Organizational culture's role in the integration phase of M&A transactions : A case study based on recent transactions

Abstract: The term mergers and acquisitions (M&A) is a collective name for a certain type of financial transaction, in which two organizations become a single entity (Rosenthal 2002, Seo & Hill 2005, Silhan 1994). In the post-M&A transaction process, the phase of integrating the organizations together emerges. These strategies can either be to absorb the acquiring organizations into the acquirer's entity or let the acquiring organizations stay fully preserved as stand-alone organizations. Another integration strategy includes transforming both organizations, where both parties adapt to each other (Marks & Mirvis 2010).  Despite the vast number of resources poured into the field, M&A transactions still have a high faliure rate (Homburg & Bucerius 2006, Marks 2001, Saunders et al. 2009). A failed M&A transaction does not only result in the loss of financial capital for the involved organizations but could also lead to people losing their jobs and potential environmental consequences. Because of this organizations become less efficient and therefore must spread their resources on activities that do not yield a positive result (Marks & Mirvis 2010, Schweiger & Goulet 2005). With Boateng & Lodorfos (2006) uncovering how “culture plays a key role in theintegration process and consequently the overall success of M\&As" and Hofstede (2001)claims that organizational culture are possible to manipulate. With these key statements,the purpose of this study is to investigate organizational culture and its role in theintegration process. The following research questions were created: 1.How do managers from different organizational cultures perceive the same integrationstrategy into a knowledge-centered organization? 2.How can an acquiring organization work with different organizational cultures during anintegration? In the thesis, we studied multiple organizations, the "umbrella organization" whichspecializes in conducting M&A transactions as a strategy for growth, and some of the organizations they have acquired and are undergoing integration into the umbrella organization. The thesis was conducted with a mixed method with a survey inspiredmostly by Schweiger & Goulet (2005) and Hofstede (2001) combined with semi-structured interviews to enable us to examine certain integration factors and cultural dimensions thatwe used in order to find correlations between them. In combination with this, we investigated how all the organizations perceived the integration to transpire based on theintegration framework by Marks & Mirvis (2010) and if organizational culture played a rolein how an organization should customize these strategies. Our findings suggest that having employees within certain cultures can affect the perception of how one sees the integration strategy, indicating that the umbrella organization and the acquired organizations are not aligned in their perception of the integration strategies. In order to enhance the effectiveness and potential success of integration we propose that it could be beneficial to customize the integration approach and strategy depending on each individual M&A transaction. Limitations of this study can be connected to the quantitative method since the results are restricted to a small sample size from one case organization as well as only investigating the correlation and not the causality between variables.