Cultural Distance and International Acquisition Performance

Abstract: Based on Hofstede's findings, this study breaks down Kogut and Singh's index of cultural distance, examining implications for acquisition performance of each individual dimension. Hypotheses are formulated, and based on deal data covering 488 acquisitions with American companies as acquirers, tested through linear regression. We find support for a positive relationship between cultural distance of power distance and performance, and an inverse relationship between cultural distance of masculinity and performance. Significant results are not obtained for the remaining dimensions.