Cultural fit and post-merger integration in banking M&As

The intense concentration process taking place in the financial systems has attracted substantial attention from stakeholders and academics. The impact of M&A on the value creation and efficiency/effectiveness improvements of banks involved appears, on the whole, disappointing and it is still hard to create benefits for customers. Management literature points to the difficulties of governing a post-merger integration process and recognizes the importance of corporate culture for explaining success. In fact, cultural clashes could, on one hand, generate conflicts and have negative effects on the timing and effectiveness of the post-merger integration process and, on the other hand, could influence the motivation and turnover of individuals. Set in the Italian banking industry, this paper proposes a framework, applied to a representative sample of cases (about 78.2% of market share, based on total assets), for assessing cultural similarities of actors involved in M&A transactions. Corporate culture is measured using an ethnographic approach focused on language as its special artefact. The assessment is based on the definition of some key concepts that are relevant for the banking industry (i.e., competencies, competition, customer, disclosure, human resources, innovation, and risk) and on a text-analysis model applied to a corpus of reference texts produced by the surveyed banks three years before the transaction. The elaboration of data uses Wordsmith 4, a text analysis software developed by Oxford University.