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Cultural differences, convergence, and crossvergence as explanations of knowledge transfer in international acquisitions

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Abstract

In spite of the proliferation of research on cultural differences in international mergers and acquisitions, we lack systematic analyses of the impact of cultural factors on knowledge transfer. In this paper, we argue that both national and organizational cultural differences and cultural integration in the form of cultural convergence and crossvergence affect knowledge transfer in acquisitions. We develop specific hypotheses concerning the nature of these effects, and test our hypotheses with data on international acquisitions carried out by Finnish corporations. The analyses performed show that national cultural differences provide great potential for knowledge transfer in international acquisitions. Furthermore, organizational cultural convergence and crossvergence have a significant positive impact on knowledge transfer. In particular, convergence and crossvergence moderate the impact of national cultural differences on knowledge transfer.

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Notes

  1. The small number of firms present in all three periods (less than 10% of the sample) prevented the use of longitudinal analyses through which the possible learning effects could have been explored.

  2. Following Schein (1990), cultural differences were defined as differences in organization-specific beliefs, values, and practices between the acquiring and the acquired firm. Knowledge was defined as the accumulated practical skill or expertise that allows one to do something smoothly and efficiently (Zander & Kogut, 1995), and knowledge transfer as transferring such knowledge between the acquisition partners. We acknowledge that such broad definitions may have injected some extraneous variance in the results. However, in the survey design we had to take into account that our study would involve a wide variety of companies and industries. We felt that very specific definitions would have been restrictive, and unlikely to be applicable across different cases.

  3. The positive relationship between national cultural differences and knowledge transfer was particularly robust across all alternative measures tested. The interaction terms were significant with Hofstede (1991) and Trompenaars and Hampden-Turner (1998) scores, but not significant with Inglehart et al. (2004) scores. These differences in the results can be explained by the differences in the cultural dimensions included in the indices, the differences in the countries to which the scores are available, and the different time periods during which the indices were created.

  4. The use of factor scores based on varimax rotation in the subsequent regression analyses ensured that there was no multicollinearity between the constructs of organizational cultural convergence and organizational cultural crossvergence.

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Acknowledgements

This is a fully co-authored paper, and the authors are listed in alphabetical order. We are very grateful to Rosalie Tung and the three anonymous reviewers for their insights, which have greatly improved the paper. We also thank Paulina Junni and all the students involved in data gathering, and Ingmar Björkman, Tomi Laamanen, David Miller, Jennie Sumelius, and Philippe Very for useful comments.

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Authors and Affiliations

  1. Department of Business Administration, Bryan School of Business and Economics, University of North Carolina at Greensboro, Greensboro, USA

    Riikka M Sarala

  2. Department of Management and Organization, Hanken School of Economics, Helsinki, Finland

    Eero Vaara

  3. EM Lyon Business School, Strategy & Organization, Lyon, France

    Eero Vaara

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  1. Riikka M Sarala
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Correspondence to Eero Vaara.

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Accepted by Rosalie Tung, Area Editor, 4 August 2009. This paper has been with the authors for three revisions.

Appendices

APPENDIX A

4

Table A1 Background information on the respondents
Full size table

APPENDIX B

The Survey Questions

The survey asked respondents to circle the best response to each question.

Knowledge transfer a

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Organizational Cultural Differences Before the Acquisition

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Organizational Cultural Differences After the Acquisition b

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figure g

Organizational Cultural Crossvergence

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figure f

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figure e

Control Variables

Operational integration effort

illustration

figure d

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figure c

Autonomy

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figure b

illustration

figure a

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Sarala, R., Vaara, E. Cultural differences, convergence, and crossvergence as explanations of knowledge transfer in international acquisitions. J Int Bus Stud 41, 1365–1390 (2010). https://doi.org/10.1057/jibs.2009.89

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