Taco H. Reus

The Impact of Culture on Mergers and Acquisitions: A Third of a Century of Research

Abstract This chapter aims to make sense of the growing research that examines the role of culture in mergers and acquisitions. We provide a detailed review of the many related but distinct constructs that have been introduced to the literature. While each construct has contributed to our understanding of the role of culture, the lack of connections made among constructs has limited the consolidation of contributions. The review shows what these constructs mean for mergers and acquisitions, what major findings have been discovered, and, most importantly, how constructs interrelate. Our discussion provides several opportunities to foster the needed consolidation of this research.

Organizational learning capacity and internal customer orientation within strategic sourcing units

Though an internal customer orientation is believed to be indispensable in meeting the highest quality demands of external customers, little is known about the antecedents of internal customer orientation. In line with the resource-based view (RBV) of the firm, our contention is that four first-order factors (team-, systems-, learning-, and memory orientations) collectively contribute to the creation of an intangible strategic resource in the form of “organizational learning capacity” (OLC). OLC, in turn, is positively related to the buyers customer orientation towards the internal customers in the strategic sourcing unit, as perceived by the internal strategic business unit (SBU) customer. Data from internal customers within 141 strategic dyadic sourcing units in a multinational corporation (MNC) confirm the theoretical model. The results are robust across 1994 and 1999 data, suggesting that learning offers a persistent tool for managing important outcomes such as the degree of internal customer orientation.

INSTITUTIONAL DISTANCE, ORGANIZATIONAL LEGITIMACY, AND THE PERFORMANCE OF FOREIGN ACQUISITIONS IN THE UNITED STATES.

The article reports on research which was conducted to investigate the impact organizational legitimacy and regulatory, normative and cultural distances had on the performance of foreign business a...

Mergers and Acquisitions in Africa: A Review and an Emerging Research Agenda

This article identifies and reviews existing merger and acquisition (M&A) studies focused on African markets. In this review, the factors mentioned directly or alluded to in the existing studies that distinguish African countries as target nations from other countries traditionally considered in the M&A literature are highlighted. Also reported are the results from a series of in-depth interviews with executives intimately involved with M&As in Africa. These interviews highlight some of the idiosyncratic features of the African context that bring to the forefront boundary conditions of, and the need to expand, existing M&A research based on acquisitions in the more developed regions of North America and Western Europe. The paper concludes with a synthesis of the conclusions from the authors’ review of the literature with the insights offered from their executive interviews to chart a roadmap for future research designed to enhance our understanding of M&As in general. The African context appears particularly appropriate for extending our knowledge of institutional theory, the development of selection capabilities, learning and knowledge transfer theories, the role of cultural differences in cross-border M&A, organizational justice theory, a subset of institutional theory on institutional legacies, and social dominance theory.

A knowledge-based view of mergers and acquisitions revisited: Absorptive capacity and combinative capability

This chapter revisits central knowledge-based mechanisms that explain variance in value creation through mergers and acquisitions (M&As). It places the organizational capabilities of absorptive capacity and combinative capability in the context of M&As. Absorptive capacity – i.e., the combining firms’ ability to explore new knowledge – relies on the extent of prior related experiences of acquirers and their acquired firms, and available complementary knowledge among the two. Combinative capability – i.e., the combining firms’ ability to combine and recombine available existing knowledge – depends on the opportunity, motivation, and ability to share knowledge. The chapter concludes with several contextual factors that intensify the roles of knowledge, and reveal important contradictory roles in the development and value of absorptive capacity and combinative capability.

Research on Culture and International Acquisition Performance: A Critical Evaluation and New Directions

Abstract This article critically reviews and synthesizes the current state of the literature on culture and international acquisition performance, and sketches out new directions for research that are promising to advance knowledge in the field. The literature on acquisition performance is categorized and discussed along three streams of research: the contingency literature, process-oriented research, and the cultural stream. Particular emphasis is placed in the latter stream to take account of the vast amount of work on this topic. In so doing, this article relates the cultural stream to both the contingency literature and process-related research to gain a more inclusive understanding of culture’s consequences for international acquisition performance. The article concludes by offering a research agenda to stimulate new insights and novel work on the variables that determine the success of international acquisitions.

The Acquisitive Nature of Extraverted CEOs

This study examines how extraversion, a personality trait that signifies more or less positive affect, assertive behavior, decisive thinking, and desires for social engagement, influences chief executive officers’ (CEOs’) decisions and the ensuing strategic behavior of firms. Using a novel linguistic technique to assess personality from unscripted text spoken by 2,381 CEOs of S&P 1500 firms over ten years, we show that CEOs’ extraversion influences the merger and acquisition (M&A) behavior of firms above and beyond other well-established personality traits. We find that extraverted CEOs are more likely to engage in acquisitions, and to conduct larger ones, than other CEOs and that these effects are partially explained by their higher representation on boards of other firms. Moreover, we find that the acquisitive nature of extraverted CEOs reveals itself particularly in so-called “weaker” situations, in which CEOs enjoy considerable discretion to behave in ways akin to their personality traits. Subsequent analyses show that extraverted CEOs are also more likely than other CEOs to succeed in M&As, as reflected by stronger abnormal returns following acquisition announcements.