The challenge of merging cultures

Abstract: The desire to achieve synergies and gain competitive advantage has made mergers and acquisitions an increasingly common part of organizational life. However, the outcomes of mergers often differ from the expected in a negative way and difficulties in integrating the corporate cultures have been indicated to play an important role in this. The purpose of this thesis is to increase the understanding of how two organizations handle the challenge of integrating their corporate cultures in the context of a merger. To do this we have conducted an in-depth case study of the merger between the two real-estate companies Vasakronan and AP Fastigheter, a merger that was the largest real-estate transaction in Europe in 2008. To understand what happened in the merger between Vasakronan and AP Fastigheter we identify the merger as a horizontal, friendly combination with a high level of integration, a type of merger that is often less successful than expected. Although the companies had much in common they had different levels of centralization and autonomy. To implement the merger the management applied a symbiotic change strategy, combining the best parts of both organizations to create the new company. Our findings indicate the importance of how the structure is set for the new organization. When setting the structure our findings suggest that management creates the space in which the culture can then develop in the daily interaction between people from both organizations. Looking deeper into what shapes the culture we also found the leaders to be of great importance.