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Cultural Incompatibility Influences Psychological Reactions in Cross-Border Mergers and Acquisitions: The Moderating Role of Multicultural Orientation

In: The 19th International Conference on Industrial Engineering and Engineering Management

Author

Listed:
  • Jing Shi

    (Chinese Academy of Sciences
    Graduate School of Chinese Academy of Sciences)

  • Hua-jian Cai

    (Chinese Academy of Sciences)

Abstract

Despite the initial optimism, many companies fail to meet the anticipated goals after cross-border mergers and acquisitions (M&As) on average. Cultural incompatibility (CI) has been widely reported as a cause for poor merger performance. This research attempted to examine the psychological reactions to CI during M&As and the moderating role of multicultural orientation (MO). We propose that cultural incompatibility affect people’s psychological reactions toward the acquiring firm depending on multicultural orientation. We manipulated participants’ experienced cultural incompatibility in M&A s and measured their multicultural orientation. As predicted, participants who experienced cultural incompatibility in cross-border acquisition showed more negative reactions than those who did not; moreover, those high in multicultural orientation reacted more positively to the acquiring firm than those low in multicultural orientation. Implications for culture and psychological adjustment in the process of cross-border acquisition are discussed.

Suggested Citation

  • Jing Shi & Hua-jian Cai, 2013. "Cultural Incompatibility Influences Psychological Reactions in Cross-Border Mergers and Acquisitions: The Moderating Role of Multicultural Orientation," Springer Books, in: Ershi Qi & Jiang Shen & Runliang Dou (ed.), The 19th International Conference on Industrial Engineering and Engineering Management, edition 127, chapter 0, pages 371-377, Springer.
    • Handle: RePEc:spr:sprchp:978-3-642-38442-4_40
    DOI: 10.1007/978-3-642-38442-4_40
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