizational and high perceived personal uncertainty if no clear choices are made or if internal communication is lacking. In the post-acquisition integration approach, business is not as usual and the requirements for strategy realization have not yet crystallized to the extent that they can be incorporated in job descriptions, work procedures, structures, and processes. Extra-role behavior to a large extent being discretionary and in the p of control rather than under the control of business leaders is an important finding. The more employees’ activities consist of actions that are non-fragmented, non-routine, and require interaction, the more strategy realization hinges on leadership creating an environment where value can be created. It is not so much that culture differences are incompatible; the effect of perceived uncertainty on extra-role behavior is such that employees throughout the hierarchy do not make the opening moves. The obstruction to cooperation is not so much employee resistance as that there is no platform for transfer of competencies, for sharing of knowledge and skills, or an environment for cooperation.


The sample of the questionnaire is neither random nor has it been possible to test for non-reply. As stated earlier, in management research judgment samples are more common than probability samples. The number of respondents is sufficiently large, and deliberately composed of dissimilar respondents for external validity not to pose a problem. Eight questions following the vignettes are measuring personal behavioral intentions, while two are measuring the behavior of colleagues. Asking direct question reference absenteeism was considered too intrusive to gather answers that were not influenced by considerations of “social correctness”. The question on cooperation between divisions being smooth was purposely phrased as such cooperation is more of a group effort than that of a solitary individual.

In this study, the most widely used analytical tool to establish reliability, Cronbach’s alpha, and the Kaiser–Meyer–Olkin measure to determine sampling adequacy have been used. The use of these mean-based tests on ordinals is considered an acceptable risk as they test the scale applied. They are not used to interpret the controlled laboratory experiment results. Taking into account that the answers following the different vignettes were drawn from a true replicated sample, comparing the results of the reliability tests across the vignettes warrant attention. The application of mean-based statistics to an ordinal scale might not be without penalty or alternatively it might be that environmental contexts affect reliability tests.

Further research

This study is only the first step toward a better understanding of how and why culture differences impact strategy realization. Research into whether one or some dimensions of culture are clean in their effect while others are more of a moderating nature and/or their interrelation is deemed important. Further analysis of the data is deemed worthwhile but at the moment impaired by the unconventional premise that the difference between a discrete and a continuous solution space is such that it might seriously affect the meaningfulness of analytical statistical results. In this context, it will be a contribution to the management literature to explore whether, and how, historic events influence perceptions of uncertainty in a present situation. And, whether and how, tolerance for absorbing impact within certain boundaries explains differences in the performance of firms. It is expected that current and historic organizational modus operandi and external environmental factors will determine these factors in specific change situations. The impact of these on strategy realization in addition to perceived uncertainty stemming from changing levels of autonomy and required amount of interdependence should be taken into account. It was a core premise of the chapter that strategies and their implementation are an integral part of strategy realization. Investigating the generalizability of the research findings to other organizational change efforts might not be without significance in explaining differences in firms’ performance.


Haspeslagh, P. and Jemison, D. 1991. Managing Acquisitions: Creating Value through Corporate Renewal.New York: Free Press.

Pablo, A. 1994. Determinants of acquisition integration level: A decision-making perspective.AcademyofManagementJournal, 37(4): 803–36.

Nahavandi, A. and Malekzadeh, A. 1988. Acculturation in mergers and acquisitions. Academy of Management Review, 13

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The Impact of Culture Differences on Strategy Realisation in the Post-Acquisition Process. (2019, Apr 14). Retrieved from

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