The Role of Corporate Culture in Mergers & Acquisitions

Christa H. S. Bouwman

Texas A&M University; Wharton Financial Institutions Center

May 1, 2013

Etienne Perrault (ed.), Mergers and Acquisitions: Practices, Performance and Perspectives, NOVA Science Publishers, May 2013


Corporate mergers are an important driver of growth, and yet many mergers fail to produce value for the shareholders of the acquiring firms. Survey and anecdotal evidence suggests that corporate culture is central to the success of mergers and acquisitions (M&A), and that cultural differences are an important causal factor in merger failures. However, there is little either by way of theory or by way of large-sample empirical evidence in Finance and Economics on the importance of culture for M&A performance, although there appears to be growing interest in this area. There is a fairly substantial literature in Organizational Behavior, however, on this subject.

To provide a perspective on the role of culture in mergers and outline an agenda for future research that can be built around the key questions whose exploration promises to extend the frontiers of knowledge in this important area, this chapter critically reviews the Organizational Behavior and Economics literatures on corporate culture. Some survey and anecdotal evidence on the effect of culture on M&A is discussed as motivation and also to surface questions that could be more systematically addressed through research. The goal of the chapter is to both acquaint the reader with the research that has already been done in this somewhat nascent area and to facilitate the development of an agenda for future research.

The Role of Corporate Culture in Mergers & Acquisitions

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