On the Symmetry and Discordance of Cultural
Distance in Cross-border M&As: A TwoCountry Study
H. Emre YILDIZ
Stockholm School of Economics
Box 6501, 11383 Stockholm, Sweden
Tel. +(46-8)-736-9514
Emre.Yildiz@hhs.se
Carl F. FEY
Nottingham University Business School China
199 Taikang East Rd., Ningbo 315100, China
Tel. +(86)-574-8818-0071
Carl.Fey@nottingham.edu.cn
September 2013
Note 1: This article is a draft. Please do not cite without written permission of the
authors.
Note 2: The authors would like to acknowledge the kind help of Wang Zhongming,
Adis Murtic and Karin Wiström with data collection.
Note 3: The authors thankfully acknowledge financial support from the Jan Wallander,
Tom Hedelius, and Tore Browaldh Foundation.
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On the Symmetry and Discordance of Cultural Distance in Cross-border M&As:
A Two-Country Study
ABSTRACT
Cultural distance occupies a central role in international business studies. Notwithstanding its
prevalence as a key explanatory factor for a myriad of questions studied in the field, the
concept of cultural distance entails several entrenched assumptions that have not been put to
sufficient systematic scrutiny. Situated within the specific context of cross-border mergers
and acquisitions, we address this gap and investigate assumptions of symmetry and
discordance. We collected data through decision simulations with professionals in Sweden
(n=154) and China (n=222) by replicating the same vignette design in both countries. Our
findings reveal that distance perceptions are asymmetric and create contrasting attitudes
among Swedish and Chinese respondents. The study shows that distance perceptions from
Sweden to China, as perceived by Swedish respondents, is shorter compared to the distance
from China to Sweden, as perceived by Chinese respondents. We also detect mixed empirical
evidence regarding discordance assumption, which suggests that perceptions and reactions
towards a foreign acquirer at different ends of a given country pairing do not necessarily
mirror each other. Specifically, the results from Swedish participants suggest that cultural
differences are an impediment to the success of post-merger integration. However, this is not
the case for Chinese respondents, which casts doubt on the discordance of national cultural
distance. Findings reported in this study pinpoint important theoretical implications regarding
cultural distance, which could contribute not only to cross-border M&A literature but also to
general IB research concerned with cross-cultural phenomena.
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INTRODUCTION
Understanding the effects of cultural, institutional, and political differences
characterize much of the field we call international business (IB). Thus, the need for
investigating the effects and implications of these differences defines one of field’s main
raison d'être and has been fueling the academic motivation of many IB scholars. As
unerringly pointed out by Zaheer et al. (2012), international management is essentially
management of distance and research in this field has been primarily concerned with the
coordination of firms’ activities dispersed across geographies. Accordingly, the extent of
cultural differences and their implications have received significcant scholarly attention from
diverse disciplines such as management, organization, marketing and strategy (for thorough
review of relevant literature, see Kirkman et al., 2006).
Despite the perpetual increase in the number of empirical studies, it is intriguing to
observe that the lack of empirical consensus on role of culture and cultural differences in
myriad of IB phenomena persists. Management of cross-border mergers and acquisitions
(M&As) is no exception to this. Review articles (e.g., Schoenberg, 2000; Stahl and Voigt,
2005) have come to the conclusion that the relationship between cultural differences among
merging organizations1 and the success of M&As is vaguely understood. In response, scholars
looked for alternative ways for unraveling the role of culture and its net effects in M&As.
Inter alia, this included (a) disentangling different levels (i.e., national vs. organizational) of
cultural differences and separately examining their effects on post-acquisition integration
outcomes (e.g., Sarala, 2010; Stahl and Voigt, 2008), (b) identifying possible moderators of
the relationship between cultural difference and integration outcomes, e.g., acquisition
experience (e.g., Dikova and Sahib, 2012), extent of operational integration (e.g., Slangen,
2006) or partner attractiveness (e.g., Very et al., 1997), and (c) adopting a more nuanced and
fine-tuned approach by considering both positive and negative consequences of cultural
differences between merging organizations (e.g., Reus and Lamont, 2009; Vaara et al., 2012).
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Individually and collectively, these endeavors have significantly furthered our
understanding of the effect of culture differences in M&As. In this paper, we wish to extend
this stream of literature. To that end, we will problematize the assumptions upon and
mechanisms with which cultural differences are theorized to have a bearing on individuals’
perceptions and likely responses in M&As. In this vein, we will question the plausibility of
two underlying assumptions behind the measurement and use of cultural differences between
merging organizations. Particularly, we will build on the shrewd theoretical treatise of
Shenkar (2001) and scrutinize the assumptions of symmetry and discordance and examine the
conditions under which cultural distance could yield asymmetrical and/or positive effects on
the perceptions and possible responses of individuals in M&As. Indeed, most studies assume
that cultural distance is symmetric (e.g., that people in China perceive Sweden to be as
culturally distant as people in Sweden perceive China to be). In this paper we question if this
is the case and investigate this empirically. If cultural distance is not symmetric, perhaps this
is one reason for some of the inconsistent findings of the effect of cultural distance. Thus,
despite this study’s setting in the M&A context and specific focus, our study’s findings likely
have implications beyond this context. Accordingly, we argue that the lack of systematic
attention paid to the tenability of the above assumptions could be the main culprit behind the
lack of empirical consensus on the net effects of cultural differences and distance.
Obviously, we are not the first to put these assumptions under systematic examination
in the IB literature. Theoretical and empirical studies on expatriate deployment (Brock et al.,
2008), expatriate adjustment (Selmer et al., 2007), mutual and bilateral managerial
perceptions (Chapman et al., 2008; Muratbekova-Touron, 2011), headquarter-subsidiary
relationships (Drogendijk and Holm, 2012) and mode of entry choice (Parente et al., 2007)
scrutinize the assumptions apropos symmetric effects and directional equivalence of cultural
distance. Conceptual arguments and empirical results of these studies lend support to the
argument that symmetry assumption of cultural distance concept could be illusionary and
misleading. To the best of our knowledge, however, no previous study explicitly tested the
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asymmetry and discordance assumptions within the context of cross-border M&As, and their
implications for organizational commitment and knowledge transfer in the post-acquisition
stage and there is a need for more systematic and rigorous tests of the symmetry of cultural
distance in general considering the importance of this concept for international business
theory. Considering the effect of cultural distance in knowledge transfer (Björkman et al.,
2007) and organizational commitment (Kirkman and Shapiro, 2001), as well as the role of
organizational commitment and knowledge transfer in post-acquisition success (Birkinshaw
et al., 2000; Bresman et al., 1999), we identify this as an important gap in the literature.
With this study, we intend to address the aforementioned gap and contribute to the
specific branch of M&A literature focusing on sociocultural dynamics of post-merger
integration, along with the emerging stream of research aiming at a more nuanced view of
cultural distance concept. In this regard, the first research question we aim to answer in this
study is whether or not cultural distance has the same effect on acquired unit employees’
perceptions and potential behaviors, regardless of the route through which this distance is
measured. In other words, ceteris paribus, can we observe similar pattern of perceptions and
reactions among employees who work in Country A and whose company is acquired by a
firm from Country B, compared to employees who work in Country B and whose company is
acquired by a firm from Country A?
While the first research question is aimed to put the symmetry assumption to
empirical test, we also intend to scrutinize the discordance assumption inherent in the cultural
distance hypothesis. Thus, the second research question of this paper is whether and
whencultural differences lead to negative and positive reactions from acquired unit
employees. Some of the studies we cited above have already addressed the ‘double-edged
sword’ nature of cultural distance in international acquisitions (c.f., Reus and Lamont, 2009).
Nonetheless, as we shall discuss later, the majority of these studies have anchored their
arguments in different conceptual footholds. As a result, opposing effects and competing
hypotheses regarding cultural distance are built on totally different (and rather
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incommensurable) theoretical bases, which points to the need for a more coherent and
theoretically calibrated approach to the matter. To address this, we will borrow theoretical
frameworks from social psychology and formulate our arguments regarding the negative and
positive effects of cultural differences on different integration dynamics in M&As
accordingly.
To answer the aforementioned questions we collected individual-level data in Sweden
and China. Using an under-utilized research design (i.e., policy-capturing), we presented
Swedish (Chinese) respondents with a series of acquisition scenarios, in which their firm is
acquired by a Chinese (Swedish) firm. Following that, we asked respondents to express their
willingness to use knowledge sent by the Chinese (Swedish) acquirer as well as their possible
commitment to the merged organization. Our results confirmed that cultural distance has
asymmetric effects on Swedish and Chinese respondents’ perceptions and likely behaviors in
the context of M&As. In particular, perceived cultural differences between Sweden and China
had more negative effects on Swedish respondents’ willingness to learn and commit to a
Chinese acquirer compared to Chinese respondents. Furthermore, our analyses provides
mixed results regarding the discordance assumption. On the one hand, compared to a
domestic acquirer, Chinese respondents displayed more favorable and positive perceptions
towards a foreign (Swedish) acquirer. On the other hand, our results based on Swedish
respondents, who had more favorable attitudes towards a domestic acquirer vis-à-vis a foreign
(Chinese) acquirer, were in line with discordance assumption
The organization of the paper is as follows. In the next section we shall provide a
critical review of earlier literature. This will be followed by the description of our research
design. Next, we will present our results and interpret them in relation to the extant findings
from earlier literature. We will end the paper with some concluding remarks and suggestions
for future research.
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LITERATURE REVIEW
Culture in Previous M&A Literature: A Critical Reading
The “cultural distance” hypothesis implies that cross-cultural contact and intercultural
relations gets more problematic and difficult to manage when there are large cultural
differences between organizations, groups and individuals (Hofstede, 1980). Measured by the
differences between countries in terms of in values, norms, business practices, political,
regulative disparities etc., cultural distance has been extensively used as a key explanatory
variable to understand different phenomena by IB scholars (see Tung and Verbeke, 2010).
Within the specific context of M&As, cultural differences have traditionally been considered
a source of problem for synergy creation for they are argued to increase misunderstandings,
animosity, and unease between the members of the merging organizations (e.g., Larsson and
Finkelstein, 1999). Complications arising out of cultural differences are especially
pronounced for cross-border M&As where the cultures of merging organizations are likely to
differ on both national and organizational levels (Barkema et al., 1996). These theoretical
arguments, along with somewhat limited empirical evidence, stand to reason for a negative
effect of cultural distance on the creation of value, the achievement of sociocultural
integration, the emergence of trust and the transfer of capabilities between merging
organizations in cross-border M&As (Stahl and Voigt, 2005).
However, cumulative empirical results on the net effects of cultural differences in
cross-border M&As are far from being in accord. Positive, negative and non-significant
effects of cultural differences have been reported in different empirical studies (Schoenberg,
2000). These inconsistent findings have left the influence of cultural differences between
acquirers and acquired firms on post-acquisition integration outcomes as an issue yet to be
resolved. Motivated by this, more recent studies started to adopt a contingency approach by
identifying potential moderators and mediators. For example, Slangen (2006) examined the
moderating role of integration level in the cultural distance – acquisition performance
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relationship. His results reveal that national cultural differences are detrimental to acquisition
performance only if the acquired unit is tightly integrated into the acquirer, whereas the
effects of cultural differences were found to be positive in the case of loose integration.
Dikova and Sahib (2012) theoretically argued and empirically showed that a higher degrees
of cultural distance is a problem for inexperienced acquirers whereas firms with extensive
acquisition experience are able to extract positive value by taking over culturally distant
target firms. Focusing on the role of acquirer’s multiculturalism (i.e., tolerance and
encouragement for cultural diversity), Reus (2012) reported the counter-intuitive finding that
acquirers are unable to account for and manage emotional well-being of acquired unit
members in culturally distant contexts even if they have a high degree of multiculturalism.
Focusing on a specific and key integration outcome (i.e., trust), Stahl et al. (2006) detected an
interaction effect between cultural distance and mode of takeover. In particular, they showed
that acquired unit members’ trust towards a culturally distant acquirer would be lower in case
of a hostile mode of takeover.
With the ambition to reconcile earlier empirical inconsistencies, yet another stream of
research sees the solution in a more fine-grained approach to the level at which cultural
differences are theorized to have a bearing on integration outcomes. For instance, Sarala
(2010) showed that the organizational cultural differences increase the extent of postacquisition conflict whereas cultural differences at the national-level were found to have
insignificant effect on post-acquisition conflict. Using the same dataset but instead focusing
on the effectiveness of knowledge transfer, Sarala and Vaara (2010) also found that national
cultural differences provide opportunities for successful knowledge transfer whereas
organizational cultural differences were not a significant factor in knowledge transfer. As a
follow-up on this, Vaara et al. (2012) further found that there is a negative relationship
between the degree of social conflict and the effectiveness of knowledge transfer.
Differentiating between both level of culture and measures of post-acquisition performance,
the meta-analyses of Stahl and Voigt (2008) revealed that differences in national and
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organizational cultures have a negative effect on sociocultural integration (i.e., shared identity,
positive attitudes, and trust). On the other hand, neither national nor organizational cultural
differences seemed to have a meaningful effect on synergy realization (i.e., accounting based
performance) or shareholder value (i.e., abnormal stock market returns).
While the theoretical rationale behind differentiating between national and
organizational cultural differences has an intuitive appeal, we argue that trying to reconcile
extant empirical inconsistencies by recognizing the issue as a typical “level-of-analysis
problem” could be ineffective. This is especially the case if the ambition is to understand the
drivers of sociocultural integration by adopting a micro-level focus on the perceptions,
feelings, attitudes and possible behaviors of individuals in acquisitions. That is, as far as the
issue of post-acquisition integration is considered at the individual-level of analysis and from
a socio-cognitive vantage point, explicit differentiation between national and organizational
cultures and differences stemming therefrom would be an unavailing attempt. However, an
individual’s membership in a nationality or an organization (or to any other collective
affiliation for that matter) could be more or less relevant when s/he is deriving his/her selfconcept and making self-other comparisons accordingly. As argued by Regnér and Zander
(2011), being large and complex organizations, multinational corporations embrace various
subgroups with different identity frames. Therefore, it is an open empirical question whether
members of merging organizations derive a larger or smaller portion of their self-image and
concept from their nationality (e.g., being German), or from their organizational membership
(e.g., being a member of Daimler organization) or from their profession (e.g., being an
engineer). Hence, there is no reason to expect, a priori, national and organizational cultures to
have differing effects on “us vs. them” type of thinking and the ensuing process of
sociocultural integration unless one can (a) observe varying degrees of salience and relevance
of these two bases of identity frames, (b) theoretically establish a link between primary
variables of interest and the unique attributes of a specific context which is expected to make
a difference in the salience and relevance of different identity frames. Alas, those studies
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identifying the remedy as a more precise approach to the “level of culture” fail to offer solid
theoretical and analytical ground regarding either of these conditions. As a result, their
conclusions suffer from the same empirical inconsistency (e.g., national cultural differences
have no effect on social conflict in Sarala ( 2010), whereas for the very same dataset with
Finnish acquirers, these differences are found to have a negative effect on social conflict and
positive effect on knowledge transfer in Vaara et al. (2012)) they attempt to puzzle out in the
first place.
In addition to differentiating between the different levels of culture, recent studies
have also made notable attempts at understanding the positive and negative consequences of
cultural differences with the aim of deciphering the net effects of cultural differences in the
context of cross-border M&As. For example, Reus and Lamont (2009) portrayed cultural
distance as a ‘double-edged sword’ in international acquisitions due to its impeding effects
(i.e., different communication styles and amplified perceptions of ‘us vs. them’) along with its
enriching effects (i.e., additional potential and opportunities for learning and knowledge
combination due to cultural diversity). These arguments were preceded by an earlier study by
Morosini et al. (1998) who found a positive effect of national cultural distance due to
acquirers’ ability to extract rent-yielding routines and repertoires that would otherwise be
unavailable in targets coming from culturally similar contexts. Björkman et al. (2007) also put
forth a similar logic and took a step further by hypothesizing a non-linear relationship
between cultural differences and value creating potential of cross-border M&As in which a
low to moderate degree of cultural distance provides additional learning opportunities
whereas at higher degrees of cultural distance exploiting these opportunities becomes
problematic.
Accounting for both the advantages and disadvantages of cultural differences in
cross-border M&As is an important step to facilitate a more fine-grained understanding of
culture in M&As. How ever, the string of studies mentioned above border on suggesting
multiple theoretical frameworks for the sake of their ex ante arguments and/or explaining
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their ex post empirical findings without paying due attention to the commensurability of the
mechanisms with which they theorize on the pros and cons of cultural differences.2 To be
more specific, majority of earlier studies conjectured that a primary source of problems in
culturally distant acquisitions is the amplified feelings of hostility between members of
merging organizations. On the other hand, the added value of higher cultural distance is
argued to lie in additional diversity and learning opportunities. Although we agree with both
of these points, we argue that the former part of the argument is relevant for socio-cognitive
processes regarding group membership and social comparison mechanisms observed at the
micro-level (i.e., interpersonal and inter-group relations) whereas the latter half of is more
pertinent for issues of strategic fit, synergy creation, and resource combination which work at
the meso- and macro-levels (i.e., creation and transfer of assets between organizations and
across countries). This underlines the need for a more theoretically calibrated and coherent
approach to studying the positive and negative aspects of cultural differences which we shall
expand on in the following section.
Towards a More Rigorous Approach to the Micro-level Effects of Culture in M&As
In this section, we shall motivate our ensuing empirical study by detailing the
rationale behind the (a)symmetric effects of cultural distance in cross-border M&As, as well
as explicating the conditions under which cultural differences could be perceived favorably vs.
unfavorably by individuals engaged in acquisitions. To that end, we shall first provide a brief
overview of extant studies questioning the symmetry and discordance assumptions.
With his acclaimed critique of extant conceptualization and measurement of cultural
distance, Shenkar (2001) was the first to draw attention to the potential perils of these
assumptions. Specifically, he argued that standard conceptualizations of cultural distance
suffer from the “illusion of symmetry” and noted that “distance, by definition, is symmetric:
The distance from point A to point B is identical to the distance from point B to point A [...] It
suggests an identical role for the home and host cultures [...] However, there are no studies
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showing symmetry between the two nor is there a reason to assume one” (Shenkar, 2001:523).
To pinpoint the assumption of discordance, he further claimed that increased distance does
not necessarily translate itself into lack of fit between interacting cultures and exacerbated
obstacles to the relationship.
Despite Shenkarr’s (2001) ideas, there have been a surprisingly limited number of
empirical attempts to test the assumption of symmetry. One such example is the comparative
study on expatriate adjustment conducted by Selmer et al. (2007) which found that German
expatriates in the USA achieved a higher degree of socio-cultural and psychological
adjustment and adaptation to the host culture compared to American expatriates in Germany.
In another study, Brock et al. (2008) showed that discrete measures of cultural distance (i.e.,
power distance, assertiveness, institutional collectivism and in-group collectivism) have
asymmetrical effects on the likelihood of assigning and deploying expatriates to subsidiaries.
Providing an indirect test of both symmetry and discordance assumptions, Drogendijk and
Holm (2012) focused on headquarters’ influence on subsidiaries and found that, instead of
looking at the absolute differences between power distance scores, measuring the extent to
which headquarters and subsidiaries agree on accepting or rejecting power differences could
provide more accurate estimates.
Understanding the theoretical reasons behind asymmetric effects of culture is as
important as detecting them. In this regard, we can get some inspiration from the field of
social psychology. Delving into the conceptual roots of the cultural distance hypothesis, it is
not difficult to determine that most of the earlier studies conceiving of cultural distance as the
main culprit behind “us vs. them” type of thinking based their arguments on the classical
version of similarity-attraction paradigm (Byrne, 1971; Taylor et al., 1978) which simply
avers that the more similar individuals/groups are, the higher would be the extent of attraction
between them. Thus, cultural differences and dissimilarities have been theorized to have a
negative influence on sociocultural integration due to individuals’ innate tendency to develop
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more positive attitudes and favorable biases towards those who share similar characteristics
and demographic attributes (Byrne, 1971).
While conjecturing that similarity would breed intergroup attraction and cooperation,
the majority of the studies in the M&A literature have developed their hypotheses in a way as
if members of merging organizations always have a more positive attitude and favorable
feelings towards their own pre-acquisition culture (as an exception to this, see Very et al.,
1997). Yet, whenever this ex ante positive valence linked to pre-acquisition social identity is
weak or not salient, the central premise of similarity-attraction and cultural distance
hypotheses, as they have been applied in cross-border M&A research, becomes rather moot.
Indeed, this point is explicitly acknowledged as a scope condition of Social Identity Theory
(e.g. Leonard, 1975; Tajfel and Turner, 1986). Specifically, it is shown that the strength of the
link between intergroup similarity and attraction depends on the extent to which individuals
have strong identification with their group and internalize that group membership prior to
engaging in social contact with the members of another group (Haslam, 2004).3 In other
words, a more careful reading of Social Identity Theory reveals that individuals’ attitudes and
behaviors towards the ‘other’ hinges on their subjective belief structures regarding their
relative standing and status vis-à-vis relevant out-groups (Ashfort and Mael, 1989).
Concerning intergroup relations in the particular case of M&As, the discussion above
imparts two vital points. First, whenever members of an acquired unit perceive their
organization to occupy lower position vis-à-vis an acquirer with higher status or image, they
“will attempt, as individuals, to disidentify and gain psychological entry to the other
organization. This will increase their support for the merger and their commitment to and
identification with the new, merged organization”. (Hogg and Terry, 2000:133). This stands
to reason that the effects of cultural differences and similarities between merging firms in
M&As are more complex than assumed by previous studies. Therefore, instead of merely
envisioning any kind of similarity (dissimilarity) to instigate feelings of attraction (repulsion)
and sympathy (animosity), we shall explicitly examine whether the factors that render
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merging firms similar (dissimilar) are seen and evaluated as favorable (unfavorable) by the
parties.
Second, given that these evaluations are based on relative characteristics and
attributes of interacting groups, the way cultural differences are perceived and evaluated from
either side of a given national pairing would not necessarily mirror each other. Therefore,
understanding the net effects of cultural differences depends more on the qualitative
characteristics of the cultural differences as perceived at either end of a dyad, and positive and
negative connotations associated therewith, (c.f. Drogendijk and Zander, 2101) instead of a
simple quantitative measurement of distance from one focal point to another. As a result, the
effect of cultural differences would depend on the directionality and, therefore, would not be
symmetrical between two nodes.
Guided by these theoretical considerations and motivated by the dearth of empirical
evidence regarding the plausibility of symmetry and discordance assumptions in the context
of cross-border M&AS, we formulated two research questions: (1) Do cultural differences
between two countries (i.e., A and B) have the same effect on perceptions and likely
behaviors of acquired unit employees in Country A whose company is taken over by an
acquirer from Country B as they have for acquired unit employees in Country B whose
company is taken over by an acquirer from Country B?, (2) Do acquired unit employees in
Country A react equally positively/negatively to the acquirer from Country B vis-à-vis their
counterparts in Country B who are facing an acquirer from Country A? In the next section,
we will present the general design and research methodology of our study with which we
sought systematic answers to these questions.
METHODOLOGY AND RESEARCH DESIGN
In this study, we employed a policy-capturing technique, which is a method used for
understanding the relative importance of different contingency variables in individuals’
decision-making (Karren and Barringer, 2002). As described by Aiman-Smith et al.
14
(2002:390), in policy-capturing “participants are asked to make decisions in response to a
series of decision or problem solving scenarios presented by the researcher. The researcher
regresses the decision outcomes on the values of one or more cues embedded in the scenarios
and then uses the resulting regression weights to make inferences about the respondents’
judgment policies”. Thus, policy capturing can be considered a decision exercise in which
stylized scenarios with different combinations of experimental treatments are presented to the
respondents, who are then asked to express their perceptions and likely behaviors based on
the information provided in the scenarios. In other words, instead of asking questions about
respondents’ past or present experiences, researcher creates a realistic and controlled situation
and directs questions to the respondents based on this constructed reality. As a sort of pseudoexperimental design, policy capturing can provide several advantages. These advantages
include (1) the use of clean and reliable measures of variables, (2) higher control over
compounding and the ability to rule out competing explanations for the results, and (3) the
ability to establish causality more credibly than other alternative cross-sectional designs
(Aiman-Smith et al., 2002; Croson et al., 2007). These unique advantages of policy-capturing
technique are well-suited for the specific purposes of the present investigation. Since we are
primarily interested in understanding whether or not the direction of a given cultural distance
(from A to B vs. from B to A) matters on its effects and implications, policy-capturing design
was an effective way to make sure that the data for either of these directions were minimally
affected by the extraneous sources of variation.
Although experimental designs are yet to take full purchase in the IB field, recent
studies have started to use this design to examine issues like entry mode decisions of
executives (Buckley et al., 2007), partner selection in international joint ventures (Reuer et al.,
2012), response strategies in international strategic alliances (Tjemkes et al., 2012), the role
of exposure to different cultural primes on cooperative behavior (Akkermans et al., 2010) and
so forth. In the specific context of M&As, experimental designs have also been used in earlier
research to understand the determinants of executives’ decisions on post-acquisition
15
integration level (Pablo, 1994), antecedents of acquired unit employees’ trust towards
acquirers (Stahl et al, 2006), and effects of integration strategies and patterns on support
(Giessner et al., 2006) and organizational commitment (Mottola et al., 1997) of acquired and
acquirer unit employees.
Participants
In line with editorial provisos (Bello et al., 2009), we conducted our experiments with
non-student samples in both China and Sweden. 222 Chinese (average age= 31.1, average
work experience=6.7 years and 61% males) and 154 Swedish (average age= 43.9, average
work experience=18.9 years and 86% males) professionals took part in this study.4 All of the
participants from both countries had university degrees (i.e., bachelor or higher). 74.8% of
Chinese and 64.7% of Swedish participants had prior experience with acquisition in their
professional career.
Research Framework
As noted before, the primary purpose of this paper is to examine the effects of
cultural distance between Sweden and China in the context of acquisitions. To test for these
effects, we specified two dependent variables. Namely, these were acquired unit members’
willingness to implement organizational practices sent by the acquirer and their
organizational commitment in the aftermath of acquisition, both of which have been
considered important integration outcomes in earlier M&A studies (e.g., Birkinshaw et al.,
2000; Bresman et al., 1999; Mottola et al., 1997; Stahl and Voigt, 2008). In addition to
country-of-origin effects, we also manipulated three other predictor variables in our
experimental treatments (see Figure 1), which were intended to provide some auxiliary
insights. These were technological reputation of the acquirer, change in acquired unit
members’ compensation, and change in their decision-making autonomy in the aftermath of
acquisition. The role of reputation in post-acquisition integration is a relatively understudied
issue (c.f., Davies and Chun, 2004) which warrants further empirical examination. In addition
16
to that, given that we build on SIT, the concept of reputation and image is directly relevant for
our present investigation. On the other hand, analyzing the dual effects of compensation and
autonomy is an intriguing exercise when considered within the framework of Self
Determination Theory (e.g., Gagné and Deci, 2005) given that each of these factors is shown
to have distinct effects on intrinsic and extrinsic motivation.
=== Insert Figure 1 about here ===
Measures
Acquired unit members’ willingness to adopt organizational practices sent by the
acquirer was measured by a single-item 7-point likert-scale question (“As the new owner, if
<<acquirer>> sends new organizational practices to my unit, I would be willing to utilize and
implement these practices”). In order to measure acquired unit members post-merger
organizational commitment, we adopted the five-item scaled from Mottola et al. (1997).
These five items were factor analyzed and loaded on one item (Cronbach’s Alpha values
were .903 and .896 for Chinese and Swedish data, respectively). In Table 1, we present the
textual material used to manipulate the three independent variables we used in this study. In
order to avoid possible confounds due to preconceived notions and ideas about real
companies, we used fictitious names while describing the acquirers in the scenarios. We used
a 1/4 replicate of 2x2x2 design to avoid respondent fatigue. Accordingly, each participant
answered two acquisition scenarios with different experimental manipulations of the three
independent variables. In addition to that, participants were asked to read and respond to the
same set of scenarios where the acquirer was a domestic company. As a result, each
participant responded to a total of 4 scenarios (2 with foreign acquirer and 2 with domestic
acquirer).
=== Insert Table 1 about here ===
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Findings
As an initial test of the symmetry hypothesis, we compared inter-country differences
as perceived by Swedish and Chinese respondents. For this, we asked Swedish/Chinese
participants to indicate the extent to which they found China/Sweden different from their
country of origin along six items (i.e., norms and values, political system, regulations and
formal rules, level of economic development, relationships and ways of communication,
organizational practices). We then factor analyzed the six items and all of them loaded on one
factor (Cronbach’s Alpha = .758), which accounted for 51.23% of the variance. Using this
latent cultural distance measurement, we then performed an independent sample t-test to see
if differences between Sweden and China, as perceived by Swedish and Chinese participants,
differed depending on the nationality of the respondent. The results reveal that Swedish
respondents’ distance perceptions (M = -.108, SD= .840) were smaller compared to those of
Chinese respondents (M = .765, SD =.903) and the difference between the two sets of
responses was significant, t (358) =1. 969, p<.05, Cohen’s d = .212.
In the subsequent statistical analyses, we used a linear mixed model (LMM) with
restricted maximum likelihood estimation. LMM is well-suited for the analysis of repeatedmeasures data in which the dependent variable is measured more than once on the same unit
of analysis across levels of a repeated-measures factor.5 Thus, LMM enables researcher to
detect the role of fixed effects (i.e., those that are of primary interest) while controlling for
random effects (West et al., 2007). This is especially important to control for possible
correlation between observations coming from same unit of analysis and to isolate the main
effects of interest from un-modeled sources of variation. In our data we assigned a unique
subject identification number to each respondent and specified a sequence number (from 1 to
4) for each response to the scenarios. Both of these counters were used to account for
random effects.
To test whether or not Swedish participants’ possible reactions to a Chinese acquirer
were the same as Chinese participants’ reactions to a Swedish acquirer (i.e., symmetry
18
assumption) we pooled the two datasets together and coded each response with the dummy
variable Respondent Country (0=Chinese, 1= Swedish). We then analyzed the data with
Respondent Country, Reputation (0=weak, 1= strong), Compensation (0=same, 1= increased)
and Autonomy (0=lost, 1= retained) as fixed effects. If valid, the symmetry assumption would
predict that a Swedish acquirer making an acquisition in China should be facing the same
degree of distance perceptions with a Chinese acquirer making acquisition in Sweden.
Therefore, significant coefficient estimates for the Respondent Country variable would negate
the validity of this assumption.
The results are reported in Table 2a and 2b. Regarding our first outcome variable,
acquired unit members’ Willingness to Implement Organizational Practices it is found that
respondents’ country of origin was a significant predictor, which points cultural distnace
having asymmetric effects.. To be more specific, Chinese respondents displayed a stronger
willingness to implement organizational practices sent by a Swedish acquirer compared to
Swedish respondents’ motivation to implement practices sent by a Chinese acquirer, t (683) =
2.585, p<.05. Concerning two of the other independent variables, the effects were in line with
our theoretical predictions. Namely, increased compensation (t683 =1.806, p=.071) and
retained decision-making autonomy (t683 =2.852, p=.004) positively affected Swedish and
Chinese respondents’ willingness to implement organizational practices sent by the acquirer.
On the other hand, strength of the technological reputation of the acquirer/sender did not
emerge as a significant predictor of acquired unit/recipient’s willingness to implement
organizational practices (t683 =1.170, p=.243).
As for the other outcome variable, acquired unit members’ post-acquisition
organizational commitment, the results followed a similar pattern. To be more specific,
Chinese respondents’ commitment to a Swedish acquirer was stronger than Swedish
respondents’ commitment to a Chinese acquirer, t (619) = 2.173, p=.030. Similarly, increased
post-acquisition compensation (t341 =1.735, p=.084) and retained decision-making autonomy
(t341 =6.160, p<.001) both increased the extent of individuals’ commitment to post-merger
19
organization. However, similar to willingness to implement organizational practices,
commitment to post-acquisition organization was not affected by the technological reputation
of the acquirer (t341 =.363, p=.717). Yet, further analyses also revealed a significant
interaction effect between respondent country and acquirer’s reputation (t341 =2.712, p=.007).
Specifically, Chinese and Swedish respondents had lower willingness to commit to the
merged organization when the foreign acquirer had weak reputation. On the other hand,
Chinese respondents had higher organizational commitment scores than Swedes in case the
reputation of the foreign acquirer was strong. We also detected another significant interaction
effect between respondent country and compensation (t341 =2.209, p=.028), which denoted
that Chinese respondents had lower (higher) organizational commitment than Swedes should
their salaries were retained the same (increased) in the aftermath of acquisition.
=== Insert Tables 2a 2b about here ===
Overall, the above analyses were instrumental to test the assumption of symmetry in
an explicit and direct way. With subsequent analyses, we also examined Swedish and Chinese
datasets separately and compared Swedish (Chinese) participants’ responses to Chinese
(Swedish) acquirers with a baseline scenario where the acquirer was a domestic Swedish
(Chinese) company. These further analyses provided two additional insights. First, it helped
us to get a better understanding regarding the extent to which aforementioned variations in
Swedish/Chinese employees’ responses to a Chinese/Swedish acquirer could be attributed to
the nationality of the acquirer by isolating context-specific variations, e.g., differences
between Sweden and China in terms of the way acquisitions are generally perceived,
interpreted and reacted upon. Accounting for possible variations in the way any given
organizational phenomenon is generically perceived and responded to across different
contexts and cultures (c.f. Gelfand et al., 2007) is especially important to isolate and zero in
on specific effects (i.e., country-of-origin of the acquirer) we are curious about in this study.
Second, by comparing Swedish/Chinese participants’ responses to Chinese/Swedish acquirers
with a case where the acquirer is a domestic (Swedish/Chinese) firm, we were able to test the
20
discordance assumption, i.e., whether or not cultural differences always lead to unfavorable
perceptions of and reactions to the ‘other’.
The results we obtained from Swedish data (see Tables 3a and 3b) confirmed that
Swedish respondents were less motivated to implement acquirer’s organizational practices (t
381.2
= 2.578, p<.05) and were less likely to show strong organizational commitment to the
acquirer (t 383 = 5.251, p<.001) in case their firm is taken over by a Chinese company. Thus,
as far as Swedish respondents are concerned, it is possible to deduce that the nationality of an
acquirer is an important predictor of acquired unit members’ willingness to commit to the
acquirer and to implement organizational practices sent therefrom. Thus, the results from
Swedish data lend support to the plausibility of discordance assumption. The effects of two of
the other predictor variables, i.e., Reputation (t 381.3 = 2.272, p<.05 for practice
implementation and t 383 = -2.776, p<.05 for organizational commitment) and Autonomy (t
381.3
= 4.206, p<.001 for practice implementation and t 383 = 3.294, p<.001 for organizational
commitment) were also significant. On the other hand, change in Compensation did not have
any significant effect Swedish respondents’ willingness to implement practices (t 381.3 = 1.011, p=.313) nor did it affect their commitment to post-merger organization (t 383 = .126,
p=.900). In addition to this, we also detected a significant interaction effect between
acquirer’s country of origin and its technological reputation (t 381.3 = 2.978, p<.05)
=== Insert Tables 3a 3b about here ===
The country-of-origin of the acquirer emerged as a significant predictor in the
Chinese data as well (see Tables 4a and 4b). However, and contrary to our expectations and to
the discordance assumption, Chinese respondents showed stronger willingness to use
organizational practices sent by a Swedish acquirer compared to those being sent by a
domestic (Chinese) acquirer, t (292.8) = 1.882, p= .061. Similarly, Chinese respondents
displayed a stronger commitment to a Swedish acquirer compared to a case where the
acquirer was Chinese, t (643.3) = 2.447, p< .05.Indeed, both of these findings were in contrast
21
with the one we observed in Swedish data where responses to a domestic (Swedish) acquirer
were more favorable compared to those for a foreign (Chinese) acquirer (see Figures 2 and 3).
Moreover, we also uncovered an interesting and significant interaction effect between
acquirer country and reputation (t 381.3 = 2.287, p=.022) in our Chinese data. To be specific,
when the acquirer’s technological reputation was weak, Chinese respondents were less likely
to commit to a Swedish acquirer compared to a domestic/Chinese acquirer. However, under
the strong reputation treatment, Chinese respondents’ willingness to commit to a Swedish
acquirer became much stronger. Taken together, our analyses of the Chinese data provided
evidence against the discordance assumption given that a culturally different (Swedish)
acquirer would encounter a more motivated acquired unit/recipient vis-à-vis a domestic
acquirer. In the next section, we shall provide interpretation of these findings, along with
others, and discuss our results in relation to the previous literature.
=== Insert Tables 4a 4b about here ===
=== Insert Figures 2 and 3 about here ===
DISCUSSION AND CONCLUDING REMARKS
Three main conclusions can be drawn from our analyses. First, by measuring
perceived cultural differences at both ends of the Sweden-China pairing we were able to
provide an initial answer as to whether or not perceived cultural differences between Sweden
and China follow a symmetric pattern or not. Our results revealed that the distance from
Sweden to China (as perceived by Swedish respondents) was shorter compared to the distance
from China to Sweden (as perceived by Chinese respondents). This finding should be
interpreted along with those reported in earlier studies, which emphasized differences
between objective and subjective distance measurements (e.g., Drogendijk and Slangen,
2006; Moon and Park, 2011). While relative merits of different metrics is an important yet
unresolved issue in IB research, we don’t intend to pursue this at length. That said, however,
we argue that choice for measuring a distance between two ends of a relational dyad should
22
be guided by the specific purpose of any given study. Thus, in so far as the aim of a study is
to understand socio-cognitive mechanisms operating at the individual level of analysis, these
results point out the usefuleness of using perceptual measures over objective/secondary data.
Second, by pooling Swedish and Chinese responses to Chinese and Swedish acquirers,
we were able to detect the implications of cultural differences on knowledge transfer and
organizational commitment in M&As. To begin with, Chinese respondents showed stronger
willingness to implement Swedish acquirer’s organizational practices compared to Swedish
respondents prceptions towards practices sent by a Chinese acquirer. This result is in line with
those reported by Gupta and Govindarajan (2000), who found that relative economic
development levels of home and host countries are a significant determinant of the extent of
knowledge flows between sender and recipient units. We further found a similar pattern for
organizational commitment, i.e., Chinese respondents’ organizational commitment to
Swedish acquirers was stronger than Swedes’ commitment to a Chinese acquirer. This finding
corroborates well with the earlier remarks we quoted from Hogg and Terry (2000). The
effects of two of the other explanatory variables (compensation and autonomy) were in line
with expectations. However, we did not detect any significant interaction between the two
suggesting that crowding-out effect is not tenable for the specific context of sociocultural
integration in M&As. Interestingly, acquirer’s technological reputation did not have any
effect on either of our dependent variables. This implies that the role of specific status
characteristics, i.e., organizational reputation, is less noticeable than diffuse status
characteristics, i.e., country of origin effects, (c.f. Berger et al., 1972).
Third, in order to take the analysis a step further, we also examined our datasets
separately and compared our respondents’ possible reactions to a domestic vs. foreign
acquirers. This way, we were able to understand whether or not the way Swedish respondents
react to a Chinese acquirer showed a similar pattern to the way Chinese respondents reacted
to a Swedish acquirer. Over and above gaining more insights regarding the discordance
assumption, these further analyses were also important to rule out alternative explanations
23
and attribute variation in Swedish/Chinese employees’ responses to a Chinese/Swedish
acquirer to the nationality of the acquirer. For both of our dependent variables, responses of
Swedish participants lent support to the idea that cultural differences are an impediment for
the success of post-merger integration. On the other hand, this was not the case for Chinese
respondents who expressed more favorable perceptions and possible reactions to Swedish
acquirers compared to domestic acquirers.
One possible interpretation of this difference between Swedish and Chinese
respondents lies in the importance of individuals’ perceptions of their pre-acquisition culture
and how they compare their own nationality with the cultural image of the acquirer. Indeed,
satisfaction with existing group membership and identity was pinpointed as a significant
determinant of the way with which individuals perceive and respond to the out-group in
general (Tajfel and Turner, 1979), organizational (Hogg and Terry, 2000) and M&A
(Ellemers et al., 1988) contexts. It is likely that, compared to their Chinese counterparts,
Swedish respondents take greater pride in their nationality, and therefore depicted more
positive reactions towards a domestic acquirer. To see if that is the case, we conducted
supplementary analysis based on data we gathered from the World Values Survey. In
particular, we compared Sweden and China according to the answer to the question “How
proud are you to be <<nationality>>?” (1=very proud, 4=not at all proud).6 The results based
on our indepdent samples t-test confirm that on average Swedes are more proud of their
nationality(M= 1.71, SD=.717) than Chinese are(M=2.06, SD=.766). Furtehr, the difference
between the two groups is significant, t2919=11.993, p<.001. This finding underscores the role
of existing group membership (i.e., nationality), and favorable/unfavorable values attached to
it, while forming attitudes towards a culturally different ‘other’. In addition to this, the
different patterns of responses among Swedish and Chinese participants could also be due to
the differing effects of foreignness across different institutional contexts, which might yield
advantages as well as create liabilities for multinational companies due to variations in
institutional structures (Edman, 2009; Kostava and Zaheer, 1999; Shi and Hoskisson, 2012).
24
In summarry, this study provides important systematic evidence suggesting that cultrual
distinace is not symatric as most previous management studies have treated it. Thus, this
study should cause researchers to pause and reflect about how they are using cultural
distannce.
The limitations of our study should be seen as fruitful avenues for further research.
Our primary focus in this study was the initial conditions and resulting perceptions and likely
behaviors of individuals. First, it would be valuable should future studies adopt a process
perspective by opening the ‘black box’ of post-merger integration in cross-border M&As via
longitudinal designs (c.f., Stahl and Voigt, 2005). Thus, we believe that a more nuanced
understanding of initial contact conditions and how these initial conditions determine later
stages of integration would contribute to the unpacking of this black box. Furthermore, while
our choice of key integration outcomes was motivated and guided by theory, we believe the
research framework we presented and tested here could and should be extended in order to
see whether or not symmetry and discordance assumptions hold true for other dimensions of
sociocultural integration in M&As. As an initial step towards a more systematic and rigorous
test of symmetry and discordance assumptions, the present study is primarily interested in
whether or not cultural differences are perceived and reacted to equally and similarly from
each side of a given national pairing (i.e., Sweden and China). Yet, this leaves the roots and
origins of asymmetric perceptions at either end of the side as a research attempt yet to be
fulfilled by future studies. In addition to that, the particular design of our study has enabled us
to test the assumptions of symmetry and discordance based only on the attitudes of
individuals towards a culturally different acquirer. While social psychology research has
shown that attitudes are good predictors of intentions and actual behavioral outcomes (Ajzen,
2001), we invite future studies to complement our present endavor and examine these two
assumptions by looking at observeable behaviors of employees in cross-border M&As.
25
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Figure 1: Research Framework
Technological
Image/Reputation of The
Acquirer
Acquired Unit Employees’
(1) Willingness to Implement
Organizational Practices
sent by the Acquirer
Compensation Policy of
the Acquirer
(2) Post-acquisition
Organizational Commitment
Acquired Unit
Employees’ Decision
Making Autonomy
33
Table 1: Different Levels of Experimental Cues and Their Textual Descriptions
in the Vignettes
Construct
Level
Strong
Technological
Image/Reputation of
The Acquirer
Weak
Retained
Individuals’ Decision
Making Autonomy
Lost
Fixed
Compensation
Increased
Text
<<Acquirer>> has an established image and a strong reputation for
being an innovative company, given that its products successfully
appeal to the needs and preferences of its customers. Thus,
<<Acquirer>> is a clear technology leader. The success of
<<Acquirer>>is mainly due to its strong research and development
skills as well as its investments in getting a good understanding of
the market trends.
Instead of developing totally new products of its own,
<<Acquirer>> usually adds incremental changes to the products of
other companies, and then sells them under its own brand. In other
words, <<Acquirer>> is more of a follower than a developer of
new technologies. Even though <<Acquirer>> made several
attempts to develop and launch totally new products, these
attempts largely failed.
<<Acquirer>> encourages different ideas. The top management of
<<Acquirer>> believes that subsidiaries shall take their own
initiatives since they have better knowledge of their local markets.
This implies that you will retain much of the managerial autonomy
over your own decisions. Therefore, you will not have to get
approval from the headquarters for every action.
The top management of <<Acquirer>> believes that centralizing
most of the decisions is a better way to control and coordinate its
subsidiaries. As a result, you will have less autonomy to make your
own decisions at your job. Unlike before, in many cases you will
have to get approval from the headquarters before you take any
action.
<<Acquirer>> adopts a compensation policy that aims at
introducing minimum changes in the salary levels of acquired unit
employees. As a result, your salary will be kept at the same level as
before the acquisition.
<<Acquirer>> adopts a standardized compensation policy (i.e.,
same pay for same position). <<Acquirer>>’s existing employees
who work in your position have higher salary than what you used
to receive before the acquisition. As a result, your monthly
compensation will be increased considerably after the acquisition.
34
Table 2a: Parameter Estimates using Pooled Swedish and Chinese Responses (Foreign
Acquirers only)
Parameter
Intercept a
Respondent Country b
Reputation c
Compensation d
Autonomy e
Age
Tenure
Respondent Country* Reputation
Respondent Country * Compensation
Respondent Country * Autonomy
Estimate
5.319364
.554670
-.175908
-.271084
-.427636
.006100
-.002327
-.274716
-.266216
.016408
Std. Error
.432304
.214551
.150390
.150105
.149944
.012900
.011785
.195043
.195444
.190983
df
t
683
683
683
683
683
683
683
683
683
683
Sig.
12.305
2.585
-1.170
-1.806
-2.852
.473
-.197
-1.408
-1.362
.086
.000
.010
.243
.071
.004
.636
.844
.159
.174
.932
a. Dependent Variable: Willingness to Implement Practices Sent by the Acquirer
b. Swedish respondents are used as the baseline, c. Strong technological reputation is used as the
baseline, d. Increased compensation is used as the baseline, e. Retained autonomy is used as the baseline
Table 2b: Parameter Estimates using Pooled Swedish and Chinese Responses (Foreign Acquirers
only)
Std.
df
t
Sig.
Error
Intercept a
.069888 .425351 364.792
.164
.870
b
Respondent Country
.370741 .170626 619.074
2.173
.030
c
Reputation
-.032870 .090510
341
-.363
.717
d
Compensation
-.156753 .090339
341
-1.735
.084
e
Autonomy
-.555861 .090242
341
-6.160
.000
Age
.005935 .013055
343
.455
.650
Tenure
-.000386 .011933
343
-.032
.974
Respondent Country* Reputation
-.318345 .117367
341
-2.712
.007
Respondent Country * Compensation
-.259777 .117581
341
-2.209
.028
Respondent Country * Autonomy
.144241 .114882
341
1.256
.210
a. Dependent Variable: Post-Acquisition Organizational Commitment
b. Swedish respondents are used as the baseline, c. Strong technological reputation is used as the
baseline, d. Increased compensation is used as the baseline, e. Retained autonomy is used as the
baseline
Parameter
Estimate
35
Table 3a: Parameter Estimates using Swedish Responses (Domestic and Foreign
Acquirers)
Parameter
Intercept a
Acquirer Country b
Reputation c
Compensation d
Autonomy e
Age
Tenure
Acquirer Country* Reputation
Acquirer Country * Compensation
Acquirer Country * Autonomy
Estimate
6.451637
-.312680
-.202800
-.090107
-.374121
-.012152
.009016
.049598
-.128877
.137395
Std. Error
.640369
.121282
.089242
.089099
.088941
.020955
.018866
.126044
.125823
.125644
df
130.192
381.222
381.381
381.399
381.356
126.146
126.241
381.302
381.311
381.289
t
Sig.
10.075
-2.578
-2.272
-1.011
-4.206
-.580
.478
.393
-1.024
1.094
.000
.010
.024
.313
.000
.563
.634
.694
.306
.275
a. Dependent Variable: Willingness to Implement Practices Sent by the Acquirer
b. Swedish acquirer is used as the baseline, c. Strong technological reputation is used as the baseline,
d. Increased compensation is used as the baseline, e. Retained autonomy is used as the baseline
Table 3b: Parameter Estimates using Swedish Responses (Domestic and Foreign
Acquirers)
Std.
df
t
Sig.
Error
Intercept a
.936716 .485690 131.892
1.929
.056
b
Acquirer Country
-.530967 .101114
383
-5.251
.000
c
Reputation
-.205999 .074209 383.000
-2.776
.006
d
Compensation
.009310 .074068 383.000
.126
.900
e
Autonomy
-.243729 .073989
383
-3.294
.001
Age
-.009458 .015869 127.000
-.596
.552
Tenure
.002759 .014284 127.000
.193
.847
Acquirer Country* Reputation
-.312524 .104947 383.000
-2.978
.003
Acquirer Country * Compensation
-.087316 .104748
383
-.834
.405
Acquirer Country * Autonomy
-.031407 .104636 383.000
-.300
.764
a. Dependent Variable: Post-Acquisition Organizational Commitment
b Swedish acquirer is used as the baseline, c. Strong technological reputation is used as the
baseline, d. Increased compensation is used as the baseline, e. Retained autonomy is used as the
baseline
Parameter
Estimate
36
Table 4a: Parameter Estimates using Chinese Responses (Domestic and Foreign
Acquirers)
Parameter
Intercept a
Acquirer Country b
Reputation c
Compensation d
Autonomy e
Age
Tenure
Acquirer Country* Reputation
Acquirer Country * Compensation
Acquirer Country * Autonomy
Estimate
4.908191
-.202411
-.442955
-.538190
-.403089
.038859
-.012491
.088647
.068530
.043119
Std. Error
.557891
.107546
.097637
.098200
.092798
.019586
.018766
.106471
.106830
.100758
df
223.639
292.865
214.118
214.152
214.334
211.658
211.097
215.700
215.658
214.930
t
Sig.
8.798
-1.882
-4.537
-5.481
-4.344
1.984
-.666
.833
.641
.428
.000
.061
.000
.000
.000
.049
.506
.406
.522
.669
a. Dependent Variable: Willingness to Implement Practices Sent by the Acquirer
b. Swedish acquirer is used as the baseline, c. Strong technological reputation is used as the baseline,
d. Increased compensation is used as the baseline, e. Retained autonomy is used as the baseline
Table 4b: Parameter Estimates using Chinese Responses (Domestic and Foreign
Acquirers)
Parameter
Intercept a
Acquirer Country b
Reputation c
Compensation d
Autonomy e
Age
Tenure
Acquirer Country* Reputation
Acquirer Country * Compensation
Acquirer Country * Autonomy
Estimate
-.152133
-.230665
-.351215
-.416530
-.411620
.027967
-.014520
.218027
.111164
.063719
Std. Error
.473064
.094264
.067314
.067803
.064048
.016695
.016007
.095317
.096001
.090608
df
221.372
643.303
642.799
642.799
642.799
213.690
213.707
642.994
642.983
642.852
t
Sig.
-.322
-2.447
-5.218
-6.143
-6.427
1.675
-.907
2.287
1.158
.703
.748
.015
.000
.000
.000
.095
.365
.022
.247
.482
a. Dependent Variable: Post-Acquisition Organizational Commitment
b. Swedish acquirer is used as the baseline, c. Strong technological reputation is used as the baseline,
d. Increased compensation is used as the baseline, e. Retained autonomy is used as the baseline
37
Figure 2: Willingness to Implement Organizational Practices Sent by a Foreign
vs. Domestic Acquirer
Figure 3: Post-Acquisition Organizational Commitment to a Foreign vs.
Domestic Acquirer
38
1
By merging organizations, we refer to those firms that engage in an M&A. Thus, in case the
transaction involves one firm taking over the other (fully or partially) and qualifies more as an
acquisition than merger, the term “merging organizations” refer to acquirer and acquired unit.
2
An exceptional study of note in this regard is Weber et al. (1996). There, authors specify the positive
aspects of cross-border M&As, relative to domestic ones, by underscoring individuals’ possibility of
making anticipatory adjustments” in their behavior since they “expect differences and the changes
related to those differences, and therefore are less likely to resist them” (p.1223).
3
This is simply because of the fundamental contention of Social Identity Theory, which argues that
individuals have the inherent proclivity to maintain a favorable self-concept (Tajfel, 1982) and being
identified with a similar other would not serve this purpose as long as the focal actor is similar to that
other in terms of a negative self-concept or inferior social position. Based on the same logic, it is
plausible to claim that a dissimilar other could be seen as more attractive in so far as s/he is dissimilar
because of his/her more favorable social position and/or superior skills and capabilities.
4
While there is a noticeable difference between Swedish and Chinese respondents regarding average
age and work experience, we control for these variables and their role is significant only in one of the
models we will report in the next section.
5
Compared to classical repeated measures ANOVA and ANCOVA methods, LMMs are more
effective in dealing with missing data, as well as handling unevenly observed repeated measurements.
6
We used the 4th wave dataset of the World Values Survey where this question was enumerated as
#V209 and answered by 951 Swedes and 1,970 Chinese. The full version of the questionnaire and
corresponding dataset can freely be retrieved from http://www.worldvaluessurvey.org and
http://www.wvsevsdb.com .
39