Chapter 10: Determinants of top management retention in cross border acquisitions
Cross border mergers and acquisitions (M & A) are playing a progressively more important role in worldwide M & A activity both in terms of deal numbers and values (Bertrand and Zuniga, 2006). In parallel to this rise in activity, there has been increasing recognition of the poor performance of many cross border M & A (for example, Datta and Puia, 1995; Aw and Chatterjee, 2004). Recent research remains pessimistic over the success potential of cross border acquisition deals (for example, Moeller and Schlingemann, 2005). Problems with post-acquisition implementation are among the primary reasons given for this disappointing record (Olie, 1990; Haspeslagh and Jemison, 1991; Schweiger and Goulet, 2000, Child et al., 2001; Ranft and Lord, 2002). Acquisition implementation problems often arise because of clashes of organizational cultures, systems, or strategies and because of the loss of key executives in the acquired firm. Academics trying to understand the reasons of the high failure rate focused on managerial attributes and human resource activities particularly during the integration phase (Vaara, 2002; Kiessling and Harvey, 2006; Fubini et al., 2007; Weber and Tarba, 2010; Weber et al., 2012a). The departure of an acquired firm’s top managers, and the consequent loss of their knowledge and skills, is thought to be an important determinant of poor post-acquisition performance (Cannella and Hambrick, 1993; Gomes et al., 2011).
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