Mergers and Acquisitions Across Cultures

Abstract

We study international mergers and acquisitions from a cross-cultural perspective. We examine in particular (i) which types of cultures are more likely to carry out acquisitions in a different culture to their home society and (ii) which are more likely to complete deals. We use the culture clusters developed by the GLOBE study to classify acquirer and target countries into culturally similar groups. In a sample of 130,000 transactions worldwide, we find that result-oriented cultures are less likely to attempt an acquisition outside their home culture cluster and are less likely to complete announced deals. Cross-cultural acquisitions are also less likely to occur and less likely to complete if the acquirer is from a traditional-oriented culture. Acquirers from people-oriented cultures are more likely to make a cross-cultural acquisition and complete announced deals.