Strategic Alliances, Mergers and Acquisitions

Strategic Alliances, Mergers and Acquisitions

The Influence of Culture on Successful Cooperation

Edited by Jan Ulijn, Geert Duysters and Elise Meijer

This unique book focuses on the link between different types of culture (national, corporate, professional) and the success of strategic alliances, mergers and acquisitions.

Chapter 10: Resistance to the Transfer of Management Knowledge in International Ventures: Steps Towards a Pathologic Interpretation

Gerard Fink and Nigel J. Holden

Subjects: business and management, international business, strategic management


Gerhard Fink and Nigel J. Holden INTRODUCTION Cartwright and Schoenberg (2006) confirm what Michael Porter had already published by 1987: managers and scholars alike should know that cross-border acquisitions are overly risky ventures. Many publications confirm that only about half of the acquisitions are partially successful (Barnes, 1984; Gregory, 1997; Lessard, 1995; Limmack, 1991; Pettway and Yamada, 1986; Meschi and Metais, 2006). Irrespective of persistent failures, in 2004 the total value of international acquisitions was close to US$ 2 trillion. This inspiring record raises serious doubts as to whether strategic management is on the right track. In recent years, Probst and Raisch (2005), Toh and DeNisi (2005) and Rossetti and Choi (2005) have indicated the need to explore deeper into the motives and reasons for failure of foreign direct investment activities. Let us consider a stylized case, which we have derived from 15 interviews with middle and top managers of Austrian firms at different time points after a takeover by a US firm. The well-established and successful US firm has developed a clear and explicit corporate culture. The vision and mission statement, guiding principles and compliance code have been explicitly formulated. When hired, each staff member gets a booklet and has to sign that they have taken note of the vision, mission, guiding principles and compliance code, and explicitly confirm that they will comply with or live up to the expected standards. This strong business culture is supported by a relatively centralized model of management control systems. When this firm...

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